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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of Earliest Event Reported): December 27, 1996
MARVEL ENTERTAINMENT GROUP, INC.
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
1-10779 94-3024816
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(Commission File Number) (I.R.S. Employer
Identification No.)
387 PARK AVENUE SOUTH, NEW YORK, NY 10016
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(Address of Principal Executive Offices) (Zip Code)
212-696-0808
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP
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On December 27, 1996, Marvel Entertainment Group, Inc. (the
"Company") and several of its subsidiaries, The Asher Candy Company,
Fleer Corp., Frank H. Fleer Corp., Heroes World Distribution, Inc.,
Malibu Comics Entertainment, Inc., Marvel Characters, Inc., Marvel
Direct Marketing Inc. and Skybox International Inc. (together with the
Company, the "Debtors"), filed voluntary petitions for reorganization
(the "Petitions") with the United States Bankruptcy Court for the
District of Delaware in Wilmington (the "Bankruptcy Court") under
chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"), procedurally consolidated as case numbers 96-2609 through
-2077 (HSB). Panini S.p.A., Marvel Restaurant Venture Corp. and
inactive subsidiaries of the Company did not commence a petition
under the Bankruptcy Code.
The Debtors filed the Petitions to implement a recapitalization
including debt financing and equity contributions aggregating $525
million, and to ensure that the Company continues all business
operations without interruption as it implements the recapitalization.
Under the plan of reorganization filed on December 27 (the
"Plan"), Andrews Group Incorporated, a parent corporation of the
Company, ("Andrews Group"), will purchase from the Company a number of
shares representing 80.8% of the Company's outstanding common stock,
after giving effect to the transaction, for a purchase price of $365
million and such capital will be used to make Toy Biz, Inc. ("Toy
Biz") a wholly-owned subsidiary of the Company. As part of the Plan,
a syndicate of the Company's lenders has agreed to provide the Company
with $160 million of new credit facilities to fund the Company's
strategic investments and working capital requirements. Andrews Group
has entered into stock purchase agreements with each of Isaac
Perlmutter and Avi Arad to purchase an aggregate of approximately 13.7
million shares of class A common stock of Toy Biz owned by them for
$14 per share in cash and an aggregate of $40 million in promissory
notes. To effectuate the Plan, Andrews Group has entered into a
merger agreement (the "Merger Agreement") with Toy Biz which provides
for the purchase of the publicly held shares of Toy Biz's class A
common stock for $22.50 per share. The Company expects that Andrews
Group's rights under the Merger Agreement and the Stock Purchase
Agreements will be assigned to the Company.
In conjunction with the filing of the Petitions, a bank group has
agreed to provide the Company with $100 million of debtor-in-
possession financing. This debtor-in-possession financing is expected
to ensure that the Company has sufficient liquidity to pay all current
and expected trade and employee obligations and to meet all of its
operating and investment needs
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during the reorganization process. The Company expects to repay the
debtor-in-possession loan with the $160 million in new credit
facilities to be entered into as part of the Plan. Prior to the
filing of the Petitions, holders of senior secured claims governed by
the Company's existing credit agreements, voted to accept the plan by
requisite statutory majorities for class acceptance under the
Bankruptcy Code. There can be no assurance that the Plan will be
confirmed in its present form or that the transactions contemplated
thereby will be consummated. The Plan and the related disclosure
statement have been filed with the Bankruptcy Court.
At present the Company is managing its business as debtor in
possession subject to Court approval for certain actions.
A copy of the press release issued by the Company on December 27,
1996, reporting the filing of the Petitions and related matters is
filed as Exhibit 99.1.
(c) Exhibits
99.1 Press Release, dated December 27, 1996
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
MARVEL ENTERTAINMENT GROUP, INC.
By: /s/ STEVEN R. ISKO
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Name: Steven R. Isko
Title: Vice President
Date: December 27, 1996
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EXHIBIT INDEX
Exhibit No. Description
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99.1 Press Release, dated December 27, 1996,
issued by Marvel Entertainment Group, Inc.
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MARVEL ENTERTAINMENT GROUP FILES VOLUNTARY CHAPTER 11 PETITION
to Implement Financial Restructuring Plan
Plan Contemplates Marvel Receiving $525 Million In New Funds
and Trade Partners and Employees Being Paid On Time and In Full
Business To Continue Uninterrupted
NEW YORK, Dec. 27 -- Marvel Entertainment Group, Inc. (NYSE: MRV)
today announced that, in order to implement a proposed $525 million
recapitalization that will enable Marvel to pursue its new strategic
initiatives and achieve sustained profitability, Marvel has filed a
voluntary petition for reorganization in the U.S. Bankruptcy Court for
the District of Delaware in Wilmington. The filing will ensure that
Marvel can continue all business operations without interruption while
it obtains necessary approvals of its financial restructuring plan.
The filing was necessitated by the failure of the holders of
bonds issued by Marvel's holding companies to reach agreement
regarding any alternative plans for the Company's future. As a result
of today's petition, Marvel will be able to avail itself of the
orderly processes of the court to complete the reorganization and move
forward without the necessity of bondholder consent. Holders of Marvel
holding company bonds were asked more than a month ago to support
Marvel's plan by waiving certain restrictions contained in the bonds.
However, the failure to reach agreement with bondholders, many of whom
are so-called "vulture investors" who recently accumulated the bonds,
delayed Marvel from moving forward with its plan in a timely fashion.
"We would have preferred to re-capitalize Marvel without having
to seek the aid of the court, but the actions and positions taken by
the bondholders prevented that approach," said Scott Sassa, Chairman
and CEO of Marvel. "The key to putting Marvel on track for a dynamic
and profitable future is a quick resolution to this situation, and we
want to get on with it."
"We are taking steps that are not typical in this situation,"
said Mr. Sassa. "We intend to pay all of our bills, including those
submitted prior to the filing, on time and in full, and maintain
normal credit terms with our suppliers and licensors. We expect to
continue doing business with our customers and licensees under normal
business terms. We will fund and move forward with all of our new
strategic investments,
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and employees will be paid in full and on time. We will gain a
valuable new asset in Toy Biz, Inc. and new funds that will allow us
to face the future with strength and confidence."
"The recapitalization plan represents a strong vote of confidence
by our principal shareholder and lender group in the fundamental
strength and promise of the Marvel brand, our creative properties,
business partners, licensing relationships, and strategic
initiatives," said Mr. Sassa. Marvel's strategic investment program
includes Marvel Studios' development of television and film
properties, Marvel Mania theme restaurants, Marvel Interactive
software and Fleer/SkyBox trading card initiatives.
Under the proposed financial restructuring plan, Andrews Group
Incorporated will invest $365 million in new equity in Marvel,
allowing Marvel to make Toy Biz, Inc. a wholly-owned subsidiary of
Marvel. In turn, Marvel's lender group has agreed to provide $160
million in new funds to finance Marvel's new strategic investment
program and working capital requirements. Marvel's Board of Directors
has approved this proposed plan.
In conjunction with the chapter 11 filing, a bank group led by
Chase Manhattan Bank has agreed to provide Marvel with $100 million of
debtor-in-possession (DIP) financing. Upon court approval, which is
expected shortly, this DIP financing will ensure that Marvel has
sufficient liquidity to pay all current and expected trade and
employee obligations and to meet all of its operating and investment
needs during the reorganization process. Marvel expects the
reorganization to be completed within a few months, although there can
be no assurance that such reorganization will be consummated.
In addition to Marvel, the companies engaged in the publishing,
licensing, distribution and trading card businesses of Marvel have
filed voluntary chapter 11 petitions today.
Marvel's filing does not include Marvel's Panini subsidiary,
which is headquartered in Italy. Panini has had an operating profit
each year since its acquisition by Marvel and will continue to operate
independently and unaffected by today's filing. The filing also does
not include Marvel's Restaurant Ventures affiliate.
Toy Biz, Inc. continues as an independent, publicly traded, New
York Stock Exchange listed company and its operations are unaffected
by today's filing.
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