Shakespeare & Company moves to stabilize finances

The theater company also said it had reached an out-of-court settlement with Allegrone Construction of Pittsfield. Shakespeare & Company had owed the construction firm about $750,000 of the $7 million it had agreed to pay for the renovation of the building that became the Bernstein Center for the Performing Arts. The theater company declined to reveal the amount of the settlement.

In further steps to stabilize its finances, Shakespeare & Company has cut costs through a hiring freeze, staff reductions, a 10 percent pay cut for all employees, and other budget cuts. Its annual budget is down from $5.6 million three years ago to just over $4.2 million in the current year, according to spokesman Jeremy Goodwin. Full-time staff have been reduced from 33 to 26, according to Nicholas J. Puma Jr., the company’s managing director.

“The bottom line is that our financial position is stabilized, we have financial obligations that are within our capacity to meet, and together, with budget discipline, we’re in a position to move forward,’’ said Richard Mescon, the chairman of the company’s board of trustees. “From here on out, the news coming out of our company will not be financial. It will be artistic.’’

Just last October, a report done for the company revealed a gloomy picture, including a deficit of $4.75 million over the last five years and liabilities exceeding assets by a ratio of almost seven-to-one.

The report stated that the theater, a central player in the artistic life of the Berkshires since its founding by Tina Packer in 1978, would need to raise $2.3 million just to survive until March. But Century Bank agreed to a restructuring arrangement with the company that includes lower interest rates, the full payment of a small high-interest loan, and the consolidation of remaining obligations. The restructuring reduces the company’s annual debt service from about $550,000 to about $300,000, according to Mescon.

As part of the deal, Century Bank informed the company of a program from the US Department of Agriculture that guaranteed $3 million of the company’s debt obligation.

“If you get a good solid guarantor, a lender is prepared to work for you more,’’ said Mescon. “I was astounded. I didn’t know anything about this program.’’

Shakespeare & Company’s problems stemmed, in large part, from its ambition. Over the last decade, it spent about $18 million on buying property, renovations, and transition costs. Those projects made it hard for the company to raise enough for its annual operating budget, so capital funds were used for daily operations. In turn, construction money had to be borrowed.

There were times, Puma conceded, when he wondered whether the company would survive.

“Anybody who thinks any other way is nuts,’’ he said. “This was very difficult but we did it.’’

Geoff Edgers can be reached at gedgers@globe.com.