Bondholders Win a Round in the Fight for Control of Marvel

Bondholders of Marvel Entertainment Group Inc. claimed victory Friday in the latest round of their fight with financier Ronald Perelman for control of the publisher of Spiderman, X-Men and the Incredible Hulk comics.

The bondholders, led by investor Carl Icahn, said Friday that Marvel, which filed for Chapter 11 Bankruptcy Court protection in December, agreed to consider their plan to reorganize the company. As a result, Perelman’s group withdrew its competing reorganization plan for Marvel.

“It’s a tremendous victory for the bondholders,” said David Freidman, a lawyer for the bondholders. “We have an understanding with Marvel that the company will work with us to finalize a definitive reorganization plan.”

The plan, still being formulated, would include a $365-million cash infusion through a rights offering of both equity and debt to all bondholders and non-insider Marvel stockholders. This would allow Marvel to emerge from bankruptcy, said sources close to the bondholders, formally known as the Official Committee of Bondholders of Marvel Holdings Inc.

The plan, which would lead to the replacement of Marvel’s directors by bondholder-appointed directors, would use about $300 million to pay down debt and about $65 million initially for working capital, the bondholders said.

Freidman said the plan would also allow Marvel to continue as a major shareholder of Toy Biz, which has an exclusive license agreement to make toys based on Marvel characters, although it would not include a Marvel merger with Toy Biz, as had the Perelman group plan.

Toy Biz shares plunged on the news, falling as much as $4.125 before ending at $14, down $3.625 on the New York Stock Exchange. Marvel’s stock rose 50 cents to close at $2.875, also on the NYSE.

Perelman’s group in December said that as part of its reorganization plan, it had tentatively agreed to acquire all class A shares of Toy Biz stock held by Toy Biz public stockholders for $22.50 a share.

The bondholders--who in December called Marvel’s bankruptcy plan a ploy by Perelman to secure a “windfall profit” at the expense of others--resisted. Late last month, they won a surprise victory when a federal bankruptcy court judge in Delaware ruled they could submit their own reorganization plan.

That ruling was the turning point, Perelman’s group said.

“Based on that ruling, it was clear the reorganization plan was not going to be approved soon,” said Michael Freitag, spokesman for Perelman’s Andrews Group.

Marvel also held a restricted conference call Friday that led some investors to speculate that a deal with the bondholders was near. However, some analysts and investors said the battle for Marvel is between Icahn and Perelman--and it’s far from over.