We're keeping incredibly busy here at the warehouse, as our web site is starting to experience exponential growth in activity. We now have (most times) our entire inventory of back issues up on our site, and fans are blown away at having 3,000 pages of availability at their fingertips. The only time you won't be able to access the inventory is when we're working on improvements to the site. It seems that whenever we make a positive change, something else gets accidentally messed up, but, we're told this is normal. Meanwhile, we have the Golden Age/Silver Age sale up (it loads slowly because of the color graphics, but we're going to fix that). We are also receiving computers in trade, but we're still looking for more, especially for our California store. Our comics index is now on-line (this allows you to ascertain the publisher of any comic by looking up the title), but still needs to be cleaned up a bit. Still, it is a fantastic resource. Also, we just added 1500 older Marvels and DC's into our backlist (including Amazing Spider-Man #2 (Good) and Silver Surfer #1 (1968, Fine) both signed by Stan Lee) from a deal I bought last week in Garden Grove, Lots of Good Stuff.

The big news for this week is again from Marvel. Still no deal. However, they do have operating capital through October 9th and we are confident that some sort of deal is going to be worked out to keep Marvel functioning. There are still many questions about the present agreement, though, as is indicated in the analysis that follows.

We have had requests for information about other publishers, and new projects, but there is a very limited spectrum of possibilities to report at this time. We have several news items from DC, but they have requested that we release those announcements only after October 1st. We'll, of course, honor their request. Dark Horse hasn't given us much of anything and neither has Image. We can report, however that Awesome Entertainment's first books have all sold out nationwide. Also, Awesome will be relaunching Youngblood in early 1998, with Steve Skroce (Amazing Spider-Man & X-Man) and Alan Moore providing the stories. Another bit of news is that Creed has moved to Avatar Press. That's about it for this week.

After a promising start, the dramatic agreement reached on September 16th between representatives of Marvel's secured creditors, led by Chase Manhattan Bank, and representatives of the bondholders groups, led by Carl Ichan, has gone nowhere. Reports from several sources indicate that an initial transfer of funds was to take place on Monday, September 22nd. Due to the inability of the parties to agree, this transfer did not occur. This leaves the entire agreement in question. Time is running out, however, as Judge Helen Balick, of the U.S. Bankruptcy Court, has instructed both parties to have a finalized agreement in her hands on October 9th.

What makes this situation a perplexing conundrum is the inexplicable parameters of the agreement. A survey of the powers-that-be within Marvel, at other publishers, and within the investment banking community finds a unanimity of opinion that no one can understand why anyone would be willing to put $400 million more into Marvel. With Panini given to the banks as part of the settlement, the remaining assets of Marvel Entertainment are Marvel Publishing, Marvel Licensing, Fleer/Skybox, and Marvel's minority 28% stake in Toy Biz, Inc.

Fleer/Skybox has been on the market, and has drawn a top bid in the range of $22 million. The Marvel Publishing unit has earnings that would support a buyout in the $40 million range. The Marvel Licensing unit is very hard to place a value on. The licenses written by the Perelman management team often required prepayments for extended periods of time. Until these licenses expire, very limited revenue can be expected to accrue from this area. In addition, the film rights to Marvel characters are held by a variety of different parties. Exploiting these rights proved very difficult to the Perelman team. Only if the Bankruptcy Court were to abrogate some, or all, of Marvel's existing licenses could this area be considered a significant contributor to Marvel's income.

None of the above argues for an additional contribution (beyond the reported $300 million the bondholders have already invested) of $400 million into Marvel. Three possible rationalizations that might make sense are:
1) The bondholders may seek to exploit the Toy Biz, Inc. contract (giving Marvel control of the Toy Biz Board of Directors under certain circumstances) to lever a lucrative buyout of the Marvel position.
2) The bondholders may continue to seek legal remedies against Ronald Perelman and his companies for certain actions taken while they were in control of Marvel.
3) The bondholders may be simply bargaining for time while they seek some measure of both 1 & 2, combined with a "flip" of the remaining assets of Marvel to a third party. A "flip" scenario would have the bondholders taking control of Marvel, but only long enough to sell the company for a profit to a MCA/Universal, Fox, Saban, etc.

At this point in time, most parties agree that #3 is the most likely scenario. Meanwhile, the Rozanski/Shooter bid for the Marvel Publishing unit is on hold pending the outcome of the agreement between the banks and the bondholders. Another news summary next week, or a news flash if important events transpire.