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Marvel: Debt Free
Posted 16/06/2004
Source Newsarama

As of yesterday, Marvel is debt free, a goal the company had set for itself since emerging from bankruptcy in 1998. Marvel filed for Chapter 11 bankruptcy protection in December of 1996, after being driven to the brink of ruin, in the views of many analysts, by former owner, Ron Perelman.

Today’s news comes as Marvel redeemed all of the principal from its outstanding 12% Senior Notes. The deal cost Marvel approximately $169 million, which it paid in cash. As a result of the move, as of close of business yesterday, Marvel had over $150 million in cash, certificates of deposit, and commercial paper. Comparatively, the company was $200 million in debt at the end of 2000, which led many observers within the industry to take a long-term stance that Marvel would declare bankruptcy again, or be quickly bought by a larger company in a sale or hostile takeover.

Marvel also reported that it anticipates having approximately $200 million in cash by December 31st.

Marvel’s press release regarding the state of the company reads:

Marvel Enterprises, Inc., (NYSE:MVL) a global entertainment licensing company, announced that it has redeemed all of the outstanding $150,962,000 in principal amount of the Company's 12% Senior Notes due 2009. The redemption price was $106 for each $100 in principal amount of the Notes, plus six-months of accrued interest totaling approximately $9 million, for a total cash outlay to redeem the Notes of approximately $169 million. Marvel funded the Senior Notes redemption with cash on hand. Following the redemption, at June 15, 2004 Marvel had over $150 million in cash, certificates of deposit and commercial paper and no debt.

As previously announced, Marvel expects to record approximately $16 million in aggregate interest expense in the second quarter of 2004, consisting of $4 million of net interest expense for the three-months ended June 30, 2004, the early redemption premium of roughly $9 million, and $3 million of previously unamortized deferred debt costs related to the Senior Notes. Marvel anticipates cash levels at December 31, 2004 to approximate $200 million, reflecting anticipated Federal income tax payments resulting from the recent exhaustion of Federal net operating loss (NOL) carry-forwards. Marvel commenced payment of cash Federal income taxes in the second quarter, which are expected to amount to $45-$55 million in fiscal 2004.

"Redeeming our Senior Notes at the earliest allowable time has been a goal of Marvel since we emerged from bankruptcy and refocused our business on high-margin consumer and entertainment licensing initiatives," said Allen Lipson, Marvel's President and CEO. "Emerging as a debt-free company with a growing cash position is a testament to our business model and ability to leverage our popular brands to generate strong cash flows."


One would hope we might see Marvel relaxing their policy on cancelling under performing books as quickly now that they are out of the red, perhaps giving new books more of a chance to survive past their first trade paperback (which usually helps boost sales on a title). one would hope.. somehow I think they will carry on as they are however.

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