MONTREAL, June 30 (Reuters) - Canada’s once high-flying Cirque du Soleil Entertainment Group on Tuesday received initial protection from its creditors in a Quebec court, after the COVID-19 pandemic forced the famed circus operator to cancel shows and lay off artists.
Montreal-based Cirque, which grew from a troupe of street-performers in the 1980s to a company with global reach, has been forced to slash about 95% of its workforce and suspend its shows due to the pandemic. The company filed for bankruptcy protection on Monday.
Quebec Superior Court Judge Louis Gouin agreed to give the company protection from its creditors for 10 days. Cirque will seek its immediate provisional recognition in the United States under Chapter 15 in the United States Bankruptcy Court.
The company has signed an agreement with its existing investors private equity fund TPG Capital, China’s Fosun International Ltd, and Canadian pension fund Caisse de depot et placement du Québec under which the consortium will take over Cirque’s liabilities and invest $300 million to support a restart.
The agreement will serve as the “stalking horse” bid in a sale and investment solicitation process, subject to court approval.
But creditors are unlikely to agree to the deal, which could result in existing debt holders getting about 45% equity in the restructured company, Reuters reported on Monday.
Goodmans lawyer Joe Pasquariello, a legal advisor to creditors, dismissed the stalking horse bid as inadequate.
As part of the investment, government body Investissement Québec will provide $200 million in debt financing.
Cirque du Soleil generated about $1 billion in revenues and $157 million in profits last year before the pandemic, Chief Executive Daniel Lamarre said in an interview. (Reporting By Allison Lampert in Montreal Editing by Marguerita Choy)
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