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Cirque du Soleil, the producer of a number of Las Vegas acrobatic shows, has filed for bankruptcy.
Montreal-based Cirque, which grew from a troupe of street-performers in the 1980s to a company with global reach, has slashed about 95 percent of its workforce and suspended shows due to the pandemic.
In an announcement earlier this week, the Montreal-based company blamed its bankruptcy on the "immense disruption and forced show closures as a result of the Covid-19 pandemic" and is aiming to restructure its debt with assistance from the Canadian government and private equity firms.
The filing comes three months after it temporarily suspended production of its shows, including six in Las Vegas. It also has about 10 shows on tour across the world, including "O," "Michael Jackson One," and "The Beatles LOVE."
Cirque entered a "stalking horse" bid from its largest backers, including a mix of multinational private equity firms from the United States, China and Canada for $420 million. That offer is intended to be a starting point in an auction to draw other bidders.
The company has also received $300 million in fresh funding to "support a successful restart, provide relief for Cirque du Soleil's affected employees and partners, and assume certain of the company's outstanding liabilities," it said in the release.
Cirque is drowning in nearly $1 billion in debt, according to multiple reports. That's becoming increasingly untenable as its productions remain suspended. To help stem the financial loss, Cirque has laid off roughly 3,500 employees.
"For the past 36 years, Cirque du Soleil has been a highly successful and profitable organization," said Daniel Lamarre, CEO of Cirque du Soleil Entertainment Group in a release. "However, with zero revenues since the forced closure of all of our shows due to Covid-19, management had to act decisively to protect the company's future."
Cirque generated about US$1 billion in revenues and US$157 million in profits last year before the pandemic he said.
Founded in 1984, the Cirque set up big tops in more than 300 cities around the world, delighting audiences with enchanting contemporary circus acts set to music but without the usual trappings of lions, elephants and bears.
But the pandemic left it fighting for survival, forcing it to cancel dozens of shows worldwide, from Las Vegas to Tel Aviv, Moscow to Melbourne, Australia.
A group of shareholders - which includes private equity firm TPG, Chinese conglomerate Fosun and Investissement Quebec - will initially acquire company assets in exchange for providing $300 million in liquidity as the restructuring venture seeks other investors.
Secured creditors of Cirque du Soleil will receive $50 million in unsecured debt, plus a 45 percent equity stake in the restructured company and repayment of $50 million in loans.
The expectation is that the company will emerge from the US bankruptcy process with less debt and able to "meaningfully advance toward an eventual restart by launching the in-court process immediately," Cirque du Soleil said.
The plan establishes a $15 million employee assistance program under the restructuring.
Parts of this article originally appeared on CNN.com
