Cirque du Soleil Entertainment Group has filed for protection from creditors in Canada as its global circus shows remain shuttered during the coronavirus pandemic.
Montreal-based Cirque du Soleil is seeking bankruptcy protection under the Companies’ Creditors Arrangement Act to restructure its balance sheet, the company said on Monday. The application will be heard by the Superior Court of Quebec on Tuesday.
Cirque du Soleil also disclosed that it has entered into a court-supervised purchase agreement with its existing shareholders — including Texas-based TPG Capital, with a 55 percent stake and China's Fosun Capital Group, with another 25 percent stake — and Quebec debt holders to acquire the company's assets with a combination of cash, debt and equity.
Terms of the new purchase deal were not fully disclosed, but a $20 million fund will be created to support around 3500 employees who have been laid off. "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," Daniel Lamarre, president and CEO of Cirque du Soleil Entertainment Group, said in a statement.
The proposed purchase agreement will also see $300 million of liquidity injected into the restructured business to allow a restart of the Cirque du Soleil global empire. In March, the creator of many of the most popular shows in Las Vegas temporarily laid off 4,679 employees, or 95 percent of its global workforce, after suspending 44 shows worldwide because of the coronavirus outbreak.
The canceled shows in Las Vegas include O at the Bellagio, KA at MGM Grand, The Beatles LOVE at the Mirage, Mystere at Treasure Island, Zumanity at New York-New York and Michael Jackson ONE at Mandalay Bay. Cirque du Soleil shows in Austin; Chicago; Houston; New Orleans; Salt Lake City; Montreal; Boston; Tel Aviv; Meloneras, Spain; Munich; Costa Mesa, California; Denver; and the Australian cities of Melbourne, Adelaide and Perth were also canceled.
The proposed purchase agreement will see Cirque du Soleil’s existing secured creditors receive $50 million of unsecured, takeback debt, in addition to a 45 percent equity stake in the restructured company.