Creditor protection will save Cirque: CEO
Following months of both financial uncertainty and mental anguish, Daniel Lamarre on Monday finally was breathing a sigh of relief.
Lamarre, the president and chief executive officer of the beleaguered Cirque du Soleil Entertainment Group, believes the company’s now on the path to relaunch its business after filing for creditor protection.
“I can tell you, with guarantee, the survival of Cirque du Soleil is ensured,” Lamarre told the Montreal Gazette in a telephone interview. “I have a guaranteed proposal on the table that ensures the future of our company. I know at the end of this I’ll have an owner and I’ll have ensured the survival of Cirque du Soleil.”
The Cirque is entering a stalking horse agreement — a restructuring plan — that will see its existing shareholders , U.S. investment firm TPG Capital, China’s Fosun Capital Group and the Caisse de dépôt et placement du Québec, inject US$300 million.
At the same time, Investissement Québec, the financial arm of the provincial government, will provide US$200 million in debt financing to support the proposed acquisition.
The agreement serves as the floor for the other potential bidders, who now have 45 days in which to submit proposals.
Under a confidentiality agreement, Lamarre said he’s not at liberty to provide details. However, other than TPG Capital, which holds the majority control of the company, five other groups have shown interest, he said.
Guy Laliberté, who co-founded the Cirque in the 1980s, recently announced he intends to submit a bid. It also has been reported media company Quebecor Inc. is interested. A spokesperson for Laliberté on Monday said he wouldn’t comment.
While Quebec Economy Minister Pierre Fitzgibbon couldn’t be reached, he proclaimed the investment was “good for Quebec” last month following the province’s pledge. That deal includes an option allowing the government to purchase the Cirque, ensuring it remains under Quebec ownership.
But the news on Monday wasn’t all positive.
Some 3,480 employees that were furloughed in March due to the coronavirus pandemic — at which time the entertainment company cancelled its 44 shows and saw its revenue stream halted — have been laid off, although Lamarre hopes to rehire the vast majority. Two funds totalling US$20 million have been established to provide additional relief
to impacted employees and independent contractors.
Of that total, US$15 million will go to the former employees with the remainder used to pay artists and freelancers. Earlier this month, those two groups staged
a protest in Montreal’s Old Port, alleging they were still owed nearly $1.5 million in work contracts.
The company’s debt has been calculated at US$900 million.
The Cirque still employs nearly 900 people, Lamarre said. That includes about 200 at its Montreal head office, with the remainder in Las Vegas and Orlando, where permanent shows are staged and might shortly resume.
“It’s kind of reassuring for our employees that, despite this unique situation where we have no revenue, our actual owners are willing to support us through the crisis because they believe when we come back to normalcy we’ll be in position to go back to profitability very quickly,” Lamarre said.
He believes the U.S. theatres will
be allowed to reopen within two or three weeks and is cautiously optimistic Montreal shows could resume by November, provided a second wave of the pandemic doesn’t occur.
“We were a profitable company until this crisis happened,” Lamarre said. “Within 48 hours we had zero revenue. This has happened once in the history of this industry; no shows. For the last four months I had no revenue and for the foreseeable future I also have no revenue.”
The application, under the Companies’ Creditors Arrangement Act, is expected to be heard Tuesday in Quebec Superior Court. Ernst & Young Inc. will monitor and control the process.
We were a profitable company until this crisis happened. Within 48 hours we had zero revenue.