Palace to reopen cinemas, turns to bankers for financing
C inema operator Palace Amusement Company has sought financial assistance from its bankers to cover fixed expenditures amid a fall-off in revenues at its theatres.
The disclosure was made by the company on Wednesday in a market notice posted on the Jamaica Stock Exchange, JSE. The magnitude of the funding was not disclosed.
Palace Amusement on March 14 announced the closure of all its cinemas following social-distancing restrictions by the Government to control the spread of COVID-19.
The loss in revenue, in addition to challenges the cinema operator was facing with its newest cinema, Sunshine Palace in Portmore, St Catherine, resulted in Palace Amusement posting a loss of $49.2 million for its March quarter against a profit $43.7 million for the similar quarter of 2019.
Core sales declined by 10 per cent to $229 million, while other operating income was cut by a third, and non-operating income flows fell from $46 million to zero.
Palace remains the single most expensive ordinary stock on the JSE, but the price has been cut in half, from $2,789 pre-COVID to $1,850 on Wednesday, July 1. However, the stock’s current trading level reflects a recovery from its year to date low of $1,101.67 on June 1.
“Closure of the cinemas has resulted in significant losses over the last three and a half months. Meanwhile, we have had substantial standing charges to maintain. As such, we have obtained interim financing from our bankers to help us meet some of our financial obligations,” Palace said in its filing.
The JSE requires all listed companies to provide updates on impacts to their operation from the coronavirus.
Palace’s advisory comes just ahead of the loosening of restrictions by the Government on entertainment businesses.
Cinemas, playhouses and theatres will be allowed to reopen, but with restrictions, for a period of 14 days, starting Sunday, July 5. Palace says it intends to resume operations.
Under the new protocols, Palace Amusement is allowed to utilise no more than 60 per cent of the seating capacity in its movie houses, which include Carib 5, Palace Cineplex, Palace Multiplex and Sunshine Palace.
In addition to reopening its theatres to the public, Palace Amusement says it is also considering adding drive-in movies to its line-up – a product segment it once offered but exited years ago.
“Though efforts have commenced to explore the possibility of offering a drive-in cinema experience to our patrons, to date we are not in a position to say whether this will become a reality. Indeed, there has been no decision by senior management or the board of directors in this regard,” the company said.
Efforts at comment from the cinema company, headed by Douglas Graham and Melanie Graham, were unsuccessful.