Québec gives green light to a loan of$ 280 Million at Cirque du Soleil

Québec donne le feu vert à un prêt de 280 M$ au Cirque du Soleil

Québec donne le feu vert à un prêt de 280 M$ au Cirque du Soleil

The minister of the Economy Pierre Fitzgibbon announced on Tuesday that a financial support for the Cirque du Soleil of up to 280 million $, in Quebec city, Tuesday.

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May 26, 2020 14h34

Updated at 17h34

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Québec gives green light to a loan of$ 280 Million at Cirque du Soleil

Julien Arsenault

The canadian Press

Québec comes to the rescue of the Circus of the Sun by offering him a loan of 280 million CAN $ — with a provision allowing him to eventually acquire the business of entertainment — if the restructuring proposed by the existing shareholders a reality.

An agreement was entered into between Investissement Québec (IQ), the financial arm of the quebec government and the existing shareholders, or the investment fund texas TPG Capital, the chinese company Fosun and the Caisse de dépôt et placement du Québec (CPDQ).

“In the circumstances, it is a very beautiful transaction, said the minister of Economy and Innovation, Pierre Fitzgibbon, Tuesday, making the announcement in a media scrum that was on the re-opening of shopping centres. The reason why we have supported the existing shareholders, is that we wanted to secure the recovery of the Circus in Quebec. One day, the Circus will become detained in quebec.”

In addition to studying all of the scenarios, including the one where it would be shielded from its creditors, the company started its efforts to find an investor or a buyer, or renegotiating another injection of capital from its current owners.

The loan will be enforceable only if it is the recovery plan for the current shareholders, which is retained, said Mr. Fitzgibbon. Thus, if a new buyer does not need a boost in the government, the money would not be paid.

“If, in the process, other shareholders [would acquire] the Circus, this money-there [the 280 million $] might also be available”, however, has reported the minister.

Québec donne le feu vert à un prêt de 280 M$ au Cirque du Soleil

For the 12-month period ending last September, the Circus would have generated revenues of approximately $950 million US, had calculated the rating agency Moody’s in a report published last march.

Library The Sun, Yan Doublet

Finances precarious

In addition to dragging a debt of approximately US $900 million, the Circus generates virtually no revenue as its activities are paralysed by the pandemic COVID-19. This has forced the company to cancel, in march, 44 shows and laying off almost all of its workforce, or about 4700 people.

For the 12-month period ending last September, the Circus would have generated revenues of approximately $950 million US, had calculated the rating agency Moody’s in a report published last march. Its profits were estimated at US $155 million.

The financial assistance, which will not be used to pay the holders of the bonds, is subject to multiple conditions. The headquarters, currently located in the montreal borough of Saint-Michel, will have to remain in the province, and the remuneration of the members of the senior management of the Circus will also have to be reasonable. They will also have to remain in Quebec.

Daniel Lamarre is the president and chief executive officer of Cirque since 2004, while the business man Mitch Garber has been appointed to the head of the board of directors in 2015. In addition to having seen the light of day in Quebec, the two men are resident in the province.

If the loan is paid, the IQ would be a creditor of first rank.

Purchase Option

The minister of Economy did not want to specify the terms and conditions of the mechanics that would enable Quebec to acquire the equity interests of TPG and Fosun, who currently hold 80 % of the Circus. At a price set at the market value, the State could force a transaction to a date that has not been disclosed or redeem the participation of these firms if they decide to leave the ship later.

However, it is out of the question-Quebec or the operator of an entertainment company, ” said Mr. Fitzgibbon.

By e-mail, the spokesman for the Circus, Caroline Couillard, was limited to say that the financial support of Quebec was welcomed.

“The strong interest […] confirms once again the strength of our brand and the importance of preserving quebec’s heritage of the Circus”, she stated.

This announcement of Quebec occurs two days after the billionaire Guy Laliberté, who has yet sold its last shares in the Circus to the CDPQ not later than February last, had announced that he wanted to buy back the company he co-founded in 1984 at a “fair price”.

The conglomerate Quebecor, controlled by the businessman Pierre Karl Péladeau, has also said they want to participate in a rescue of the company before injecting “hundreds of millions” in order to bring the ownership in Quebec. The investment firm u.s.-based Providence Equity Partners would also be on the ranks, according to the daily newspaper The Globe and Mail.

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