Marvel Entertainment Group is the primary comic book editor in the United States, with superhero's that include Spider-Man, the Incredible Hulk, the X-Men, and Captain America. It is likewise one of the chief producers of games and amusement trading cards under the trade marked brand names of Fleer and Sky Box. In the mid-1990s, it encountered a sharp decrease in both its trade diversions, forcing it file for insolvency and liquidation in December 1996. This case was prepared in late January 1997, not long after Marvel recorded its restructuring strategy and design with the bankruptcy court and roughly one month prior the creditors will need to vote on the arrangement at the affirmation hearing. Two of the most important corporate ravagers of the 1980s are set against one another for command of the organization. Ronald Perelman, who has control over Marvel through his MacAndrews & Forbes holding organization, is on one side. On the other side is Carl Icahn, who has control of 25% of Marvel's public leverage. Icahn and added bondholders must choose whether to agree to Perelman's strategy, to reject it in order to achieve their own particular plans, or to offer their bonds for sale before the affirmation hearing. Perelman must choose whether to alter the plan because of the debt holders' perils or to wait and watch for what comes next at the hearing. A redrafted account of another case.
Asset Beta, Debt to Value, Tax Rate, Levered Beta, Risk-free Rate, Levered Beta, Market Risk Premium, Levered Return on Equity,
Net Income, Net Working Capital, Capital Expenditures, Net Debt, Free Cash Flow to Equity, Total Assets, Debt to Value Ratio
1. Why is Marvel in financial distress? Bad luck? Bad strategy? Bad implementation? When possible, back your claims with numbers.
2. Why did Marvel file for Chapter 11 rather than restructure out-of-court?
3. What do different stakeholders of Marvel get under liquidation? What if the firm just continues to operate without restructuring?
4. Evaluate the (new) restructuring plan. Assuming that the plan is approved, will it solve the problems tat caused Marvel to be in financial distress? If yes, how? If not, why not?
5. What is your assessment of the pro forma financial projections and liquidation assumptions? What are the different parties incentives to bias the valuation and in what direction?
6. Does the order in which the holding company and subsidiary go bankrupt have any influence n the expected returns for each stakeholder group?
7. Why did the price of Marvel’s zero coupon bonds drop on November 12th, 1996? Comment briefly.
8. What is Icahn’s strategy? Should Icahn vote for the restructuring plan? Why or hay not?