(Montreal) Cirque du Soleil is in a much better financial position thanks to the relaunch of its shows. The Quebec company managed in March to reduce its debt by US$100 million and to refinance it at lower rates, despite monetary tightening by central banks.
Cirque du Soleil’s total debt now stands at 550 million US, the equivalent of just over 750 million CAN. “This is the lowest level of debt in recent years, underlines its chief financial officer, Emmanuelle Leclerc-Granger, in an interview. This refinancing will translate into savings in interest costs that are still substantial, but it will improve Cirque du Soleil Entertainment Group’s financial situation. »
Prior to the pandemic, Cirque du Soleil had racked up nearly $1 billion in debt to fund its growth plans. The pandemic, which forced the industry to lower the curtain, had pushed the company into bankruptcy.
In November 2020, Catalyst Capital Group injected 375 million US dollars to bail out the company’s coffers, but it took until the summer of 2021 before the relaxation of sanitary measures allowed the resumption of shows.
Hard hit by the pandemic, the entertainment industry has finally resumed its activities. This more favorable context enabled Cirque du Soleil to obtain a better rate by refinancing its debt. “It represents savings of more than 30 million US annually”, illustrates Mme Leclerc-Granger.
The terms of the refinancing include a $100 million credit facility. The company does not intend to use this available credit, but it provides flexibility, if needed.
The chief financial officer points out that the rating agencies have recognized the improvement in Cirque du Soleil’s balance sheet. Standard & Poor’s raised the company’s rating three times. At B+, Cirque’s debt is still considered speculative, but the gradual improvement in its rating shows that its financial situation is on the right path.
The sun is rising
The pandemic eclipse did not overshadow the popularity of Cirque du Soleil. The return of spectators to the marquee enabled it to return to profitability. The company has been raking in more cash than it has spent for the past five consecutive quarters, says Mme Leclerc-Granger.
Occupancy rates are still “a little below” pre-pandemic thresholds, as health measures have not yet been completely lifted in all the markets where Cirque is present, explains the manager. Strong demand, however, allowed the group to increase the price of its tickets by nearly 15%, on average. “The ticket price is so high that, for us, profitability is increased compared to pre-pandemic levels. »
Even if the rise in interest rates raises questions about household behavior, demand for Cirque du Soleil performances remains resilient for the moment, estimates Mme Leclerc-Granger. “We haven’t yet seen the signs of a recession manifesting itself in our ticket sales,” she replies.
PHOTO DOMINICK GRAVEL, LA PRESSE ARCHIVES
The return of spectators to the big top allowed Cirque du Soleil to return to profitability.
The presale of tickets suggests that the intentions of Cirque fans have not changed. “We continue to see ticket pre-sales that remain strong in all of our markets. Of course, from a financial governance perspective, we remain cautious in this macro-economic context. »
The head office comes back to life in Montreal
The recovery will have allowed Cirque du Soleil to replenish its workforce at its international headquarters, located in Montreal. The confinement had forced the company to lay off the majority of its employees. The head office, which housed 1,558 workers in December 2019, only employed 200 people at the height of the pandemic.
With the resumption of activities, this number has gradually increased. There are now 945 workers at the company’s head office in Montreal.