New York, Mar 17 18:12

Cirque du Soleil Says Dubai Investors Will Hold Stake (Update1)

By Frederic Tomesco

March 17 (Bloomberg) - Dubai’s Istithmar World and Nakheel PJSC will keep their stake in Cirque du Soleil Inc., said Daniel Lamarre, chief executive officer of the circus, amid reports that the funds are considering asset sales.

“They are going through a difficult period, that’s no secret,” Lamarre told reporters today after a speech to the Montreal Board of Trade. “But investing in the Cirque is the best investment they ever made.”

Istithmar Chief Executive Officer David Jackson told the Financial Times last week that the state-owned fund would consider selling some of its investments to repay some of its related companies’ debts. The report didn’t say whether the Montreal-based circus was one of those investments.

A person familiar with Dubai World told Bloomberg News last month that Nakheel, a real-estate developer, needs cash to pay debt maturing this year. Istithmar may sell U.S. luxury retailer Barneys New York for less than half what it paid two years ago, four people familiar with potential bids said in February.

Istithmar and Nakheel, both units of government-owned Dubai World, acquired 20 percent of the circus operator in August as part of a bid by the sheikhdom to grow as a tourism destination. Terms of the transaction weren’t disclosed at the time.

“We have two partners that back us,” Lamarre said of the Dubai investors. “They trust us. It works for them. We continue to manage the company the way we managed before the deal.”

$3 Billion Valuation

Forbes magazine last week said that circus founder Guy Laliberté sold the stake for $600 million, implying a value of $3 billion for the whole company.

Cirque du Soleil, which employs about 4,500 people, has annual revenue of about C$800 million ($631 million). The company runs permanent shows in Las Vegas; Orlando, Florida; Tokyo; and Macau, China, as well as traveling productions that visit about 250 cities a year.

In December 2006, Nakheel sold $3.52 billion of Islamic bonds that mature in 2009, Bloomberg data show. Dubai and its state entities borrowed $80 billion to finance the emirate’s transformation into the Persian Gulf’s banking and tourism hub. It’s now being stung by a drop in real-estate values and oil prices.

Cirque du Soleil postponed a permanent show at the Palm Jumeirah in Dubai because of the economic slowdown. The production was supposed to open next year, and Lamarre said today the company won’t make a final decision on the timing until the end of December. Cirque du Soleil has a temporary show in Dubai, and Lamarre called early ticket sales “encouraging.”

‘Many Tourists’

“I went to Dubai in January, and I was surprised by how many tourists there are,” he said. “The economy in the Gulf states will rebound a lot earlier than anywhere else. Everyone would love to have petroleum reserves in their backyard.”

China and Russia are Cirque du Soleil’s two main priorities for global expansion, Lamarre said. The company set up a permanent show in Macau last year and has begun talks with local investors about tours or other resident shows, he said.

Cirque du Soleil will visit Moscow for the first time this year and may add a permanent show in two years, Lamarre said.

“We’ve been getting a lot of calls from interested promoters,” he said.

Lamarre said Cirque du Soleil plans two shows for New York next year: a revue at Radio City Music Hall loosely based on the Moulin Rouge, and a vaudeville-style show at the Beacon Theatre. He said the circus will collaborate with a unit of Cablevision Systems Corp., which runs both venues.

Cirque du Soleil shifted the revue to New York from Macau because tourism revenue in the Chinese city has grown more slowly than anticipated, Lamarre said. Canadian singer René Simard will direct the Radio City show.

Last Updated: March 17, 2009 17:05 EDT