CPE News (6/29/2020) – TPG, Fosun, and Caisse de dépôt et placement du Québec (CDPQ) (consortium), the joint owner of Cirque du Soleil Entertainment Group, in partnership with Investissement Québec (IQ), have submitted a proposal to acquire substantially all of Cirque du Soleil Entertainment Group’s assets.
Pending approval from the Superior Court of Québec (Commercial Division), the consortium is expected to serve as the primary bidder, also known as the “stalking horse” bid, in Cirque du Soleil’s Court-supervised restructuring and concurrent Sale and Investment Solicitation Process (SISP).
The proposed purchase agreement will provide Cirque du Soleil with capital and resources to stabilize and rebuild its business for the future, including the injection of US $300 million of new liquidity into the restructured business, which shall be used, among other things, to provide dedicated relief for affected employees and contractors, as well as specific commitments toward preserving the brand’s Québec heritage.
As part of the US $300 million, Investissement Québec will provide US $200 million in debt financing to support the proposed acquisition.
The purchase agreement provides Cirque du Soleil’s existing secured creditors with US $50 million of unsecured, takeback debt in addition to a 45% equity stake in the restructured company, and repayment of an interim loan made by certain first lien lenders in an amount of US $50 million.
The proposed Purchase Agreement further provides, as part of the US $300 million of liquidity, for the creation of a dedicated US $15 million employee fund to provide financial assistance to terminated employees, and a dedicated US $5 million contractor fund to pay outstanding obligations to artisans and freelance artists. It also includes key undertakings for the Québec community in which Cirque du Soleil has deep roots, such as maintaining Montréal, Quebec, as the businesses’ headquarters, with a view to keeping the core of this important cultural asset in Quebec.
On June 29, 2020, Cirque du Soleil Entertainment Group, together with and certain of its affiliated companies, filed for protection from creditors under the Companies’ Creditors Arrangement Act (CCAA) in order to restructure its capital structure.
photo credit: Cirque du Soleil
News Release
TPG, Fosun and Caisse Partner to Create a Sustainable Cirque du Soleil
Company’s long-term investors partner with Investissement Québec as a debt provider to serve as the proposed purchaser in a Court-Supervised Restructuring and Sale and Investment Solicitation Process
Proposed Purchase Agreement provides Cirque du Soleil with significant financial, operational, and strategic support, including key undertakings for Québec, affected employees and contractors
Enables Company to preserve and rebuild its brand amid continued disruption facing the global entertainment industry
MONTREAL, June 29, 2020 /CNW/ – TPG, Fosun, and Caisse de dépôt et placement du Québec (Caisse), (the “Consortium”) announced today that they have partnered with Investissement Québec and submitted a proposal to acquire (the “Purchase Agreement”) substantially all of Cirque du Soleil Entertainment Group’s assets (“Cirque du Soleil” or the “Company”). Pending approval from the Superior Court of Québec (Commercial Division), the Consortium is expected to serve as the primary bidder (also known as the “stalking horse” bid) in Cirque du Soleil’s Court-supervised restructuring and concurrent Sale and Investment Solicitation Process (“SISP”). The Consortium’s bid is fully committed, fully financed, and not contingent on additional business diligence.
The proposed Purchase Agreement will provide Cirque du Soleil with capital and resources to stabilize and rebuild its business for the future, including the injection of US$300 million of new liquidity into the restructured business, which shall be used, among other things, to provide dedicated relief for affected employees and contractors, as well as specific commitments toward preserving the brand’s Québec heritage. As part of the Purchase Agreement, Investissement Québec will provide US$200 million in debt financing to support the proposed acquisition.
Addressing Stakeholder Considerations and Positioning Cirque Du Soleil to Succeed
The Purchase Agreement includes key undertakings that are part of a comprehensive plan to rebuild Cirque du Soleil’s business once the COVID-19 pandemic subsides and live entertainment resumes globally. The Purchase Agreement, which will serve as the minimum acceptable bid for the SISP, will help position Cirque du Soleil for long-term, sustainable growth while ensuring that it remains at the heart of Québec’s vital arts community. Key undertakings include the following commitments:
Cementing Montreal as the Company’s international headquarters, where key strategic decision-making and creative activities would continue to reside;
Maintaining key leadership positions in Québec, including The Chair of Cirque’s Board of Directors and Chief Executive Officer, and;
Offering employment to as many Québec-based workers as possible, whose employment was terminated as part of the shutdown due to COVID-19.
The Consortium’s proposal assumes a significant portion of the Company’s ordinary course operating liabilities, and provides for:
A dedicated US$15 million fund to provide financial assistance for Company employees whose employment has terminated;
US$5 million contractor fund for Cirque du Soleil to meet outstanding obligations towards contractors, consultants, freelancers, agents, or other individual non-employees who have provided service to the Company;
The assumption of outstanding payables and bills from critical trade suppliers, including payments to all Québec-based trade suppliers, and;
A commitment to honouring customers’ (ticketholders’) refund requests or exchanges due to the onset of the COVID-19 pandemic.
“The COVID-19 pandemic has presented meaningful, unforeseen challenges for Cirque’s business and the live entertainment industry globally,” said the Consortium. “Together with management, we have worked diligently to preserve the long-term value of the business, and believe our commitment today creates a strong foundation from which the Company can start to rebuild and reposition the brand for the future. For decades, Cirque and its dedicated community of creators have inspired and entertained fans through iconic performances, and it is our priority through this proposal to ensure these individuals are supported and part of the Company’s exciting path forward. Cirque du Soleil is a global symbol of Québec’s rich history and creative culture, and we are deeply committed to helping the Company sustain and grow its unique tradition.”
Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Osler Hoskin & Harcourt LLP served as legal counsel to TPG, and PJT Partners acted as financial advisor. McCarthy Tétrault LLP served as legal advisor to Caisse. Norton Rose Fulbright Canada LLP served as legal counsel to Investissement Québec.
About the Consortium
TPG, Fosun, and Caisse have been part of Cirque du Soleil’s ownership group since 2015.
SOURCE The Consortium
For further information: English Media, Joel Shaffer, Longview Communications & Public Affairs, jshaffer@longviewcomms.ca, 416-649-8006; French Media, Daniel Larouche, Larouche Consultant inc., dlarouche@laroucheconsult.ca, 514-944-6145