Criticized by the opposition for its lack of transparency surrounding a US$200-million loan offered to Cirque du Soleil, Quebec’s Legault government has committed to revealing the details of the agreement if the money is given to the entertainment company paralyzed by the COVID-19 pandemic.
In making this commitment during question period on Wednesday, however, Minister of Economic Development and Innovation Pierre Fitzgibbon did not specify when the details would be shared.
“There is a complex process with the creditors of Cirque, they are the ones who will decide (who will be the next owners),” he said in response to a question from Québec solidaire (QS) MP Vincent Marissal.
“When this is finalized, all agreements will be released to the public.”
Fitzgibbon announced financial support for the company from Quebec as part of a press scrum on Tuesday, a strategy that has been criticized by opposition parties.
For Marissal, there are “many more questions than answers” at this point.
Believing that the Quebec government should be “partly owner” rather than a simple lender, Marissal said the venture was risky.
“We want to see the famous ‘deal’ before embarking Quebecers on another adventure that could be disastrous, costly, ruinous,” he said in a press briefing before question period.
On the side of the Liberal Party of Quebec (PLQ), the spokesperson for culture and communications, Isabelle Melançon, said the announcement from Fitzgibbon had been “nebulous,” while also noting that other Quebec performing arts companies, such as Cirque Éloize, The 7 Fingers and Flip Fabrique, were probably going to need a financial boost to get through the current crisis.
As for the Parti Québécois spokesperson on the economy, Martin Ouellet wondered why it was necessary to “go so fast and so strongly with the circus” when several other companies are also weakened by the current crisis.
Cirque du Soleil generates practically no income since its activities have been paralyzed by the COVID-19 pandemic. In March, the health crisis forced the company to cancel its 44 shows and lay off almost all of its staff, about 4,700 people.
Trailing a debt estimated at some US$900 million, Cirque du Soleil is studying several scenarios, including one in which it would take shelter from its creditors.
The company is also trying to find an investor or buyer or to renegotiate another injection of capital from its current owners: the Texan investment fund TPG Capital, the Chinese firm Fosun and the Caisse de dépôt et placement du Québec (CDPQ).
There is no guarantee that existing shareholders will be able to retain ownership of Cirque du Soleil at the end of this process.
However, if they remain on track, Cirque du Soleil may receive a loan of US$200 million from Investissement Québec as part of an agreement accompanied by a provision allowing the Quebec state to possibly acquire the company.
The financial instrument would place Quebec among the first creditors of the company, according to the economic development minister.
Fitzgibbon, however, did not specify the mechanism that would allow Quebec to buy out the interests of TPG and Fosun, which currently own 80 per cent of Cirque du Soleil. At a market price, the Quebec government could force a transaction on an undisclosed date or buy out the participation of these firms if they decide to leave the ship later.
According to Louis Hébert, a professor in HEC Montréal’s management department, the financial support offered by the Legault government is “adequate” and “reasonable.”
By appearing at the top of the list of creditors, Quebec risks having more power compared to taking a minority stake in the company, he estimated during a telephone interview.
“This is a first claim. This means that the Quebec state becomes involved and will be much better placed to know what is going on and to have an influence on decisions,” Hébert said.
“When you are a minority shareholder, others can vote against you.”
The financial assistance offered by Quebec is subject to multiple conditions, including the maintenance of the head office, currently located in the Montreal borough of Saint-Michel.