Shakespeare & Company Restructures Debt

Tony Simotes Stabalizes Finances

By: - May 25, 2010

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In a move that signals the organization’s emergence from a period of pronounced financial stresses , Shakespeare & Company today announced a crucial restructuring of its bank debt , and the simultaneous out-of-court settlement of a lawsuit pending with a major vendor.

Shakespeare & Company has restructured its debt with its principal lender , Century Bank of Medford , Massachusetts . The arrangement includes lower interest rates resulting in a significantly reduced annual debt service obligation , the full payoff off of a small , high interest loan , and the consolidation of its remaining obligations to Century Bank into two newly structured Notes , plus the 30-year mortgage on S&Co.’s 33-acre property. The restructuring package provides the flexibility needed to put the Company on much firmer financial footing as it moves forward.

Zero public dollars will flow to Shakespeare & Company as part of this debt restructuring. Its total debt commitment remains unchanged.

S&Co. also announced that it reached an out-of-court settlement with Allegrone Construction of Pittsfield , the primary contractor for the Company’s recent renovation of the old L enox School for Boys’ field house into the Bernstein Center for the Performing Arts , including the Elayne P. Bernstein Theatre.

“This is what we’ve been waiting for , ” said Artistic Director Tony Simotes , who celebrated these much-anticipated breakthroughs in the eleventh month of his tenure. “Shakespeare & Company has found its financial footing and revitalized its relationship with Century Bank.  These days , it’s not easy for anybody—this is still a period of economic anxiety for us , the entire arts community , and many other sectors of the economy. But for our own part , we are on a much healthier financial path , and on good footing to continue implementing the new business plan we began introducing when I arrived a year ago. We’ve needed to shift our business culture while maintaining the quality of our programming—and we have reached another important milestone in that continuing effort.”

S&Co. has cut its annual expense budget by approximately $1.25 million over the past two years by maintaining a hiring freeze for much of the past 12 months , reducing staff positions , instituting an across-the-board pay cut of 10% , making a series of additional mid-year budget cuts , consolidating positions and re-organizing internal work-flow. It did so in the midst of the most ambitious season it had ever launched at its Kemble Street property , launching 18 productions complimented by more than a dozen other special events and musical performances. It also extended its season with its recently created fall and winter seasons and by inaugurating a December show.

Notably , this fuller and more extended season was executed with a lower total production budget than that of the prior year. The 2009-2010 season saw S&Co. issuing a record of over 50 , 000 performance tickets for the first time in its history , while earning $1.13 million at the box office , only $3 , 000 below its all-time record , set the previous year.

As part of the debt restructuring , Century Bank received a guarantee of $3 million of S&Co.’s debt obligations under a program sponsored by the United States Department of Agriculture.

S&Co. has adopted a balanced budget for the fiscal year that began April 1 , a budget that provides for a wide scope of programming as well as fulfilling the Company’s annual debt service and operating costs. The 2010-2011 season began on May 21 and will continue into Spring 2010. (The Fall , holiday season and winter/spring titles will be announced soon.) At this early date , box office sales are tracking at 130% of last year’s sales.

“A lot of people talk about ‘doing more with less.’ We actually did it. Yes , we were feeling the heat , but we responded to our circumstances by finding ways to run a tighter ship without compromising the quality of our product one bit , ” says Managing Director Nicholas J. Puma , Jr. “ L ook at the level of our performances , our education programs , our actor training programs—they remain the gold standard.”

In the last two weeks alone , the level of achievement and prestige achieved by S&Co.’s programming has been vividly displayed. S&Co.’s Education Program’s groundbreaking Shakespeare in the Courts program has been profiled by Voice of America , Canada’s CBC Radio , Boston area NPR affiliate WBUR , public radio flagship station WGBH , and the Boston Globe. Artistic Director Tony Simotes was profiled in the Boston Globe , Founding Artistic Director Tina Packer ’s upcoming American premiere of Women of Will was selected to lead the Globe’s summer theatre preview , and the Simotes-directed Richard III was the featured production in The New York Times’ summer theatre preview. 

Over 600 new donors made gifts to the Company during the past year.  With the help of these new donors and its long time supporters , S&Co. is on the brink of receiving a prestigious Kresge Foundation challenge grant , thus completing its $10 million Capital Campaign.  In addition , the Company recently received a $12 , 000 Edgerton Foundation grant to support its upcoming world premiere of American playwright Joan Ackermann’s The Taster. 

“We want to thank the United States Department of Agriculture and Century Bank , for working together to find the best way for everybody to move forward into a more secure financial position. This debt restructuring , which reduces our Company’s annual debt service from approximately $550 , 000 to about $300 , 000 , is a key piece , but just one piece , in our ongoing efforts to see our way through a period of intense financial stresses , ” said Board of Trustees Chairman Richard A. Mescon. “From here , we must continue with tight expense controls while meeting our revenue expectations. But with the solid support of our Board of Trustees and our Board of Overseers , as well as the generosity of our donors , the leadership of our management team and the dedicated efforts of our tireless staff , it’s something we’re already doing.”