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Cirque du Soleil creditors set to reject TPG Group's offer – BNN

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Creditors of Cirque du Soleil Entertainment Group are set to turn down a proposal led by TPG that would leave them with a 45-per-cent stake in the company in exchange for wiping out most of its debt.

Montreal-based Cirque filed for protection from creditors in Canada on Monday after the coronavirus pandemic forced it to close shows around the world, triggering a fight for control of one of the best-known brands in live performance.

The company said it entered into a so-called stalking horse agreement with its existing shareholders — including TPG, China’s Fosun International Ltd. and Caisse de Depot et Placement du Quebec — for a US$300-million injection to help restart the business.

That proposal would see a restructured Cirque cut its debt to about US$250 million, Chief Executive Officer Daniel Lamarre said in an interview. It has nearly US$1.6 billion in liabilities.

But creditors are unlikely to accept the terms of the TPG plan, according to three people familiar with the matter. A creditor group will likely come back with a formal counteroffer by July 10, one of the people said; it has already drafted its own non-binding offer for Cirque, according to another one of the people.

Entertainment companies that depend on large crowds were among the first business casualties of the virus. Cirque du Soleil laid off 4,679 employees — about 95 per cent of its workforce — on March 19 after shutting down 44 productions to comply with government orders around the world. It has only one active show right now, in China, Lamarre said.

Cirque expects to emerge from the restructuring process as a leaner entity with about 1,000 employees initially. About 700 of them would be in Las Vegas, where the company earned about 40 per cent of its US$1 billion in revenue last year and where it hopes to open a show as early as November, Lamarre said. Touring shows could come back in 2021 if the virus situation allows for it, he said.

Cirque requested protection through the Companies’ Creditors Arrangement Act on Monday afternoon. The application is scheduled to be heard by the Quebec Superior Court Tuesday and the company will also seek its immediate provisional recognition in the U.S. under Chapter 15.

The filing starts the clock on a bidding process for control of a restructured Cirque. Quebecor Inc. and Cirque founder Guy Laliberte have expressed interest in investing in the company.

“We know there are probably five other parties that will be interested to make an offer,” Lamarre said. “The good news today is that we know that someone is committed to ensure the future of the company. And within 45 days, we’ll know if someone is willing to invest even more.”

The Quebec government’s investment and lending arm, Investissement Quebec, is providing US$200 million of the US$300 million in new capital proposed by the TPG-led group. The group wants to acquire substantially all of the company’s assets for a combination of cash, debt and equity. It says its offer has a total value of US$420 million.

Cirque du Soleil’s existing secured creditors would receive US$50 million of unsecured, takeback debt in addition to the 45-per-cent equity stake, according to the proposal.

The crisis hit the 36-year-old company just as it emerged from a string of acquisitions, which helped it diversify from its original acrobatic shows but also put it deeper into debt.

It bought Blue Man Productions in 2017, followed by children’s entertainment company VStar Entertainment Group in 2018. Last year, it added Works Entertainment and its troupe of magicians called the Illusionists to its portfolio, before striking a separate deal to make feature-length films with the company that co-produced the hit “The Lego Movie.”

–With assistance from Derek Decloet.

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Japan’s SoftBank returns to profit after gains at Vision Fund and other investments

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TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.

Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.

Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).

SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.

The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.

WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.

SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.

SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.

SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.

The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.

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Yuri Kageyama is on X:

The Canadian Press. All rights reserved.

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Trump campaign promises unlikely to harm entrepreneurship: Shopify CFO

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Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.

“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.

“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”

Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.

On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.

If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.

These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.

If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.

However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.

He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.

“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.

Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.

The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.

Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.

Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.

Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.

Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.

Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”

In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.

“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.

This report by The Canadian Press was first published Nov. 12, 2024.

Companies in this story: (TSX:SHOP)

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RioCan cuts nearly 10 per cent staff in efficiency push as condo market slows

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TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.

The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.

The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.

RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.

The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.

RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.

This report by The Canadian Press was first published Nov. 12, 2024.

Companies in this story: (TSX:REI.UN)

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