Quebecor Inc.’s chief executive says a quick resolution is needed to rescue Cirque du Soleil from its downward spiral as he reaffirmed the telecommunications company’s interest in owning the famed circus troupe.
“Time is of the essence,” Pierre-Karl Péladeau told reporters on a call after Quebecor’s annual meeting Thursday. “We know the company has not been able to meet its interest payment obligations as of March 31. It’s difficult to believe that there is a more precarious financial situation than the one they face. And so it’s important to act quickly to ensure the future of the Cirque.”
Quebecor, which operates the Videotron internet and wireless business and the TVA broadcasting network, revealed earlier this month that it made a preliminary offer for Cirque. The circus company has seen its revenue drop to nearly zero overnight as its live shows were cancelled around the world under government orders prohibiting public gatherings. Some 4,700 Cirque employees have been laid off while a core group of employees tries to plot how to restart operations.
Quebecor has said it is willing to put “several hundred million dollars” into Cirque, but so far there have been no formal talks between the two sides. Private equity fund Providence Equity Partners LLC is also expected to make an offer, according to investment banking sources.
Privately held Cirque has now launched a formal search for new capital and its shareholders are open to an investment from Quebec, said a person familiar with the situation. Cirque is not seeking any kind of bailout from the provincial government, company chairman Mitch Garber said.
Existing shareholders TPG Capital LP, Fosun Capital Group and Caisse de dépôt et placement du Québec loaned Cirque an additional US$50-million this month to pay bills that include interest on existing loans, giving the company a bit of breathing room to find a more permanent solution.
Cirque has hired National Bank of Canada and U.S. investment bank Greenhill & Co. to advise its board of directors on either selling the company or negotiating a significant cash injection from its existing owners, according to sources involved in the negotiations. The two investment banks have set a June 8 deadline for initial bids for the Cirque.
Montreal-based Cirque must make a deal that satisfies its creditors, who are owed US$900-million.
Mr. Péladeau has tried to position Quebecor as Cirque’s white knight, a local player with an understanding of the Cirque’s importance as a creative pillar of Quebec. In a May 4 statement confirming its interest in Cirque, Quebecor warned that if the circus troupe files for bankruptcy protection, it could be sold to the highest bidder and see its Montreal presence gutted.
But the CEO faces a Cirque ownership group that appears reluctant to welcome Quebecor into its fold. There is long-standing bitterness between Mr. Péladeau and Mr. Garber that dates back to when the Quebecor CEO was in politics, and the fences haven’t been mended since.
Mr. Péladeau was asked repeatedly about Cirque on his call Thursday with reporters but declined to comment further on Quebecor’s intentions beyond saying the telecom and media company has proven it has the expertise and financial strength to take on an investment like Cirque.
“We are an operator. We’ve been operating companies forever, we’re not a financial organization. So we’re not here to buy and flip companies,” Mr. Péladeau said. “We’ve been operating them with success and we intend to do so.”
Earlier Thursday, Quebecor reported a $131.6-million profit for the first quarter and a 2.7-per-cent increase in revenue compared with the same time last year despite feeling the initial effects of the COVID-19 pandemic and economic slowdown. The company said its network successfully absorbed a substantial increase in traffic since the crisis began and helped its customers stay connected during the pandemic by removing data caps on internet services and opening access to a news channel.
The company said Thursday approximately 10 per cent of its work force is now receiving benefits under its supplemental assistance program, which tops up the Canada Emergency Wage Subsidy or Canada Emergency Response Benefit.
With a file from the Canadian Press
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