The revival of Cirque du Soleil’s activities after having come close to bankruptcy during the forced closure of the pandemic is making a good impression on its main financial interlocutors.
Posted at 8:00 a.m.
This is the case of the very influential financial rating agency Moody’s, which announced Thursday that it was raising Cirque du Soleil’s credit rating after noting its “solid management” of the “successful relaunch” of its spectacle.
“This financial rating upgrade [de Caa1 à B3 en termes financiers] reflects the strong management of the restart of shows at Cirque du Soleil, including the successful relaunch of its touring division in the first half of 2022,” Moody’s analyst Whitney Leavens said in a notice to corporate debt investors. that The Press obtained.
In this context, indicates the Moody’s analyst, “we anticipate a rapid reduction in Cirque du Soleil’s still high level of indebtedness to a better level towards the end of 2022 and during 2023, while maintaining an adequate level of available cash”.
According to Moody’s analysis, Cirque du Soleil boosted revenue of US$370 million in the 12 months (one year) to the end of the first quarter of 2022.
At the same time, Cirque du Soleil has regained an “adequate level of liquidity close to 130 million US”, according to Moody’s. This sum is made up of US$120 million in cash on hand and a positive cash flow contribution “around US$10 million” which is expected to improve Cirque du Soleil’s profitability over the next 12 months. operation, by the end of the first quarter of 2023.
End of existential crisis
Remember that two years ago, Cirque du Soleil was hit hard and suddenly paralyzed by the health restrictions linked to the pandemic.
And this, just a few months after having completed another year of record activities at nearly 1 billion US in turnover, with a workforce of 5,000 people spread over its head office in Montreal and 44 shows in fixed residence or in tour around the world.
To avoid bankruptcy, Cirque du Soleil had been forced to reshuffle its shareholding with new investors capable of injecting 300 million US dollars in capital to support it until the end of the pandemic and the relaunch of its activities.
Moreover, in its Cirque du Soleil financial rating report, Moody’s updates its assessment of the strengths and weaknesses of its business plan.
Among the strengths, Moody’s points to “a strong operational track record and extensive management experience in developing, managing and acquiring shows” as well as a “partnership model for residency shows [fixe] that minimizes capital expenditure and promotes operational stability”.
Moody’s also reports the “substantial concentration” of Cirque du Soleil’s activities in the Las Vegas market, which should account for a “significant portion” of its operating profit (EBITDA) in 2022.