Cirque du Soleil gets approval to sell assets to secured lender group

By Sarah Lizee

Olympia, Wash., Oct. 29 – Cirque du Soleil Entertainment Group foreign representative Cirque du Soleil Canada Inc. obtained approval of the sale of substantially all of the company’s assets in settlement of its first- and second-lien debt, according to an order filed Thursday in the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the company entered into a stalking horse purchase agreement with the secured lender group in July. Cirque du Soleil said it did not receive any superior bids by the Aug. 18 deadline.

On Oct. 9, the parties entered into an amendment to the stalking horse bid agreement to reflect the agreed transaction structure, under which Spectacle BidCo Holdings Inc., an acquisition vehicle for the lender group, will acquire substantially all of the operations of the debtors.

Spectacle will cause the release of all amounts outstanding and obligations owed under the first- and second-lien credit agreements, estimated as of July 14 to be roughly $1.09 billion, plus any fees.

Spectacle will also arrange for the payment of a cash amount sufficient to pay all amounts owed under a replacement loan provided prepetition by the group to the debtors.

In addition, Spectacle will finance a $15 million employee fund, which will provide financial assistance to eligible former employees whose employment was terminated, as well as a fund for certain contractors.

In connection with the closing of the transaction, the members in the lender group, as well as some other first-lien lenders, will provide $375 million of new financing to Spectacle to finance the restart of operations and otherwise fund the operation of the business.

Spectacle and its subsidiaries will also be liable for debt recovery in the form of a new $300 million take-back second-lien loan and assume the obligations thereunder.

The parties expected the transaction to be completed by Oct. 30.

“A speedy completion of the Spectacle transaction, which is supported by the debtors’ senior economic stakeholders, is vital to the future viability of the debtors’ business, as the applicants require further injections of cash to restart their operations as soon as circumstances permit,” the motion said.

“Moreover, the debtors’ liquid resources, including the ad hoc group replacement loan obtained to finance these proceedings sale process, are nearly exhausted.

“It is imperative that the Spectacle transaction be completed and exit financing obtained in the near future in order for the business to transition as quickly and smoothly as possible.”

Cirque du Soleil Entertainment Group is a Montreal-based live entertainment company. The company filed bankruptcy on July 1 in the U.S. Bankruptcy Court for the District of Delaware under Chapter 15 case number 20-11719.

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