In the superior Court of Quebec, it has been revealed that lenders are about to finalize an agreement with the advisors of the Circus, which would be considered as submission of a primer in the rise of the curtain of the auction of the company.
July 10, 2020 19: 02
The creditors of the Circus in the process of positioning itself to take over the business
The canadian Press
MONTREAL — the creditors of The Cirque du Soleil, who criticized strongly the trajectory borrowed by the business of entertainment in hopes of reconnecting with the balance, now seemed on the point of tipping the balance in their favour.
In the superior Court of Québec, on Friday, it was revealed that the lenders are on the verge of finalizing an agreement with the advisors of the Circus, which would be considered as submission of a primer in the rise of the curtain of the auction of the company – a process in which Quebecor will likely be involved.
The hearing, which was held in front of the judge Louis Gouin, was supposed to give the blow of sending of the auction, but rather it has given a new twist to this folder so widely publicized.
If a ground is found, the proposal would set aside the agreement, valued at approximately 420 million US $ and advertised with the existing shareholders, the fund texan TPG Capital, the chinese company Fosun and the Caisse de dépôt et placement du Québec, June 29, when the company turned to the Law on arrangements with creditors of companies (“CCAA”). The group of lenders had already signalled its intention to oppose the arrangement agreement, calling it “doomed to failure”.
“We felt that a negotiated agreement was the best scenario for both parties, explained Friday, Martin Rosenthal, of the firm of Ernst & Young, which acts as a controller to the file, in the superior Court of Quebec. The two parties have worked very hard over the last few days.”
The creditors who hold secured debt of approximately US $ 1 billion of the Circus, will have until Tuesday to submit their proposal to the advisors of the company – which is private income since mid-march due to the health crisis, which has caused the cancellation of its 44 performances and some 3480 layoffs. Its claims totalling more than US $ 1.6 billion.
This proposal should receive the approval of the court next Friday in order to constitute the submission of primer, thus ruling out the purchase agreement announced at the end of June between the Circus and its shareholders, who had not offered comment on Friday afternoon.
“Given the conditions greatly in excess of the supply (lenders), we do not see how the advisors (…) can do otherwise than give the green light to negotiate an agreement that is the bid leader,” said Joe Pasquariello, the lawyer representing the group of creditors.
The details of the proposal of the creditors were not disclosed, but according to what has already been covered, the offer would maintain the headquarters of Cirque in Montreal and do not intend to seek reappointment for a financial support of the québec State. The lenders have already proposed a conversion of the guaranteed debt in actions to put the hand on the whole of the Circus, which would have eliminated the existing shareholders.
According to a document filed at the end of June to the superior Court, the creditors were willing to improve their putting by injecting US $ 375 million of new money, compared to US $ 300 million initially.
The owners of the Circus propose the injection of $ 300 million USD, in particular based on the loan of US $ 200 million offered by Investissement Québec. In exchange for a debt restructuring, the creditors would receive 45 % of the company, as well as an unsecured debt of US $ 50 million. The current shareholders would share the remaining 55%.
Quebecor in the portrait
Furthermore, in response to a question from the judge Gouin, a lawyer representing Quebecor, Me Denis Ferland responded that the conglomerate of communications had the intention to “bring an offering according to the rules put in place by the court”.
The company had the intention to challenge the agreement reached between the Circus and its shareholders and were critical of the current rules, which, she argued, made it difficult for them to talk directly with the creditors.
“We want to talk to these people in order to submit an offer which will be interesting for all,” said mr. Ferland.
The judge Gouin, however, preferred to wait until it is determined what will be the submission of primer before you decide whether or not other interested parties may communicate with the lenders of the Circus.