Las Vegas is Cirque du Soleil’s artistic nova, but the city has been sidelined during the company’s financial restructuring.
It’s not a bad place to be.
As its Las Vegas shows remain idled, Cirque has been at the center of a firefight for its financial future. On Wednesday, the company’s board of directors accepted an offer from its lenders that overrides a previous attempt by its main shareholders, led by TPG Capital, to buy it out of bankruptcy for $400 million.
Instead, the group of lenders has forged a deal that would take Cirque’s $1.1 billion in debt and outstanding loans down to about $300 million. The plan includes $375 million in new capital, a $20 million fund to help furloughed employees and contractors, and a promise to keep the company in its original home of Quebec.
Working on this update from the @Cirque saga in #Quebec: New purchase agreement, but no changes in company’s status in #Vegas. Cirque still wants to reopen all #Strip productions. #COVID #Entertainment pic.twitter.com/w1g5JkjX2M
— John Katsilometes (@johnnykats) July 16, 2020
The group of rival lenders is headed up by Los Angeles Dodgers minority owner Todd Boehly’s Eldridge Industries, which also owns Dick Clark Productions, The Hollywood Reporter and film distributor A24. Also involved is the private equity firm Catalyst Capital Group.
These lenders had threatened to petition the Quebec Superior Court judge hearing the case to remove Cirque CEO Daniel Lamarre. According to the New York Post, those lenders were were prepared to argue that Lamarre and the board were favoring the current investment consortium of TPG (with a 55-percent stake), China’s Fosun Capital Group (25 percent) and the Caisse de dépôt et placement du Québec (20 percent).
Lamarre emailed Cirque staff Thursday, saying the offer from the creditors does not mean the group is, at the moment, the new owners of the company.
“Their offer is being used to establish the floor price for the auction sale of Cirque Du Soleil Entertainment Group.” Lamarre wrote. “… However, in the event that we do not receive a higher offer than the one announced (Thursday), the secured creditors will become owners of the company.”
On Wednesday, Cirque spokeswoman Ann Paladie said Lamarre is remaining CEO of the company at least until the end of the recapitalization process. “Daniel is fully committed to the business and the employees,” Paladie said in a statement. “After the recapitalization process, it will depend on the decision of the new owners.”
Paladie also reiterated that, in this stalking-horse bid, the lenders have committed to keep the CEO position based in Montreal. A stalking-horse agreement is an opening offer that other bidders must surpass to buy a company. TPG could still assemble a bid to overtake the bid made by the current group of lenders. So could a group led by Cirque co-founder Guy Laliberte.
A spokesman for the TPG-led consortium said the group was “pleased” with some provisions of the rival lenders’ plan.
“When Cirque was forced to shut down amid the pandemic, we stood with the company to stabilize the business and developed a plan for the company to re-emerge with its core values and history intact,” the statement read. “We are pleased to see that the creditors have incorporated these key undertakings into their bid — including commitments to Quebec and dedicated funds for affected employees and contractors.
“The provision of capital is just one step in the potential emergence of a healthy Cirque. Our goal remains the same: Positioning Cirque to once again prosper as a global entertainment leader, entertaining millions of consumers annually and thriving at the centre of Quebec’s arts community for many years to come.”
Regardless of the legal wrangling, MGM Resorts International has reiterated that it will be business as usual for its half-dozen Cirque shows in Las Vegas. As the company moved toward bankruptcy protection, MGM Resorts Vice President of Entertainment and Sports George Kliavkoff said, “I would say the timing of opening the shows will not be delayed at all by Cirque’s court proceedings.”
On June 29, Cirque announced it was seeking bankruptcy protection to restructure its debt. In March, Cirque furloughed 95 percent of its worldwide employment force, or some 4,700 artists, and technical and support staff. A total of 1,300 were Las Vegas employees. Forty-four shows worldwide have been shut down.
On June 29, the company permanently laid off 3,500 employees in its international touring shows, and also recent acquisition productions, including Blue Man Group at Luxor.
Cirque and MGM Resorts were quick to say they wanted to bring back the Blue Men, a 20-year headlining troupe on the Strip.
Those employees in the company’s five resident Las Vegas productions remain furloughed, with their benefits being paid through Aug. 31.
John Katsilometes’ column runs daily in the A section. His PodKats! podcast can be found at reviewjournal.com/podcasts. Contact him at email@example.com. Follow @johnnykats on Twitter, @JohnnyKats1 on Instagram.