Cirque creditors set to reject Tpg-led offer, sources say

Cirque du Soleil Entertainment Group filed for protection from creditors after the coronavirus pandemic forced it to close shows around the world, triggering a fight for control of one of the bestknown brands in live performance.

Cirque said it entered into a socalled stalking horse agreement with its existing shareholders, including TPG, for a Us$300-million injection to help restart the business. The Tpg-led proposal would see secured creditors get 45 per cent of the equity in exchange for wiping out the vast majority of the company’s debt. But creditors are unlikely to accept the terms of the TPG plan, according to three people familiar with the matter.

A creditor group will likely come back with a formal counter-offer by July 10, one of the people said; it has already drafted a non-binding offer, according to another one of the people. The Montreal-based company, which has about US$1.6 billion in debt and other liabilities, requested protection through the Companies’ Creditors Arrangement Act in Canada on Monday afternoon. The application is scheduled to be heard by the Quebec Superior Court on Tuesday and the company will seek its immediate provisional recognition in the U.S. under Chapter 15.

Cirque du Soleil laid off 4,679 employees — about 95 per cent of its workforce — on March 19 after shutting down 44 productions to comply with government orders around the world. The filing starts the clock on a bidding process for control of a restructured Cirque.

Quebecor Inc. and Cirque founder Guy Laliberte have expressed interest in investing in the company.

“We know there are probably five other parties that will be interested to make an offer,” chief executive Daniel Lamarre said. “The good news today is that we know that someone is committed to ensure the future of the company. And within 45 days, we’ll know if someone is willing to invest even more.”