LAS VEGAS (FOX5) -- Cirque du Soleil plans to restructure the company and "restart business" by filing for protection against creditors, a company spokesperson confirmed Monday.
Due to "immense disruption" caused by the COVID-19 pandemic related to canceled performances and economic hardship, Cirque du Soleil Entertainment Group seeks to settle its debts and "restart business" with a comprehensive restructuring plan.
"For the past 36 years, Cirque du Soleil has been a highly successful and profitable organization. However, with zero revenues since the forced closure of all of our shows due to COVID-19, management had to act decisively to protect the Company’s future," President and CEO of Cirque du Soleil Entertainment Group Daniel Lamarre said.
The filing application will be heard Tuesday, June 30 by the Superior Court of Quebec Commercial Division, according to a release. If granted by the court, the company, headquartered in Canada, will restructure its capital under the Companies' Creditors Arrangement Act (CCAA), a statute that allows corporations owing in excess of $5 million to restructure and settle financial affairs and filing Chapter 15 Bankruptcy in the U.S. Chapter 15 would give Cirque du Soleil the ability to settle debts in US. Bankruptcy Court and acts as a cooperation between foreign debtors and the states.
In addition, Cirque announced a purchase agreement with existing shareholders that would allow sponsors to acquire "substantially all" of the company's assets, unlocking cash and equity that would provide relief to employees affected by the economic issues, the release stated. This agreement would total $20 million. According to the release, such an agreement also sets the table for a company auction. Under the purchase agreement, the sponsors (TPG, Fosun, and Caisse de dépôt et placement du Québec) and Investissement Québec would inject $300 million into the restructuring process "to support a successful restart" of the company. The investment company, Investissement Québec, is slated to provide $200 million in debt financing support, the company said.
Overall, the agreement should generate $15 million for a regular employee fund and $5 million contractor fund, providing aid to terminated employees.
"The Purchase Agreement and SISP provide a path for Cirque to emerge from CCAA protection 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," Lamarre 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," Lamarre said.
Since show closures began in March with numerous furloughs, about 3,480 employees were terminated due to financial hardship. Las Vegas houses seven Cirque du Soleil shows in the valley.