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Cirque has new owners, same COVID challenges

Updated August 19, 2020 - 4:09 pm

Cirque du Soleil uses a sun in its logo. It’s appropriate, given the company’s unshakable, sunny disposition.

The staggering Cirque has a new ownership team, with Capital Catalyst Group prevailing with its $1.2 billion proposal to rescue the company after it shut down all of its shows — including six on the Strip — because of COVID-19. Competing investors had until 5 p.m. Tuesday to exceed the Capital Catalyst bid. No such proposal was issued.

Cirque CEO Daniel Lamarre, who in March said he would stay with the company and “restart the engine,” is facing the future with his characteristic optimism.

“Now that the bidding process is completed, and the secured lenders proposal prevails, we can look to the future with a positive outlook, which is great news for all our employees. The offer made by our secured lenders is a clear recognition of our iconic brand and of the current management team,” Lamarre said Tuesday morning in an email statement to the RJ. “Today, we are prepared to build upon the successes of the past and to fulfill our mission to bring Cirque du Soleil’s unique artistic vision to audiences around the world.

“We are focusing on the relaunch of our shows and look forward to moving the organization forward with the prospect of returning to a profitable situation.”

Company spokeswoman Ann Paladie added, “At this point, the bidding process has ended but not the recapitalization process. We will have more information to share as that process continues.”

Lamarre’s future was called into question as the new lenders began their push to take control of Cirque. But Lamarre is currently still in the position he’s held since 2001. The company noted Lamarre’s position “will be confirmed in due course.”

The incoming group will need time to assess its management roster, and you might not have previously heard of the lenders who are taking control of Las Vegas’ premiere production company. Capital Catalyst Group is a powerhouse investment firm out of Toronto. It is joined by prominent investor CBAM Partners, which is part of the Eldridge Industries empire founded by CEO Todd Boehly, who also owns 20 percent of the L.A. Dodgers and a piece of the L.A. Sparks WNBA franchise.

Other investors included such asset managers as BlueMountain Capital Management of New York; First Eagle Credit (formerly THL Credit) out of Boston; Shenkman Capital Management Inc. of New York; Providence Equity Partners of Rhode Island; and Fidelity Investments Inc.

The group has pledged to keep Cirque’s headquarters in Montreal for at least five years.

The new lenders pledge to infuse some $375 million into the company to restart its shows, with no timeline yet possible because of the pandemic shutdown. The move means that Cirque shareholders including TPG, China’s Fosun International Ltd. and Caisse de dépôt et placement du Québec have been cut loose from the company.

TPG bought a majority stake from founder Guy Laliberte in 2015. Laliberte said in May he was interested in possibly returning to the company he helped start in 1985. He did not make a bid through the restructuring process, but it is conceivable he could reinvest in Cirque.

The new investment group’s plan still needs to be approved by a Quebec Superior Court within seven days. It committed to setting up a $15 million fund to pay laid-off employees and another $5 million for contractors.

Cirque was forced to cut 95 percent of its workforce in March. On June 30, the company filed for bankruptcy protection in Canada and shortly afterward in the U.S. Cirque listed debt owed to secured creditors of about $1.1 billion. The company lost nearly all of its revenue when it shut down because of COVID-19 in March.

At the time, Cirque had been running 44 shows worldwide, including the half-dozen on the Strip, which have accounted for 50-60 percent of the company’s profits since TPG came on board. Sidelined are the Strip productions “O” at the Bellagio, “Ka” at the MGM Grand, “Love” at The Mirage, “Zumanity” at New York-New York, “Mystere” at Treasure Island and “Michael Jackson One” at Mandalay Bay.

Cirque is also planning to open “Drawn to Life” in Orlando, Florida, in November. It has been running “X: The Land of Fantasy” in Hangzhou, the capital city of east China’s Zhejiang province, which returned June 3. The company last month reopened “Joya,” its first resident show in Mexico.

A total of 4,700 Cirque employees were furloughed in March. As it filed for bankruptcy protection, Cirque terminated 3,500 of those employees, most from the company’s international touring shows and from such acquisition productions as Blue Man Group (the company does plan to eventually call back that show, a hit at Luxor).

Some 1,370 Cirque artists, technicians and support staffers remain furloughed in Las Vegas. Of that community, MGM Resorts still employs about 800 technicians and front-of-house show personnel. Those workers were scheduled to move over to Cirque on April 1. Instead, MGM Resorts has held those employees and offered them full benefits through Aug. 31.

There has been no specific plan for when those staffers will be reassigned to Cirque, or if their benefits will be extended There should be an update before that Aug. 31 deadline And we don’t know when that $15 million, earmarked for Cirque employees, will be distributed to those in Vegas waiting for the engine to restart.

John Katsilometes’ column runs daily in the A section. His PodKats! podcast can be found at reviewjournal.com/podcasts. Contact him at jkatsilometes@reviewjournal.com. Follow @johnnykats on Twitter, @JohnnyKats1 on Instagram.

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