Cirque’s adventure may end badly for the Caisse and the Fonds FTQ

(Photo: Getty Images)

The offer to purchase from Cirque du Soleil creditors risks eliminating the Quebec presence in its shareholders since its founding in 1984, but also generating losses of tens of millions of dollars to two of the largest investors. institutions of the province: the Caisse de dépôt et placement du Québec (CDPQ) and the Fonds de solidarité FTQ.

In the eyes of some observers, the debacle of this entertainment company serves as a reminder that it is not always possible to combine the dual mandate aimed at generating returns while supporting Quebec companies.

“It’s called an investment,” dropped the professor of strategy at HEC Montreal Louis Hébert, during a telephone interview on Monday. There are some that work and some that do not. We have seen the pros and cons of strategies aimed at promoting Quebec businesses. “

Considered since last Friday as a seed bid in the Cirque auction process, the offer of at least US $ 1.2 billion from the group of secured creditors risks dismissing the trio of current shareholders – the Caisse, the Texan fund TPG Capital and the Chinese firm Fosun – if he does not come back to the charge. He could lose everything.

Monday, the CDPQ did not want to advance on the sums which were at stake in the file.

In its most recent annual report, Quebeckers’ stockings limited themselves to estimating that their initial 10% stake, acquired in 2015, was worth between $ 50 million and $ 100 million as of December 31. To this would be added the amount invested in February to buy back the 10% that still belonged to co-founder Guy Laliberté. La Caisse also loaned the company US $ 30 million last year.

Already written off

When Cirque turned to the Companies’ Creditors Arrangement Act (CCAA) at the end of June, the Fonds de solidarité FTQ was quick to confirm that it did not expect to see the color again. of the US $ 30 million (valued at CAN $ 39.9 million) loaned last year.

During a telephone interview with The Canadian Press at the end of June, the President and CEO of the Fund, Gaétan Morin, recalled that risk was part of the institution’s investment strategy.

“The question is: is this the kind of investment they (the Fund and the Fund) should embark on? Asked governance expert and professor at Concordia University Michel Magnan, on the phone.

“Cirque is in a sector dependent on discretionary spending. If the economy slows down, things will definitely crash. “

However, Mr. Magnan did not go so far as to criticize the financial interventions carried out by the Fund and the Fund, stressing that it was always “easy” to analyze the file “after the fact”. The professor also considered that it was “difficult” to judge whether the CDPQ was right or not to buy back the last shares of Mr. Laliberté last February, when COVID-19 had already caused the cancellation of shows in China, where the Circus was present.


The secured creditors’ proposal sets the minimum conditions to be met for the submission of any rival offers and sets aside the purchase agreement initially entered into between Cirque and its current owners.

It proposes to make up to US $ 375 million – without government assistance – available to the company. Two funds totaling US $ 20 million will also be created to pay the sums due to ex-workers and artisans. The agreement provides for a commitment to maintain Cirque’s head office in Montreal for at least five years.

While Mr. Magnan doubts this promise, Mr. Hébert, he felt that the lenders wanted to avoid overly restrictive provisions.

“If they are not obliged to keep the head office in Montreal, the price obtained (in the event of a transaction) will no doubt be higher,” said the professor of strategy at HEC Montreal. This is perhaps perceived by some buyers as an obstacle. It’s unfortunate, but that’s how financial investors think. “

We will have until August 18 to submit a rival proposal to acquire the Cirque. If necessary, the auction will take place on August 25. The transaction is expected to close by September 30. Quebecor will not be part of the auction, but the conglomerate has nonetheless reached out to creditors. Through his company Lune Rouge, Mr. Laliberté is said to be still analyzing the file.



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