Cirque du Soleil Gets Stalking Horse

In response to the disruption and forced show closures as a result of the COVID-19 pandemic, Cirque du Soleil Entertainment Group has filed for protection from creditors in Canada – under the Companies’ Creditors Arrangement Act and will seek protection in the United States under Chapter 15 of the US Bankruptcy Code.

Cirque du Soleil (“Circus of the Sun”) is a Canadian entertainment company and one of the largest theatrical producers in the world. Annual revenues – during normal times – are estimated at more than US$800 million. Cirque was founded in 1984 by two former street performers, Guy Laliberté and Gilles Ste-Croix, and is headquartered in Montreal.

Cirque was acquired by TPG and Fosun, a Chinese investment group, and Caisse de dépôt et placement du Québec (CDPQ), a Canadian manager of public pension plans, in April 2015.

Cirque has entered into a “stalking horse” purchase agreement with TPG, Fosun, and CDPQ, as well as Investissement Québec, a Montreal-headquartered business development organization that provides advisory and capital (loans, loan guarantees and equity investments) to companies looking to initiate or expand their activities in Quebec.

Under the stalking horse agreement, TPG, Fosun, and CDPQ would acquire Cirque for US$300 million through a combination of cash, debt, and equity. As part of the US$300 million, Investissement Québec will provide US$200 million in debt financing to support the proposed acquisition. Cirque’s existing secured creditors will receive US$50 million of unsecured, takeback debt in addition to a 45 percent equity stake in the restructured company.

“For the past 36 years, Cirque du Soleil has been a highly successful and profitable organization. However, with zero revenues since the forced closure of all our shows due to COVID-19, management had to act decisively to protect the company’s future,” said Daniel Lamarre, the president and CEO of Cirque. “The agreement provides a path for Cirque to emerge from bankruptcy protection as a stronger company. I look forward to rebuilding our operations and coming together to once again create the magical spectacle that is Cirque du Soleil for our millions of fans worldwide.”

As a part of its restructuring and plan to restart operations, Cirque will terminate approximately 3,500 employees previously furloughed in March following the halt in revenue caused by COVID-19 government-mandated shutdowns. This action allows employees to maximize compensation that they can obtain from the Canadian Federal Wage Earners Protection Program and other unemployment assistance programs. Certain staff active with Cirque’s Las Vegas and Orlando shows – which will restart sooner than other company’s shows – are not among the terminated employees.

TPG was founded in 1992 and makes investments throughout North America, Europe, Asia, and Australia.  Sectors of interest include industrials, retail, consumer, financial services, travel and entertainment, technology, media and communications, and healthcare.

Fosun, publicly traded on the Hong Kong stock exchange, is a Chinese conglomerate with international investments in healthcare, tourism, fashion firms and banks.  Fosun was founded in 1992 and is headquartered in Shanghai, China.

Caisse de dépôt et placement du Québec is an institutional investor that manages funds primarily for public and para-public pension and insurance plans. As of December 2019, it held C$340 billion in net assets.

Cirque is being advised by Montreal-based Stikeman Elliott, Chicago-based Kirkland & Ellis, Montreal-based National Bank Financial and New York City-based Greenhill & Co.

Private Equity Professional | July 1, 2020

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