THE SUN RISES
On July 15, 2020, Cirque du Soleil announced that it had entered into a
new “stalking horse” purchase agreement with Canada-based Catalyst Capital and
a group of its existing first lien and second lien secured lenders, sidelining
TPG, Fosun, and the Cassie. The Cirque had new owners! (Catalyst is a private
equity firm run by Toronto financier Newton Glassman that specializes in buying
the secured debt of undervalued or distressed companies.) At first glance, it’s
an anti-climactic end to a saga that Cirque founder Guy Laliberté predicted would
be a “battle royale” for control of the entertainment giant. But a drama did play
out behind the scenes – one Catalyst said tested the creditors’ resolve as
Cirque’s former owners maneuvered against them to try to keep control of the
company. “We’re pretty excited about the future,” Catalyst managing director
and partner Gabriel de Alba said in an interview with The Globe and Mail, in
which he discussed the sale dynamics and how Cirque’s new owners are thinking
about the potential for their investment. “What we bring is … a fresh set of eyes
to challenge the historical thinking and come up with more optimal ways to run the
business while still protecting the creative core from Quebec.”
UNDER NEW MANAGEMENT
Catalyst started building its position in March, Mr. de Alba said. He wouldn’t
say what it paid but Cirque debt was changing hands for between 40 and 50 cents of
the face value of first-lien debt at the time. (First-lien debt-holders are the
first to be repaid, ranking above all other lenders.) When Cirque failed to make
interest payments in late March on its first-lien credit facilities, and TPG and
its two partners moved to transfer some of Cirque’s trademarks and intellectual
property into a separate holding company they controlled in exchange for a $50-million
loan, lenders faced their first test. As Catalyst saw it, TPG was trying to jump
from being an equity investor to achieve creditor standing with direct access to
some of Cirque’s collateral. “That is not appropriate because that movement of
assets has specific restrictions, especially when a company is on the verge of
insolvency, which was the case,” Mr. de Alba said. He said he took on a leadership
role within the first-lien lending group, giving them “conviction” in a negotiating
strategy to win back the collateral and have their debt recognized for its full
value. TPG had said the asset transfer was approved by an independent committee at
Cirque and that it was essential as collateral for the $50-million loan from the
three owners, which it called “emergency financing” that would otherwise be
unavailable given the disruption caused by the COVID-19 pandemic. The creditors
eventually put up the money in a commitment backstopped by Catalyst.
A second surprise came when Cirque filed for bankruptcy protection and unveiled
an initial bid by TPG, Fosun and the Caisse for the company that offered US$300-million
to restart the circus troupe while paying lenders a fraction of what they are owed.
Behind closed doors, the lenders were already in talks with Cirque on their own bid,
with negotiations taking place even during the weekend before the filing, Mr. de Alba
said. “Maybe what they were hoping to do was to test if the lender group … had the
willingness and the ability to recapitalize the company and put new money in,” Mr. de
Alba said. “And I guess they were thinking that CLOs, because they have these
structural limitations, were not going to be able to commit to funding the amount
required for the reopening plan.”
The formal sales process for Cirque started with five qualified bidders, including
offers from the TPG shareholders and the first-lien creditor group, according to the
latest report by Ernst & Young, Cirque’s court-appointed monitor. Two other bidders
joined shortly afterward, the monitor said. In the end, no one was able or willing
to match the Catalyst-led offer. Recapitalizing Cirque gives the company the leeway
to move through the pandemic and emerge reinvigorated while bringing employees back,
according to Mr. de Alba. He said Cirque will focus first on reopening its permanent
shows in Las Vegas. But Catalyst is looking beyond Cirque’s traditional model of
selling tickets for live performances.
A big part of the new ownership’s plans for the circus troupe involves monetizing
its unique brand of entertainment by delivering it into the home digitally. “You’ve
seen that Disney is bringing some theatrical shows to [its subscription-based,
video-on-demand service] Disney+, like ‘Hamilton’, with great success,” Mr. de Alba
said. “I foresee that Cirque shows can also be part of these types of streaming
platforms.” (At the beginning of the shutdown, Cirque du Soleil embraced its online
platforms by launching a new digital content hub called CirqueConnect, through which
the company opened its vault of live show recordings and other endeavors through
60-minute specials, virtual reality experiences, content series and tutorials, music
videos, and other family-friendly fare to great success.) Cirque will also partner
with industry leaders working on non-scripted entertainment, Mr. de Alba said. “There
are a lot of options that were never explored outside the live event business as well
as they could have been,” Mr. de Alba said. “The digitization of the content and the
[intellectual property] is certainly something that will feed into the next evolution
of Cirque du Soleil.”
Making Cirque viable means taking lessons from the mistakes made under the
previous ownership, while emphasizing the main elements of past success such as the
Las Vegas shows, Mr. de Alba said. “It’s an understanding of the core drivers of the
business while at the same time having a very disciplined approach to investing
capital,” he said.
The closing of this recapitalization marked a significant milestone for Cirque
du Soleil, as it provided the Company with a solid foundation for a successful
relaunch, which included driving the business through enhanced fan experiences, a
concerted drive into new key markets, backed by roll-out plans for cutting-edge new
products and licensing opportunities. Additionally, Cirque du Soleil was pleased to
confirm that Daniel Lamarre would remain in position as President and Chief Executive
Officer of Cirque du Soleil Entertainment Group, as well as continue to sit on the
Company's Board of Directors. "I am grateful for the trust our new owners have
placed in our management team. I am prepared to contribute, along with the new
stakeholders, to build upon the successes of the past, apply discipline to our
operations and growth and fulfill our mission to bring Cirque's extraordinary
artistic vision to audiences around the world. Together, we have already begun laying
the groundwork for the relaunch of Cirque du Soleil and are excited to enter the
next chapter of Cirque's history," said Daniel Lamarre.
Members of the board include:
Jim Murren – Co-Chairman of the Board
Chairman, Acies Acquisition Corp.
Former Chairman & CEO for MGM Resorts
Gabriel de Alba – Co-Chairman of the Board
Managing Director & Partner, Catalyst Capital
Steven Justman – Member
Operating Partner, Abry Partners
Stephen Ketchum – Member
Managing Partner & CIO Soundpoint Capital
George Kliavkoff – Member
President, MGM Resorts
Daniel Lamarre – Member
President & CEO, Cirque du Soleil
Anna Martini – Member
Executive Vice President & CFO, CH Group
Aaron Meyerson – Member
Principal, Qualia Legacy Advisors
Charles "Chip" Rini – Member
Managing Director, CBAM Partners
As part of this transaction, Cirque du Soleil also announced the appointments of
Jim Murren and Gabriel de Alba as Co-Chairmen of the Board. "We are honored to have
Jim Murren and Gabriel de Alba Co-Chairmen of the Board and look forward to
leveraging their deep business knowledge to take the Company to new horizons," said
Cirque's President and CEO, Daniel Lamarre. "For the past 20 years, Jim has been a
true partner and has tremendously contributed to the success of the Company.
Likewise, Gabriel, as a skilled investor with significant turnaround experience,
will bring to the Company a deep understanding of the Canadian and international
business worlds, and his leadership and experience will be invaluable for Cirque's
In the afternoon of his company's sweeping announcement, Lamarre was asked,
simply: Are we going to be able to sit together at a Cirque show on the Las Vegas
Strip one year from now? "Yeah, oh yes, yes," Lamarre said in a phone chat from
Cirque's Montreal headquarters. "If you'd asked me the same question a few weeks
ago, I would have been very pessimistic, but not today."
Lamarre said the three new vaccines on the horizon would allow Cirque to perform
in theaters at full capacity when the company does start its relaunch in 2021 and
into 2022. The general blueprint would be the distribution of vaccines in the U.S.
beginning in December, followed by a loosening of restrictions into 2021 (first
quarter would be the dream scenario), then the start of reopening Cirque theaters
on the Strip.
The pandemic rendered a specific reopening timeline impossible at this point.
But Lamarre said the re-launch of shows would likely begin first with "O" at
Bellagio and "Mystère." The plan for which order the shows would continue to resume
is not set, but Lamarre listed "Love" at Mirage, "MJ One" at Mandalay Bay and "Ka"
at MGM Grand. Shows would reopen every two weeks or so, ideally. Each production
would require two months of rehearsal time, and cost several million dollars to
return to the stage. "We will have to lose some money, at first, to be able to make
money," Lamarre said.
"The most important thing right now is we have hope at the end of the tunnel,"
Lamarre said. "If we can start distributing vaccines as early as next month that
gives me a lot of optimism for Las Vegas. To be able to reopen with the same number
of seats in our theaters would be an amazing bonus for us."
By January 2021, vaccines for COVID-19 began rolling out from Pfizer-BioNTech,
Moderna, and Johnson and Johnson. These vaccines were found to be "highly protective
against severe illness, hospitalization, and death due to COVID-19", and so the
global community slowly started to open back up.
INTERMISSION IS OVER
On April 21, 2021, Cirque du Soleil announced that the “Cirque du Soleil sun
is rising” as the company marked the reopening announcements of four of its most
iconic shows after being closed for more than a year due to the pandemic.
Mystère will return to its stage at Treasure Island on June 28, 2021, and "O"
will mark its first performance on July 1, 2021. LUZIA will return with an engagement
at Royal Albert Hall in London starting January 12, 2022, while KOOZA will be
presented under the iconic Big Top in Punta Cana, Dominican Republic starting
November 25. In addition, Cirque du Soleil Events and Experiences, the company's
fully integrated international turnkey creative and artistic content solution
provider is ramping up operations.
"This is the moment we have all been waiting for," said Daniel Lamarre.
"Almost 400 days have passed since we had to take a temporary hiatus, and we
have been anxiously awaiting our return to the stage. I am so proud of the
resilience of our artists and employees who persevered during the most challenging
times with stages dark around the world for so long. I just can't wait to see the
lights go back on."
And then it made even more announcements…
The Beatles LOVE, a Cirque du Soleil creation and co-production with Apple
Corps Ltd., will reopen at The Mirage on Aug. 26, 2021. Michael Jackson ONE by
Cirque du Soleil, in collaboration with the Estate of Michael Jackson, will reopen
its exclusive residency at Mandalay Bay Resort & Casino on Aug. 19, 2021. Alegría,
Cirque du Soleil's emblematic production, will be in Houston, Texas, under the Big
Top at Sam Houston Race Park as of Nov. 18, 2021. KOOZA, a production acclaimed by
more than eight million spectators and critics around the world will perform at the
Old Port of Montreal as of April 28, 2022.
"This is only the beginning. We look forward to sharing more exciting news in
the coming weeks," added Daniel Lamarre.
But while shows like “X: The Land of Fantasy” in Hangzhou, China had been operating
since June 3, 2020 and JOYA in Mexico since July 3, 2020, others would not make a
grand return as Cirque du Soleil eventually restarted. Amaluna and R.U.N were two of
the first casualties of course, but over time, we’d hear about others.
On November 16, 2020, Cirque du Soleil informed the cast and crew of Zumanity about
its permanent closure. "Zumanity was a groundbreaking departure for Cirque du Soleil
when it opened in September of 2003," said Daniel Lamarre. "We are forever grateful to
the extraordinarily talented cast, crew and staff who helped make Zumanity an
unforgettable experience for more than 7.25 million guests." After wowing audiences
with more than 7,700 shows, the last performance of Zumanity took place on March 14,
2020 before it was shut down due to the COVID-19 pandemic.
Zumanity wasn’t the only resident show that would get the axe. On January 20, 2021,
Cirque du Soleil announced on its Facebook page that it would not be opening NYSA on
the Potsdamer Platz in Berlin as originally planned. “Due to the current situation and
uncertainty, we have unfortunately made the difficult decision not to resume the
creation of NYSA. We thank you for your enthusiasm.” NYSA was to be a modern tale that
followed the story of Nysa, a fearless young woman who longed for adventure and open
skies. “Her curiosity and courage will give her the power to step into the unexpected
and fly towards new worlds,” the initial announcement stated. “Inspired by youth and
its desire to push the boundaries and aspirations for a better future, the character
looks to the outside world for a sense of what life could be if she let her imagination
soar and if she allowed herself to take risks.” NYSA was originally scheduled to open
on October 28, 2020 but was pushed back to October 27, 2021 due to the Covid-19
Pandemic. It was now officially been canceled.
The Cirque would go on to solidify its commitment to the other resident shows,
Contract extensions for "O" at Bellagio, The Beatles LOVE at The Mirage, KÀ at MGM
Grand and Michael Jackson ONE at Mandalay Bay have been signed. Additionally, Treasure
Island and Cirque du Soleil have recommitted to Mystère with a contract extension of up
to 10 years! More than 70 million visitors have experienced Cirque du Soleil shows in
Las Vegas since Mystère opened in 1993 and Cirque du Soleil looks forward to continuing
that legacy when the shows return safely to their theaters.
Then, for the second year in a row, Cirque delayed “Under the Same Sky”. The world
premiere had been scheduled for April 23, 2020, then pushed to April 2021 by the
COVID-19 pandemic (and creative difficulties), was again postponed to spring 2022.
However, as Cirque du Soleil’s resident shows in Las Vegas got back on their feet and
plans to restart touring shows began to gain traction in the last half of 2021, “Under
the Same Sky” was not on the list.
In fact, neither was TOTEM, AXEL, or VOLTA. These
shows were quietly scuttled as plans moved forward. DRAWN TO LIFE would make its debut,
MESSI 10 would perform in Riyadh, TWAS THE NIGHT would return for Christmas, and BAZZAR,
OVO, CRYSTAL, CORTEO, and KURIOS would all get future tour dates. Things we’re looking
CIRQUE GETS A NEW CHIEF
On Tuesday, November 30, 2021, Cirque du Soleil named Stéphane Lefebvre, a chartered
accountant who has been Cirque's operations chief (COO) for the past year, as its chief
executive officer (CEO), effective Dec. 1. He replaced communications specialist Daniel
Lamarre, who will take a step back into an executive vice-chairman role after two
decades at the helm.
"The two of us went to war together" to pull Cirque out of the COVID-19 crisis, Mr.
Lamarre said in an interview ahead of the official announcement. "And now we're looking
for Stéphane to bring the company to the next level." They'll maintain that teamwork
now, with Mr. Lefebvre, 54, in charge of daily management while Mr. Lamarre focuses on
business development and relationships with key partners such as casino operator MGM
Resorts and Disney.
Mr. Lefebvre joined Cirque du Soleil from aircraft simulator maker CAE Inc. in 2016
in the wake of the change in Cirque ownership. He was finance chief for four years at
Cirque, leading three acquisitions as well as its post-bankruptcy recapitalization. The
soon-to-be-CEO is a known quantity at Cirque and liked by its creative teams because
he has an appreciation for the value of their work, Mr. Lamarre said. Other colleagues
describe him as a sweet and easygoing person with a sharp mind. Lefebvre insists he's
not just a money guy. "My background has more than just the financial aspects of
management," said Lefebvre. "I've been working in different businesses. Since I joined
Cirque du Soleil six years ago, I've been involved in different parts of the business,
not only the financial part … including the strategy of the company and including its
operations. "And I've done that in my previous career as well. I worked for an amazing
company called CAE and I was highly involved in operations. I am a (chartered
professional accountant) by trade but I've got more than just finance in my background.
I have a lot of interest in arts and what the creative team's capabilities are. ... One
of my favorite meetings was when we reviewed creative content for upcoming shows and I
have the pleasure and benefit of having an amazing creative team."
"While there was no specific timeframe for me passing the baton after 20 years
building this amazing organization, I feel privileged to have contributed to the
rebirth of Cirque du Soleil and feel now is the right time," Lamarre said in a
statement. "There is no doubt in my mind that Stephane Lefebvre, after being
instrumental in the relaunch of our operations, is the ideal next leader to take
Cirque du Soleil forward to the next stage in its evolution as a company founded
on the conviction that the arts and business, together, can contribute to making a
better world," he added.
Recapturing revenues and clawing back profitability remain colossal challenges for
the Cirque. Openings have been staggered but the company plans a more aggressive
schedule of touring show relaunches starting next year. Ticket sales have been
stronger than expected too, with pent-up demand fueling an initial surge, the two
senior Cirque executives said. Still, they acknowledged the fragility of the global
health situation and said they are pushing cautiously, going only into countries and
cities with high vaccination rates and rigorous sanitary measures. "Financially, we're
in really good shape right now," Mr. Lefebvre said. He said Cirque started the year
with about US$180-million in cash for operations and also has access to untapped
Lefebvre has promised a seamless transition at the top of the company as its stable
of live shows worldwide continue to reopen. "It is an honor for me to take the lead of
this Quebec flagship company, one of the largest contemporary live entertainment
producers of the world," said Lefebvre in his own statement.
Asked if realigning the company's executive structure was a condition of the
purchase, Lamarre said, "Not at all, and by the way, this was my recommendation. If I
would have decided to remain as a CEO, I would. But my decision was to make sure that
we ensured the stability of the company for the next 10 years. I'm not getting younger!
I really pushed for that transition plan to be in place because I'm not looking
short-term. I'm looking mid-term. There's only one way to learn to be a CEO, it's to
be a CEO and that's why I thought Stéphane moving in as a CEO, and counting on my
presence full-time for a while, I think is the best scenario.” Lamarre added that
the board insisted that he remain as Executive Vice Chairman.
Lamarre said he's most proud of his role in stabilizing the company through the
shutdown of all of its operations in March 2020. He has a book coming out in January,
"Balancing Acts," chronicling his time with the company. And his hand-picked successor
is a prominent, new power player on the Las Vegas entertainment scene.
LESS IS MORE
Credit ratings agencies such as Moody's have expressed concern about the extent to
which Cirque's business is centered on Las Vegas, where its partnership with MGM
counted for an estimated 35 per cent of its US$950-million in annual pre-pandemic
revenue. But Mr. Lefebvre sees it as a steady source of cash flow, a financial anchor
of sorts that the company can build out from as it relaunches shows in other cities
in the months ahead.
What might put Moody’s more at ease is the fact that Cirque itself said it would
be doing less shows than before, while embracing its ‘super markets’. “The reality
now is, and we made it very clear with our new owners, maybe it's better to have fewer
shows and focus on having a stronger presence in strong markets," said Lamarre.
He cited as an example of this that they will now have a new show in Montreal
every year, rather than every two years, which was the case in the past. (The Cirque
just signed a new 10-year deal with the Old Port to have a new show every year.) Cirque
du Soleil also plans to do the same thing in Toronto, Los Angeles, and London. "So the
10 super markets we have, we can go there every year," said Lamarre. "Only that will
change the financial model of Cirque. You have Vegas that gives you a lot of stability.
Then if you add 10 super markets that adds another layer of sustainability." And, of
course, Las Vegas. Lefebvre has been conferring with Cirque Senior Vice President Eric
Grilly and Vice President of Operations Matt Nickel in Vegas. The company's next
planned production is a New York-themed show at New York-New York, in the former
Aside from that production, there are no formal plans for a new Cirque show on the
Strip in 2022. As Lefebvre said, "In the near term, we'll continue working on certain
front-end marketing initiatives that we have launched in this year, together with MGM,
to help support our growth in the box office." By the time the NY-NY show launches,
Cirque will present five shows in MGM Resorts International hotels. "Mystere," at Phil
Ruffin's Treasure Island, is the lone exception. "I will be continuing to nurture the
relationships with our great partners MGM Resorts, AEG, Disney, [and] Vidanta.” Lamarre
said of his new role, which is a full-time position. "I will also be involved in new
"I've taken up this challenge with a dose of humility, because this company has
been through such a rough period," Lefebrve said. "We've been in the trenches these
last 18 months. Thank God, we can count on the amazing team in Vegas that supported
the relaunch of the operations. I certainly feel privileged now, just having seen
people's reaction to coming back into theaters and seeing our shows.
"That makes me feel extremely excited about the future."
However, by the time Cirque du Soleil began opening up more and more (just as global
economies breathed a sigh of relief), a more infectious variant of COVID-19 reared its
head – Delta – a more transmissible and harder hitting version of the disease. Although
more of a concern for unvaccinated individuals at first, Delta’s appearance didn’t
slow the company’s resurgence down any. And even though pubic vaccination rates
weren’t as high as hoped (all performers and associated persons had to be vaccinated),
there seemed to be a light at the end of the tunnel for all this.
But then an even easier transmissible variant appeared – Omicron – that even seemed
to evade the protections from the available vaccines. Public infection rates soared
over the holidays, runs of TWAS THE NIGHT in New York City, ALEGRIA: IN A NEW LIGHT
in Houston, and more were canceled as performers caught the disease.
And so while Cirque du Soleil may have announced that “Intermission is Over”, the
pandemic and its effects still linger on. What will 2022 bring? At this point, all
bets are off.
# # #
"Today, we have our place in the sun and a roof over our heads,
but once upon a time the street was our home. I would
say we took a little dusty carpet and shook it out pretty well we’ve shown
the world that under the dust, something exceptional is coming out of
contemporary circus. As the future approaches, Cirque prepares to embark
on new projects and connect with new audiences everywhere. Dreams never die.
Come along as they take on new forms!" — (Guy Laliberté)