Well your hypothetical would be a reasonable result for shareholders - but would still leave them with a massive debt burden. Hence I don't see something quite so rosy.
I am more inclined to expect the MF prospect of double the debt value in equity - furthermore I expect to see more than 50% of the debt written down. So using your numbers above
400million debt swapped for 800million in equity @ 27 cents = extra 3billion shares = 3.3 billion shares on issue
3.3billion shares at a share price of 27cents = $890 million Market Cap
@ $50million Net Profit = PE Ratio of 17.8
We can play with the figures all we want - but it matters not until we see how aggressive this debt reduction plan will be.
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