Photo: Cirque du Soleil
The Circus is greatly in debt to make several acquisitions in order to accelerate its growth and diversification. On the photo, the Corteo show
Prior to the onset of the health crisis that has crippled its operations, the Cirque du Soleil was already in a position of ” vulnerable “, according to the report of the comptroller, who oversees the restructuring of the entertainment company currently shielded from its creditors.
From 2017 to 2019, the company has posted losses of their respective net exports of US $ 10 million, 71 million of US dollars and US $ 80 million, says a paper — only available in English — of the firm of Ernst & Young, which has been mandated in the framework of the process that takes place under the Act on the arrangements with the creditors arrangement act (CCAA).
At the same time, the Circus is greatly in debt to make several acquisitions in order to accelerate its growth and diversification. This has helped increase its revenues by $ 882 million to $ 1.04 billion US dollars.
“During this period, the applicant’s financial situation has deteriorated due to the losses incurred and because he was increasingly in debt, so it is written. This placed the applicant in a vulnerable position […] and has led to a rapid deterioration of its financial situation during the pandemic. “
Cirque du Soleil seeks protection from its creditors
As of march 31, the various claims of the Circus amounted to nearly 1.6 billion US dollars, according to a document filed with the superior Court of Quebec. About 885 million US $ are due to the secured creditors.
During a telephone interview Monday, the president and chief executive officer of the company, Daniel Lamarre, said that the company had made a profit of 155 million US dollars last year. However, it is the earnings before interest, taxes, depreciation and amortization (EBITDA), which excludes items recorded in net loss. The EBITDA has been of 120.5 million US dollars last year.
“Before the crisis, we met all our obligations, had launched the boss of the Circus, wishing to temper the weight of the debt. Today, even if I had 200 million dollars of debt, I would be in the same situation. Without income, you can’t deal with no obligation. “
In the framework of the reorganization, the current shareholders of the company — the fund texan TPG Capital, the chinese company Fosun and the Caisse de dépôt et placement du Québec — have signed an agreement to purchase US $ 300 million, in which the loan of US $ 200 million offered by Investissement Québec, will be put to contribution. This amount will be used to repay the interim financing contingency of 50 million US dollars, which had been granted by the three shareholders of the Circus last may.
It is minimum requirements if other players want to submit a proposal to acquire the Circus, which has licensed 3480 of its employees who had been laid off last march when the 44 of the company’s performances had been cancelled.
In exchange for a restructuring of the debt, the creditors will receive an unsecured debt of 50 million US dollars in addition to owning 45 % of the Circus, which will curb the interests of the existing shareholders to 55 %. TPG would own, and 33 per cent, while Fosun and the Fund would each have 11 %.
According to the proposal, the total value of which is estimated at 420 million U.S. dollars, the registered office will be maintained in Montreal and it is expected that the big boss of the Circus, as well as its chairman of the board of directors be residents of Quebec — which is already the case. It is expected, however only make an effort, “reasonable” to remind the québec employees who have lost their livelihood.
In the event of the filing of a competing offer, it will have to meet a series of criteria, including a deposit equal to 5 % of the value of the agreement between the Cirque and its current shareholders. Mr. Lamarre had indicated that “five or six” groups were always interested in putting the hand on the business.
In the province, Quebecor, as well as the co-founder of the company, Guy Laliberté, who had sold his last shares to the Fund not later than February last, had expressed interest before the Circus turns to the CCAA.