In a move that would not have been heard a year ago, Cirque du Soleil, the Las Vegas Strip’s preeminent production company for more than two decades, has filed for bankruptcy.
The company, which has six productions on the Strip, announced Monday morning from its Montreal headquarters that it was seeking debt restructuring protection under the Business Creditors Settlement Act (CCAA) of its home country.
As expected, the company said in its filing announcement that the refinancing move was “in response to a huge disruption and forced closings of shows as a result of the COVID-19 pandemic.”
Cirque du Soleil closed all its 44 shows in March, laying off 95 percent of its workforce, including more than 1,300 in Las Vegas. The company also announced that nearly 3,500 employees in its international workforce would be laid off, though none in its Las Vegas productions.
The company had laid off about 4,700 employees in March. The company claims that the termination “allows employees to maximize and accelerate the financial compensation” they would receive through unemployment assistance programs.
In its restructuring, Cirque has been fueled by an infusion of $ 300 million from its investors (including $ 200 million from its own government agency, Investissement Quebec) to continue operations while productions are sidelined.
A total of $ 15 million applies to coverage of continuing benefits for marginalized employees. Another $ 5 million is earmarked for payments to contractors, owed several million since the company closed in March.
There has been no specific company strategy for when, how, or even if all of their shows will reopen on the Strip.
The filing also allows the company to protect creditors to reduce its debt burden, which is reported to be at least $ 900 million. The move also establishes a “stalking horse” purchase agreement with current investors, led by TPG Capital. Since the announcement, “The purchase agreement sets the floor, or the minimum acceptable bid, for an auction of the company under the supervision of the court in accordance with the SISP (Sales and Investor Request Process), which is designed to achieve the highest available value or otherwise the best offer for the company and its stakeholders. “
That means Cirque is available at a reduced, undisclosed price to half a dozen suitors, including a consortium led by company co-founder Guy Laliberte, and another from Canadian communications conglomerate Quebecor. The other parties that have entered the bidding process have not been made public, and today all potential investors are under confidentiality agreements.
It will take months, probably until the fall, for company ownership to be established. Cirque CEO Daniel Lamarre said in the Monday morning announcement that the company had had 36 years of success until the pandemic took hold, and needed to act “decisively” to advance its future. The purchase agreement is to establish a template for Cirque to finally return as a stronger company.
“The strong commitment of sponsors, which includes additional funds to support our affected employees, contractors and critical partners, all of whom are important to Cirque’s return, reflects our mutual belief in the power and long-term potential of our brand, “he said. said. “I look forward to rebuilding our operations and coming together to once again create the magical spectacle that Cirque du Soleil is for our millions of fans around the world.”
John Katsilometes column runs daily in section A. His PodKats podcast can be found at reviewjournal.com/podcasts. Contact him at [email protected]. Follow @johnnykats on Twitter, @ JohnnyKats1 on Instagram.
