Toy Biz, Marvel Holders Devise Restructure Plan

NEW YORK — Bondholders of Marvel Holdings Inc. said Wednesday that they reached an agreement with Toy Biz Inc. on a plan to restructure Marvel Entertainment Group Inc. and lead the publisher of Spider-Man and the Incredible Hulk out of bankruptcy.

The agreement, which comes one day after Toy Biz withdrew from a previous plan drafted by Marvel, could resolve the six-month struggle between Ronald Perelman and Carl Icahn for Marvel, money managers and traders said.

“You’re closer to the end, and soon you’ll see a deal between Toy Biz, the banks and the bondholders that looks a little like this one,” said a Toy Biz shareholder, who declined to be identified.

“This deal will probably be tweaked a little,” he added, “but now we’re in the homestretch.”

Under Wednesday’s plan, Marvel bondholders would underwrite a $300-million to $500-million rights offering used to pay part of Marvel’s approximately $700 million in bank debt. Marvel’s bankers would then get $300 million in cash and the assets of Marvel units Panini, which makes stickers, and Fleer/Skybox, which makes collector cards.

Marvel and Toy Biz would also combine into a new holding company that is 40%-owned by Toy Biz shareholders and 60%-owned by Marvel shareholders.

The deal is “a sensible compromise,” one trader said, because Marvel and Toy Biz will remain intertwined and all parties involved will get some incentive in the new company, valued at about $700 million.

The deal also allows Perelman, who owns 80% of Marvel through his holding company Andrews Group, to “save face,” said the trader, who also declined to be identified.

Perelman “had been in a position to lose Marvel completely, but now he would retain a stake in the company through his ownership in Toy Biz,” the trader said.

As a result of the Andrews Group’s holding in Marvel, Perelman would receive about a 13% stake in the Marvel-Toy Biz firm under Wednesday’s agreement.

Perelman would then be able to build that stake through the rights offering, other investors said.

Marvel, for its part, convinced a federal judge in Delaware on Wednesday to place a temporary stay on any bondholder plan. There will be another hearing on the matter on Tuesday.

Michael Freitag, a Marvel spokesman, said Marvel still prefers an auction of the company to maximize its value.

Bondholder lawyer David Friedman, however, said there is no need for an auction.

“We have an agreement with the equity committee and the management of Toy Biz and an agreement that fully addresses the needs of all parties,” he said.

That appears to be the sentiment from Wall Street, which has grown weary of the tug-of-war between Perelman and Icahn since Marvel filed for bankruptcy protection late last year.

According to the Toy Biz shareholder, “shareholders [of Toy Biz] much larger than me also like the deal.” But he conceded that the battle, as always, may continue.