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Quebec will lend US$200-million to cash-strapped Cirque du Soleil to help it restart performances when the coronavirus pandemic subsides, the first of what the government expects will be several other company-specific lifelines in the weeks ahead with significant strings attached.

The Legault government made the debt financing offer to the owners of famed circus troupe as they try to get operations back on track, Quebec Economy Minister Pierre Fitzgibbon told reporters in Quebec City Tuesday. He said the owners approached the government requesting aid and it agreed to help but imposed a list of conditions, including that the government has an option to buy the company if current shareholders sell.

“We want to anchor the relaunch of the Cirque du Soleil in Quebec,” Mr. Fitzgibbon said in explaining the agreement. “The Cirque is too important for Quebec to see foreigners buy it and want to move the headquarters and management.”

The pact highlights the self-interested approach Quebec will take in coming to the rescue of corporations crippled by the health crisis. Mr. Fitzgibbon said the province expects other distressed companies will request help in the weeks ahead and that it will be provided as long as specific conditions are met.

Montreal-based Cirque, founded by billionaire Guy Laliberté, is majority-controlled by Texas-based private equity fund TPG Capital Group with China’s Fosun Group and pension fund Caisse de dépôt et placement du Québec as minority shareholders.

The company saw its revenue drop to nearly zero in March as its live shows were cancelled around the world under government orders prohibiting public gatherings because of the pandemic. About 4,700 Cirque employees have been laid off while a core group of staffers plots how to get operations going again.

Cirque has now launched a formal search for new capital under a process run by National Bank of Canada and U.S. investment bank Greenhill & Co.

The troupe must make a deal that satisfies its creditors, who are owed US$900-million. A bankruptcy reorganization under the direction of a judge remains a possibility.

Quebec’s financial support is expected to make it easier for Cirque to rework its debt and reopen its shows, according to a source working for the Montreal-based company. The Globe is not naming the source because they were not authorized to speak publicly about the situation.

Cirque is expected to attract interest from groups made up of entertainment companies and financial players. That includes the involvement of Mr. Laliberté, who confirmed Monday that he is working with partners on mounting a bidding group. With US$200-million from the province, these bidders can write a significantly smaller cheque.

A loan from the provincial government is also a simpler solution than potentially changing the ownership stakes of existing investors. By giving the Cirque capital without changing its ownership, the source said the province is speeding up the Cirque restructuring process.

Current investors have a plan to reduce the debt substantially and to reinvest in the business, but there are other potential investors that could make their own proposals for the company, the minister said.

Quebec’s aide offer includes conditions on things such as limits on the salaries of Cirque senior management as well as a clause giving Quebec an option to purchase the company should the current shareholders want to sell, the minister said. He characterized the agreement as a way for the government to ensure the company does not fall into foreign control, adding the province does not intend to run a circus company.

“We support the existing shareholders but there’s no guarantee they will be the winners in this process,” Mr. Fitzgibbon said. “So if another group becomes owners, we’ll see if they need us or not. If they need us, the conditions we’ve established with the current owners will be needed to obtain our support.”

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