September 17, 1997

MARVEL COMICS NEWS

On Tuesday afternoon, September 16th, a tentative settlement was reached between negotiators for the Marvel bondholders groups, led by Carl Icahn, and the representatives of Marvel's secured creditors, led by Chase Manhattan bank. The settlement gives Marvel operating capital through October 9th, by which time Judge Helen Balick of the U.S. Bankruptcy Court has demanded that the parties bring to her a finalized settlement.The basics of the agreement are that the banks will receive $385 million in cash, plus the proceeds from the sale of Marvel's Panini subsidiary. It is estimated that this will allow the banks to recover 62.5% of the $716 million in secured debt owed to them, plus 100% of the $100 million in debtor-in-possession money provided during the bankruptcy period. The banks would then exit the bankruptcy negotiations.Left unsettled in this agreement are issues related to the proposed merger between Marvel and Toy Biz.

In an action that indicated some doubt as to whether this agreement wouldactually be finalized, Judge Balick reportedly advised both parties to "apply yourself to what has been placed in the record and don't go flying off on tangents." Her reluctance to rely on the agreement may stem from the repeated failure of earlier agreements, plus the fact that the hearing had to be delayed five times while the parties bickered over individual issues.What matters most to comics fans in all this legal wrangling is that the banks have agreed to fund Marvel's day-to-day operations through October 9th. It was previously assumed that no further funds would be available after yesterday. This allows time for the parties to finalize the tentative deal. If it were to fall apart, however, the banks have indicated that instead of seeking a Chapter 7 liquidation, they would instead seek to have a Chapter 11 trustee appointed. This would effectively remove control of operations from the Icahn-approved Board of Directors, and transfer it to the Court. The banks are assuming that this trustee would act in a manner which would be more favorable to their position.

In a separate motion to the main negotiations, Chase Manhattan Bank was presented with a letter of interest from a group led by Jim Shooter and Chuck Rozanski. This letter indicated that if the negotiations between the parties were to fail, that this group would be interested in purchasing the Marvel publishing operation. While the day's agreement seems to make this letter moot, it remains in place as a back-up to the agreement, and may lead to further negotiations even if the bondholders were to buy out the banks. Most parties to the negotiations agree that the bondholders are unlikely to want to retain long-term ownership of Marvel, and that having a letter of interest in place at this time may assist in a future purchase of Marvel's publishing operations by Shooter and Rozanski.To be put on a mailing list for further information, e-mail Chuck.