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MARVEL WHITE FLAG

Perelman will cede control to bondholders

NEW YORK — Ronald Perelman has surrendered in his battle with rival financier Carl Icahn for control of troubled Marvel Entertainment Group.

Perelman Friday said his Andrews Group is abandoning a $365 million rescue package that would have purchased the remaining shares in Marvel’s 24%-owned Toy Biz and merged it into the company.

Instead, the new bondholder proposal, also valued at $365 million, involves a rights offering, and will put cash into Marvel instead of the toy company’s assets. Of the total, $300 million will be used to retire debt and the remainder will provide working capital. The new plan also will replace Marvel’s existing Perelman-picked board of directors.

Bondholders, led by Icahn, had bitterly fought Perelman’s own rescue package, and viewed a Chapter 11 bankruptcy filing as a ploy to force his own bid through. Bondholders last week won a court’s permission to seize Perelman’s 80% stake in Marvel as collateral for their $894 million in bonds, and had been scheduled to meet today to decide whether to exercise that option.

Given those obstacles, “It became obvious that timely confirmation of the plan was unlikely, if not impossible,” said Howard Gittes, vice charirman of Andrews Group.

With Perelman out of the picture, Marvel can more easily emerge from bankruptcy and seek to rebuild its business, badly damaged by severe downturns in its key comics and trading-card business.

“They no longer have this battle going on,” said Phelps Hoyt, an analyst at KDP Investment Advisers. “It removes a lot of uncertainty, and will shorten the amount of time this company’s in bankruptcy.”

“Our goal is to revitalize the company and create value for our shareholders, and the faster we can implement a plan of reorganization, the better for Marvel, its business partners and its employees,” said Scott Sassa, Marvel’s chairman-CEO, who was installed by Perelman only last fall. Sassa is expected to remain in his post under the new bondholder control.

Aside from Perelman, who suffered an ego blow as well as a financial loss on his investment, Toy Biz’s shareholders and key execs were crushed by the abrupt ending to the toymaker’s planned sale. Toy Biz shares plummeted Friday, closing at $14, down $3.62 or 21%.

Marvel shares rose 37-1/2¢ Friday, to $2.75, but are still trading at one-fourth of their value last spring.

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