The Event Hospitality and Entertainment Ltd (ASX: EVT) share price has fallen 10% so far today, following an announcement that all its cinemas across Australia and New Zealand are to close from today.
All cinemas to close across Australia and New Zealand
The announcement today to close all cinemas in Australia follows the Australian government's strict new rules regarding the closure of a range of non-essential businesses across Australia. These businesses include clubs and pubs as well as churches, casinos, gyms, indoor sporting venues and entertainment venues such as cinemas and theatres. Although restaurants and cafes are still permitted to serve takeaway food and conduct home delivery, all sit-down meals are banned.
Other major ASX entertainment and leisure shares impacted by recent announcements include Ardent Leisure Group Ltd (ASX: ALG), Crown Resorts Ltd (ASX: CWN), Star Entertainment Group Ltd (ASX: SGR), and Village Roadshow Ltd (ASX: VRL).
Event's cinemas in Australia will be closed until at least the end of May, and the group noted that it will reassess the situation again at that time. New Zealand cinemas will also close. Today's update follows a profit warning issued by the company on March 13.
Event is currently assessing how the Government's recent announcement relating to food and beverage areas will impact on its hotel segment and its business in Thredbo.
Employees to be temporarily stood down during the crisis
Event has taken the major decision to temporarily stand down the majority of its cinema employees during the period of the cinema shut down. The group hopes that by taking this difficult decision right now, it will be positioned to keep as many jobs as possible on a long-term basis.
Event noted that permanent staff will be allowed to access their annual and long service leave during this time, and the company will offer negative leave balances of up to five days. However, Event acknowledges that it can't avoid many employees suffering from periods of leave without pay. Casual hours have been substantially reduced and the group will not be offering any more casual hours until the cinemas reopen.
Event's German cinema chain, CineStar, has already been closed.
Strategies to mitigate the impact on the business
Some of the measures that Event has put in place to minimise the fall-out on its business include voluntary wage reductions by the CEO and senior staff, as well as the availability of flexible work weeks of between 1 to 4 days over a three month period. There will also be a hold on all non-essential projects as well as a deferral of all capital expenditure.
Event noted that it has secured bank debt facilities of $560 million that mature on August 15 and has $122 million of total available cash on its books.
