Bondholders

NEW YORK -- Marvel Entertainment Group Inc. Chairman Ronald Perelman yesterday unveiled a second proposal to get the comic-book company out of bankruptcy court, drawing criticism from bondholders who succeeded in blocking the first plan.Under the proposal, Marvel would combine its comic book and character-licensing businesses with Toy Biz Inc., which makes toys modeled on Marvel characters. Marvel then would auction the combined company, mainly to repay secured creditors.Bondholders said the plan is Perelman's latest effort to hamper their recovery on $894 million of bonds.

NEW YORK -- Bondholders fighting Marvel Entertainment Group's plan to merge with Toy Biz Inc. and emerge from bankruptcy won a round in court yesterday when a federal judge ruled that the bondholders could take control of the 80 percent stake in Marvel stock that secured the bonds.The ruling will not take effect until May 23, however, giving Marvel time to appeal.The fight over Marvel, the comic book and sports card company, pits Marvel's board and bank lenders against the bondholders, led by Carl Icahn.

Bethesda-based Host Marriott Corp. said yesterday that it has reached a settlement agreement with the last of its bondholders who were challenging the 1993 spinoff of Marriott International, Inc.The lodging real estate company said it will pay PPM America Inc. and several other institutional investors a total of $1.25 million in exchange for the bondholders' withdrawal of their appeal and all claims.The bondholders, led by PPM, tried unsuccessfully to convince a Baltimore jury in late 1994 that Marriott Corp.

A federal judge in Baltimore yesterday threw out a bondholder suit against the old Marriott Corp. that claimed the company committed securities fraud when it launched a 1992 bond offering without disclosing internal discussions about dividing the company into two separate firms.Senior Judge Alexander Harvey II said the investors who sued Marriott presented so little evidence at last year's trial that no rational jury could have found the company broke the Securities Exchange Act of 1934.The jury at the actual trial failed to reach a verdict, but jurors said that most of the panel initially favored Marriott but that by the end of the deliberations they were leaning toward the bondholders.

Municipal bondholders across the nation got a lesson last week in the New Economics from the conservative "I'm mad at government and won't take it any more" crowd: One of the nation's most affluent jurisdictions, Orange County, Calif., which owes $1.7 billion and is now in bankruptcy, essentially told Wall Street it won't live up to its legal and moral obligations. It is welshing on its lenders.Until now, the basic underpinning of the government bond market has been the understanding that cities, counties and states would meet their financial responsibilities.

U.S. District Senior Judge Alexander Harvey II yesterday dismissed a claim for punitive damages against Host Marriott Corp., but agreed to continue a bondholders' suit for $18 million in compensatory damages against the Bethesda-based hotel owner.At the end of the second week of testimony in a federal securities fraud case, Judge Harvey said there was not enough evidence to support a common law fraud claim against Host and its predecessor, the Marriott Corp., which has been accused of illegally concealing from bondholders plans to divide the company in two.Common law claims, which provide for punitive damages, are proven only by "clear and convincing" evidence.

Fair Lanes Inc. said yesterday that it would file a bankruptcy reorganization plan after reaching a deal with its biggest creditors to fix the finances of the debt-ridden company.The Hunt Valley-based operator of 106 bowling and entertainment centers, including 33 in the Baltimore-Washington area, said its agreement with creditors would allow it to file a prepackaged plan, typically hastening approval by the court and forcing the deal on possibly recalcitrant minority bondholders.Both Fair Lanes Inc. and its parent, Fair Lanes Entertainment Inc., were expected to file for Chapter 11 bankruptcy protection today, said Mac Clayton, chief executive of the two companies.

Creditors of Greyhound Bus Lines Inc. attempted to force the nation's biggest bus company into bankruptcy in Texas late Wednesday, following a breakdown in talks at a Saturday confrontation at the offices of Greyhound's bankruptcy lawyers in New York.The move capped a colorful week of high-wire talks and a week of high-profile embarrassments and scrambling for Greyhound, which only emerged from its last Chapter 11 bankruptcy proceeding in 1991.In the past few weeks, the company had been forced to ask bondholders to accept stock in exchange for debt and to replace its chief executive after reporting a loss of $72 million in the first nine months of the year.

Stephen F. Bollenbach, the mastermind of Marriott Corp.'s controversial split into healthy and debt-laden companies, angrily insisted yesterday that he hadn't misled bondholders about the division.At the end of a key day of testimony in Baltimore's U.S. District Court, Mr. Bollenbach finally exploded at an attorney representing the bondholders, who have sued Marriott for securities fraud.Eleven bondholders are charging that Marriott executives sold $400 million in bonds in late April 1992, while they already knew that they were going to divide the company and assign the bonds to the debt-laden successor, thus cutting their value.

Bondholders who sued Marriott Corp. after the Bethesda hotel giant announced plans to split into two companies have won an important round in their legal battle, as a federal judge refused a request to dismiss the lawsuit.The denial of Marriott's motion for summary judgment sets the stage for a jury trial between Marriott and a group of 16 bondholders, led by PPM America Inc., who claim they lost $30 million after Marriott disclosed its plans in October 1992 to split itself into Marriott International Inc. and Host Marriott Corp.

A deadline for General Motors Corp. bondholders to accept a revised debt-for-stock offer that could speed the carmaker's ride through Chapter 11 passed Saturday without any word on whether there was enough participation to satisfy the company and the Obama administration. The offer would give holders of about $27 billion in bonds as much as 25 percent of a new, post-bankruptcy GM while wiping out most of the bond debt. The company and the administration hoped to get enough bondholders to agree so that the deal could be part of GM's expected bankruptcy filing Monday.

GM bankruptcy likely as bondholders balk at deal DETROIT -: General Motors bondholders felt they deserved something like a 58 percent stake in the company in exchange for their billions of dollars in debt. What they were offered wasn't even close. As a result, the largest industrial bankruptcy in U.S. history is now all but certain. The bondholder rejection virtually ensures GM will file for Chapter 11 bankruptcy protection within days. The government, which has already extended nearly $20 billion in loans to GM, ordered the company to come up with a plan that 90 percent of its bondholders would agree to. But the government allowed it to offer only 10 percent of the company's stock.

WASHINGTON - Chrysler's path to recovery cleared a major roadblock ahead of Thursday night's government-imposed deadline when the struggling automaker's largest bondholders agreed Tuesday to significantly reduce its debt. That deal and the expectation that the United Auto Workers will ratify a labor pact Wednesday increase the likelihood that Italian automaker Fiat will buy Chrysler and save it from financial collapse. But even if Fiat takes over, Chrysler might still enter government-backed bankruptcy to resolve some of its toughest outstanding issues, including a sharp reduction of its 3,300 U.S. dealers.

General Motors Corp. shares fell as much as 19 percent Monday in the wake of a report that the troubled automaker has been directed by the U.S. Treasury to lay the groundwork for a bankruptcy filing by June 1. GM's stock, a component of the Dow Jones industrial average, ended the session down 16.2 percent at $1.71 and is now down 47 percent since the beginning of the year. Members of President Barack Obama's automotive task force are holding meetings and conference calls with GM officials and their advisers in Detroit and Washington, according to The New York Times, with the goal of preparing for a fast "surgical" bankruptcy.

A struggling Baltimore sports museum and Western Maryland resort were put on taxpayer life-support by the Board of Public Works yesterday, over objections by Comptroller Peter Franchot that a state facing huge budget deficits can ill afford to subsidize money-losing projects. The board's two other members - Treasurer Nancy K. Kopp and Lt. Gov. Anthony G. Brown, sitting in for Gov. Martin O'Malley - voted to allow the Maryland Stadium Authority to forgive $444,274 in unpaid rent by Sports Legends at Camden Yards and to slash the faltering museum's rent from more than $32,000 a month to about $10,000.

FLINTSTONE -- On a recent weekday, Wit Kosicki enjoyed the view of Evitts Mountain as his wife received a massage inside the Rocky Gap Lodge & Golf Resort. Kosicki, an insurance broker who has lived in Timonium for 20 years, was surprised to find only a smattering of people in the upscale restaurant for lunch. Only a few had rented boats or bicycles on a sunny day when the noon temperature hit 75 degrees. The indoor pool was empty, and the fairways on the Jack Nicklaus-designed golf course were surprisingly uncrowded.

The head of a state-backed economic development agency said yesterday that it will take another three years to stabilize the Rocky Gap Lodge & Golf Resort, which has lost $18.9 million since 1999. Hans F. Mayer, executive director of the Maryland Economic Development Corp., said the agency and Rocky Gap bondholders "have been trying to work out a transaction that provides stabilization for the project." "As a result of exchanges yesterday and today, we are very close to doing that," Mayer told members of a House Appropriations subcommittee.

YOU ARE Wilbur L. Ross. You are 65 and you are rich. You collect art. They call you "the bankruptcy king." Getting inside your bald head is perhaps the best way to figure out whether, after 113 years of storied production, Bethlehem Steel Corp.'s Sparrows Point mill will see a 114th. You say you want to save Sparrows, whose employment, at 3,300, hasn't been so low since the Great Depression. You admire its efficiency and its deepwater harbor, which allows the use of foreign ore and coke.

NEW YORK -- Bondholders fighting Marvel Entertainment Group's plan to merge with Toy Biz Inc. and emerge from bankruptcy won a round in court yesterday when a federal judge ruled that the bondholders could take control of the 80 percent stake in Marvel stock that secured the bonds.The ruling will not take effect until May 23, however, giving Marvel time to appeal.The fight over Marvel, the comic book and sports card company, pits Marvel's board and bank lenders against the bondholders, led by Carl Icahn.

NEW YORK -- Marvel Entertainment Group Inc. Chairman Ronald Perelman yesterday unveiled a second proposal to get the comic-book company out of bankruptcy court, drawing criticism from bondholders who succeeded in blocking the first plan.Under the proposal, Marvel would combine its comic book and character-licensing businesses with Toy Biz Inc., which makes toys modeled on Marvel characters. Marvel then would auction the combined company, mainly to repay secured creditors.Bondholders said the plan is Perelman's latest effort to hamper their recovery on $894 million of bonds.