The Tribune

* Unless permitted to re-open by early November

* Reveals lenders 'already at end of the line'

* Will cut cinema capacity to '30% maxiumum'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Fusion Superplex will "have to make some serious decisions" on staff terminations and restructuring its finances if it is not permitted to open by early November, its chief executive warned yesterday.

Carlos Foulkes told Tribune Business that "patience has already worn thin" among the cinema and entertainment complex's lenders even though they recognise its six-and-a-half month closure is due to a pandemic beyond the company's control and is covered by a "force majeure" clause in the two sides' agreements.

Acknowledging that Fusion Superplex's debts were increasing for every day it remains closed with no revenue income, Mr Foulkes said this "creates a higher burden for the business to recover from and get back on its feet".

He explained that the complex, which overlooks the JFK Drive and Gladstone Road roundabout, was pushing for permission to re-open between late October and early November so that it could adjust staffing levels to consumer demand and "know what the business is capable of" prior to the late 2020 round of Hollywood movie releases.

Revealing that cinema capacity will be "down to 30 percent maximum" upon Fusion Superplex's re-opening to comply with COVID-19 social distancing requirements, Mr Foulkes said a comprehensive health and safety plan has been submitted to the Competent Authority (Prime Minister's Office) and he was hopeful of receiving a 'opening date' reply by the end of this week.

Noting that cinemas and theatres in jurisdictions such as Canada have begun to re-open, he told this newspaper: "Our market just has to be allowed to open. We want to take advantage of some of the films coming out in November and December.

"I hope that we can get open by the third week in October or first week in November. That's my hope. After that point we will have to make some serious decisions as a business. We'll definitely have to be talking to our lenders about refinancing and certainly have to look at what to do with our staff.

"We had committed to keeping as much of the staff as possible, but one of the first things a business in trouble has to do is cut labour costs to survive." Fusion Superplex placed some 350 staff on furlough, or temporary lay-off, when COVID-19 first hit in mid-March and the Government forced it and other businesses to close.

Fusion Superplex, whose construction budget grew from an initial $42m to $50m, was financed by a combination of Bahamas-based equity investors and overseas debt funding but Mr Foulkes has not identified any of them. He yesterday revealed that the patience of the company's financial backers was starting to wear thin even though the company was another victim of events beyond its control.

"They are already at the end of the line," he told Tribune Business. "Their patience has worn thin. We don't have a date, are working with them on the extension, and have a force majeure condition.

"They understand that as long as the emergency powers exist and we don't have a date, that places the contract on hold, but at the end of the day it makes it more difficult for us as a business with this strangulation. The lenders are flexible, but it creates a higher burden for the business to recover from having missed the entire summer and with the film studios shut down."

Mr Foulkes said Fusion Superplex would "if the Government has any assistance programmes" it could exploit "to give the business an easier time to get back on its feet", such as relief on its Bahamas Power & Light (BPL) bill and tax breaks. BPL relief previously ended, although the Ministry of Finance's tax credit and deferral initiative is continuing as a means of payment support.

"We're anxious to get back," the Fusion Superplex chief said yesterday. "We believe people want to come back to the theatres and we have a safety plan.... It will be a slightly different experience until a vaccine arrives, but we can offer a reasonable entertainment product with safety. We just need the OK.

"The reason we want those [October to November] dates is that we need time to get back into business and see how the COVID-19 restrictions impact employment levels, attendance levels so that once the Hollywood studios come back we can respond and know what the business is capable of under these present circumstances.

"We are actually following up with the Competent Authority this week. We submitted a request for an update yesterday [Tuesday]. We are waiting for them to respond. We hope to have an answer by tomorrow but, right now, the answer is still unknown and we don't have a date. We don't know if it will be October or if the emergency period has to end."

Besides reducing cinema capacity to 30 percent maximum, a level that will undoubtedly hit Fusion Superplex's revenues and profits, Mr Foulkes said it had submitted a plan to the Government detailing its sanitisation protocols and strategies for enforcing social distancing in its other facilities such as the lobby, arcade and restaurants.

Touting the complex's air filtration system and outdoor dining as further benefits amid COVID-19, he added: "We would like to get back into business as quickly as possible, but we are in the negative because just keeping on the lights is a cost.

"The longer we stay closed, the greater the debt. That's the case of all businesses in our circumstance. I think our industry has been hit the hardest. We are the least needed to open, we understand that, but life has to go on and the economy needs to re-open."

Mr Foulkes declined to detail Fusion Superplex's COVID-19 losses, although he told this newspaper in July that revenue losses then were "north of $6m". Fusion Superplex, together with the likes of Mario’s Bowling and Entertainment Centre, Galleria Cinemas and bars and nightclubs, are among the final categories of businesses yet to re-open following the COVID-19 lockdown due to government fears that their confined spaces - together with the large crowds they attract - will lead to the virus re-emerging and spreading.

Some Fusion employees have previously voiced doubts as to whether the cinema and entertainment complex would re-open given the extent of the revenue and bottom-line losses produced by the company’s continuing COVID-19 lockdown.

This newspaper also reported that Fusion Superplex was unable to meet the last $500,000 monthly staff payroll before the lockdown, which Mr Foulkes blamed on the inability/refusal of the company’s debtors to pay the $1.2m in accounts receivables that they owed.

And it then emerged that the entertainment complex had not been paying National Insurance Board (NIB) contributions on behalf of staff, which had left furloughed workers unable to receive unemployment benefits when they applied. Mr Foulkes conceded then that the company was on a payment plan with NIB.