For everyone who went to Vegas year after year and instead of going to one of the remarkable Cirque du Soleil performances would visit… less reputable “shows”, we have some bad news: you are now out of luck, because as the Las Vegas Review Journal reports, Cirque du Soleil – the Las Vegas Strip’s preeminent production company for more than two decades – has filed for bankruptcy protection, in which existing stakeholders have a “stalking horse” agreement to acquire the company, setting the minimum price for an auction.
According to the report, the company which had six productions on the Strip, announced Monday morning from its Montreal headquarters it was seeking a debt restructuring protection under its home country’s Companies’ Creditors Arrangement Act (CCAA). The company said in its filing announcement the bankruptcy filing and refinancing move was “in response to immense disruption and forced show closures as a result of the COVID-19 pandemic.”
In March, Cirque du Soleil shut down all 44 of its shows and laid off 95% of its work force, including more than 1,300 in Las Vegas in response to the covid shutdowns.
As we move forward, we know that you will have questions and we will continue to share information with you. If you already have tickets, these remain valid. For all other questions, please refer to the FAQ section of our website: https://t.co/MGJfZUk8Qr pic.twitter.com/spJ46YFs0T
— Cirque du Soleil (@Cirque) June 29, 2020
In its bankruptcy, Cirque will receive a $300 million infusion from its investors (including $200 million from its own government agency, Investissement Québec). Existing investors including TPG, Fosun, and Caisse de dépôt et placement du Québec will acquire company’s assets for a combination of cash, debt, and equity to continue operations while productions are sidelined,as well as establish two funds totaling $20 million to provide additional relief to impacted employees and independent contractors
The filing also allows the company protection from creditors to reduce its debt load, reported to be at least $900 million, which is rather shocking for what has long been considered the Strip’s most popular and lucrative show.
The filing 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 non-disclosure agreements.
As a result of the fluctuating ownership, where debt is equitized and existing stakeholders are wiped out, it will take months for the company’s ownership to be established according to the Review Journal.
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 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.”
Alas, so far there has been no specified strategy from the company for when, how or even if all of its shows will reopen on the Strip. Prior to its bankruptcy, Cirque’s multiple permanent Las Vegas shows alone played to more than 9,000 people a night, 5% of the city’s visitors, adding to the over 100 million people who have seen Cirque du Soleil productions worldwide.