Marvel Case

3451 words 14 pages
Bankruptcy and restructuring

Marvel entertainment group was started by Martin Goodman in 1939. It originally was a comic book business, known as Marvel Comics now. We have no way to forget the images of X-men, Spider-Man, and Thor. Marvel Entertainment Group has had a glorious history, and a dominant position in the comic market. However, this glorious empire regretfully elapsed in the end. The historical rise and fall influences not only comic fans’ life, but most importantly to its investors and the financial market. Here we discuss in detail about the reason Marvel file for bankruptcy, the evaluation of the restructuring plan, equity worth per share under restructuring plan, its influence on the
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To achieve this goal, Marvel planned to increase equity investment, and retire 894.1 million of debt, whose interest would be secured by 77.3 million of Marvel’s shares. In these cases, Marvel would acquire new financing support without giving away part of its ownership, which is vital for the tax and NOLs purpose of the company. Besides, the leverage ratio would decrease sharply as a large proportion of debt would turn into equity, given that the market price of stock would not decline significantly. As a result, the plan could solve the liquidity problem of Marvel, as well as solve the problem that led Marvel to violate specific bank loan covenants.

However, the company misemployed the newly acquired liquidity in the wrong place. Rather than transforming its original business strategy, which is problematic, into newly emerging industries such as video games to increase revenue, Marvel would maintain its original business lines, majority of which face downturns in the market. At the meantime, Marvel would continue to expand its current business by acquiring remaining shares of Toy Biz. As what was mentioned previous in this report, the main reason why Marvel filed Chapter 11 was that it mistakenly bought business that produces non-demanded products. S&P downgraded the company’s debt by noting that Marvel’s earnings “have fallen while it has added debt to make acquisitions”. To acquire Toy Biz, an estimated $361.5 million would be paid in


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