Updated June 29, 2020 - 11:48 am
In a move that would have been unheard of even a year ago, Cirque du Soleil, the Las Vegas Strip’s preeminent production company for more than two decades, has filed for bankruptcy protection.
The company, which has six productions on the Strip, announced Monday morning from its headquarters in Montreal it was seeking a debt restructuring protection under its home country’s Companies’ Creditors Arrangement Act (CCAA).
As expected, the company said in its filing announcement the refinancing move was “in response to immense disruption and forced show closures as a result of the COVID-19 pandemic.”
Cirque du Soleil shut down all 44 of its shows in March, laying off 95 percent of its workforce, including more than 1,300 in Las Vegas. The company further announced that nearly 3,500 employees in its international workforce would be terminated, though none in its Las Vegas productions.
The company had furloughed some 4,700 employees in March. The company states that the termination “allows employees to maximize and accelerate the financial compensation” the would receive through unemployment assistance programs.
In its restructuring, Cirque has been buoyed by a $300 million infusion 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 is being applied to sidelined employees’ ongoing benefits coverage. Another $5 million is earmarked for payments to contractors, owed several millions since the company shut down in March.
There has been no specified strategy from the company for when, how or even if all of its shows will reopen on the Strip.
The filing also allows the company protection from creditors to reduce its debt load, reported to be at least $900 million. The move also sets a “stalking horse” purchase agreement with current investors, led by TPG Capital. From the announcement, “The purchase agreement sets the floor, or minimum acceptable bid, for an auction of the company under the court’s supervision pursuant to the SISP (Sale and Investor Solicitation Process), which is designed to achieve the highest value available or otherwise best offer for the company and its stakeholders.”
That means Cirque is available at a reduced, undisclosed price for a half-dozen suitors, including a consortium led by company co-founder Guy Laliberte, and another from the Canadian communications conglomerate Quebecor. The other parties who have entered the bidding process have not been made public, and today all of the potential investors are under nondisclosure agreements.
It will take months, probably into the fall, for the company’s ownership to be established. Cirque CEO Daniel Lamarre said in Monday morning’s announcement that the company had enjoyed 36 years of success until the pandemic took hold, and needed to act “decisively” to bolster its future. The purchase agreement is to set a template for Cirque to eventually return as a stronger company.
“The robust commitment from the sponsors — which includes additional funds to support our impacted 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. “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.”
John Katsilometes’ column runs daily in the A section. His PodKats podcast can be found at reviewjournal.com/podcasts. Contact him at firstname.lastname@example.org. Follow @johnnykats on Twitter, @JohnnyKats1 on Instagram.