Ster-Kinekor has confirmed that it has been forced to issue retrenchment notices to 236 employees as it restructures its business and streamlines costs due to dwindling attendance numbers at its South African cinemas, coupled with other challenges.
The cinema group said all staff members had been issued with notices informing them of the company’s intention to proceed with a restructuring exercise under Section 189 of the Labour Relations Act.
“In recent months, the business has suffered a significant decline in attendances,” the company said in a statement to BR.
“This is largely as a result of a challenging economic environment, prolonged and more intense load shedding as well as the impact of the Hollywood actors’ and writers’ strikes.”
Ster-Kinekor said the Hollywood writers’ and actors’ strike in 2023 had resulted in content scheduled for release in 2023 and 2024 being moved to 2025.
The retrenchment of 236 employees comes a few months after the company, now managed by UK based Blantyre Capital and Greenpoint Capital, exited business rescue.
But this has plunged it into a bitter dispute with workers.
“Top executives are unaffected by the layoffs,” a source said on Tuesday.
“The affected departments include the CEO’s office, marketing, sales, human capital, information technology, business operations, content, finance, head office, regional operations, and cinemas.”
In February, Ster-Kinekor said it was also being hobbled by intensified load shedding and a poor macro-economic environment locally.
It said it required to undergo a cost-base review as it needed its cinemas to operate on streamlined structures.
There has been intense competition in the entertainment and movie sector as alternative services from pay television and streaming companies vie for competition and a share of the market.
In South Africa, traditional cinemas continue to face stiff competition for audiences from MultiChoice as well as Netflix, among other service providers.
Although Ster-Kinekor has blamed load shedding for its operational challenges, employees at the company are concerned that this is a misrepresentation as most of the operator’s cinemas have back-up generators.
Moreover, there has been an improvement in electricity availability in the past few months.
Ster-Kinekor said its proposed labour redundancies would be considerate of whether roles would be necessary under the new business structures.
Some roles would continue to be available although affected employees would have to apply for these positions and subject themselves to the applicable selection criteria.
Additionally, it said certain vacant positions would no longer longer be filled while early retirement was being offered to eligible individuals.
“The current financial position of the business requires the business to restructure based on financial and economic factors,” Ster-Kinekor said in a note detailing its restructuring plans.
“We need to ensure the sustainability of the business by putting in the necessary action plans of restructuring and mitigating our financial risks.”
Employees at the company were now querying whether the proposed retrenchments were a consequence of the new “operational requirements” of the company, and whether due procedure had been followed.
Blantyre Capital and Greenpoint Capital took control of Ster-Kinekor’ in 2022 with a R250 million senior secured debt facility.
The facility was geared to fund future operations, facilitate the exit of business rescue and refinance the existing capital structure of the business.
The Competition Commission reportedly directed the merging parties not to retrench any employees as a result of the merger for a period of 36 months from the date of implementation of the transaction.
“We believe that regardless of whether the merging parties violate the aforementioned employment condition, the job losses may effectively mean that the company is in fact unable to comply with many of the other conditions, which would need to be reconsidered, amended, and re-agreed upon by the company with the commission,” wrote representatives of the affected employees in a statement.
Ster-Kinekor yesterday said it was “committed to complying with all the legal requirements”, adding that it would also “ensure that employees are kept abreast of all developments throughout the Section 189 process” as it progresses.
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