The Quebec government is coming to the rescue of Cirque du Soleil, announcing a loan of up to US$200 million as part of an agreement that could eventually see the province take over the live entertainment giant now walking a financial tightrope.
Economy Minister Pierre Fitzgibbon said Tuesday the province will become a creditor of the company under an agreement in principle between the provincially owned Investissement Quebec agency and Cirque’s three main shareholders — Texas-based TPG Capital, Chinese firm Fosun and Quebec pension fund manager Caisse de depot et placement.
“Under the circumstances, this is a very nice transaction,” Fitzgibbon told reporters.
“The reason why we supported existing shareholders is that we wanted to anchor the takeover of Cirque in Quebec. One day, Cirque will once again be Quebec-owned.”
The province would also have the option of buying Cirque in the event that shareholders decide to sell their stakes, Fitzgibbon said.
He said financial support would not be used to pay bondholders and would come with multiple conditions, including that the company’s head office remain in the province and that senior executives reside there.
Cirque, which carries a debt estimated at more than US$900 million following an ambitious four-year expansion, has seen its operations paralyzed due to the COVID-19 pandemic, which prompted it to cancel all 44 shows and lay off about 4,700 employees, roughly 95 per cent its workforce.
The company has studied potential solutions, including creditor protection, and ramped up efforts to attract an investor or purchaser, or to negotiate another injection of capital from the current owners.
“If in the process other shareholders (were to acquire) Cirque, that money could also be available,” Fitzgibbon said, referring to the US$200-million loan.
The three current owners, who recently provided emergency funding of US$50 million, have a plan to revive the company, he added.
Cirque spokeswoman Caroline Couillard said it welcomed financial support from the province.
“The strong interest…once again testifies to the strength of our brand and the importance of preserving Cirque’s Quebec heritage,” she said in an email.
The minister’s announcement followed one by Cirque founder Guy Laliberte Sunday, who said he wants to buy back the 36-year-old circus company that he sold for US$1.5-billion in 2015 after growing it from a troupe of stilt walkers and fire-breathers into a global entertainment giant.
Laliberte, who sold his remaining 10 per cent stake in February for an estimated $100 million, said his intention was to keep the headquarters in Montreal and hire mainly Quebecers to run the company.
Quebecor Inc. has also voiced a desire to “rescue” Cirque, saying in a letter to federal ministers earlier this month it was in funding talks with the Caisse, the Fonds de Solidarite FTQ and the Royal Bank of Canada.
The Montreal-based media giant run by Pierre Karl Peladeau said in a separate release it is ready to spend “several hundred million dollars” to revive Cirque operations, despite not having access to their books.
The Quebec government had previously signalled it was ready to help the circus financially, with Fitzgibbon confirming last week the provincial government was in talks with potential investors.
This report by The Canadian Press was first published May 26, 2020.
Companies in this story: (TSX:RY)
Julien Arsenault, The Canadian Press