UPDATE 1-Creditors group is front-runner for struggling Cirque du Soleil, source says

(Adds comment from Canadian pension fund exec at hearing)

MONTREAL, Aug 17 (Reuters) – A group of Cirque du Soleil creditors is the front-runner to win control of the financially strapped entertainment group ahead of a Tuesday deadline for bids, a source familiar with the matter said on Monday.

Canada’s once high-flying Cirque received protection from its creditors in June, after the COVID-19 pandemic forced the famed circus operator to cancel shows and lay off artists.

The group of creditors, led by Catalyst Capital Group, is the “lead bidder” for Cirque, said the source, who spoke on condition of anonymity because the sales process is confidential.

Catalyst and Cirque declined to comment.

News that the creditors are poised to win control of Cirque was first reported by the Wall Street Journal.

Also on Monday, Quebec’s largest pension fund told lawmakers in the Canadian province that it spent $75 million in February on a 10% stake in the Cirque from company co-founder Guy Laliberté.

Caisse de depot et placement du Quebec, Canada’s second-largest pension fund, had since written off the amount, it said.

Last month, Montreal-based Cirque and the creditor group reached a “stalking horse” purchase agreement, worth $900 million in debt forgiveness and up to $375 million in new financing, which acts as an opening offer that other interested bidders must surpass if they want to buy the company.

The agreement replaced an earlier deal with Cirque shareholders, including TPG Capital and Fosun International Ltd , which included debt financing from a Quebec government body.

Potential buyers have until Tuesday at 5pm Eastern Time to submit their bids, according to court documents.

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