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TPG proposal for Cirque du Soleil is doomed, creditors say

TPG proposal for Cirque du Soleil is doomed, creditors say
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Creditors of Cirque du Soleil Entertainment Group say a proposal by TPG and other shareholders to restructure the live performance company is “doomed to fail” and there is no chance they will accept it.

Montreal-based Cirque filed for protection from creditors in Canada on Monday after the coronavirus crisis forced it to close shows around the world. TPG, China’s Fosun International Ltd. and the Caisse de Depot et Placement du Quebec, Cirque’s shareholders, made a proposal that would refinance the company and leave creditors with a 45 per cent stake in exchange for wiping out most of its debt.

“Pursuing approval of the proposed shareholder transaction (on a stalking-horse basis or otherwise) is doomed to fail,” said the ad hoc committee of creditors, which represents holders of about three-quarters of the $885 million (U.S.) principal of first lien loans and two-thirds of the $150 million second lien creditors, in a document seen by Bloomberg.

The group questioned the timing of the company’s bankruptcy protection filing.

“We see no reason why they didn’t engage in negotiating a definitive agreement with our group and chose to enter into an agreement with the out of the money equity holder TPG for a transaction that they knew their secured creditors had already rejected,” said Tuck Hardie, a managing director at Houlihan Lokey which is acting an adviser to the creditors committee.

“The ad hoc group is excited and is financially motivated to see the successful relaunch of Cirque and its place in the Montreal and Quebec business community.”
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