CIRQUE DU SOLEIL Bankrupt

In a desperate act, Montreal-based Cirque du Soleil Entertainment filed for protection from creditors in Canada on Monday after the COVID-19 pandemic. It forced it to close shows around the world, triggering a fight for control of one of the best-known brands in live performance.

• The company said it entered into a so-called stalking horse agreement with its shareholders — including TPG, China’s Fosun International Ltd., and Caisse de Depot et Placement du Quebec — for a $300-million injection to help restart the business.
• That proposal would see a restructured Cirque cut its debt to about $250 million, Chief Executive Daniel Lamarre said in an interview. It has nearly $1.6 billion in liabilities.

But creditors are unlikely to accept the terms of the TPG plan that would leave them with a 45% stake in the company in exchange for wiping out most of its debt, according to three people familiar with the matter who was not authorized to comment.

• A creditor group probably will come back with a formal counteroffer by July 10, one of the people said; it has already drafted its own nonbinding offer for Cirque, according to another source.
• Entertainment companies that depend on large crowds were among the first business casualties of the coronavirus. Cirque du Soleil laid off 4,679 employees — about 95% of its workforce — on March 19, after shutting down 44 productions to comply with government orders worldwide. It has only one live show right now, in China, Lamarre said.

The crisis hit the 36-year-old company just as it emerged from a string of acquisitions, which helped it diversify from its original acrobatic shows but also put it deeper into debt.
It bought Blue Man Productions in 2017, followed by children’s entertainment company VStar Entertainment Group in 2018.

• Last year, it added Works Entertainment and its troupe of magicians called The Illusionists to its portfolio before striking a separate deal to make feature-length films with the company that co-produced the hit “The Lego Movie.”

Cirque du Soleil expects to emerge from its restructuring as a leaner entity with about 1,000 workers initially. About 700 of them would be in Las Vegas, where the company earned about 40% of its $1 billion in revenue last year and where it hopes to open a show as early as November, Lamarre said. Touring shows could come back in 2021 if the virus situation allows for it, he said.