My admittedly simplistic understanding...
Shareholders Equity = Assets - Liabilities
So - Before Recap:
SE (~35M) = Assets - $800M
They are keeping $35M in "senior debt" (Liabilities).
So - based on this - before recap, the Assets (i.e. "the company") was valued at roughly $835M without the debt. (I'm rounding to keep the maths simple here).
All they are doing is moving most of the Liabilities side of the equation over to sit on the Shareholders Equity side of the equation.
So - After Recap - shareholders will own 4% (or 5%) of the equity (depending on warrants outcome):
SE = (Assets - $35M) - 96%
SE = 800M - 96% = $32M (or $40M if @ 95% dilution)
Where SE represents the portion of the company existing s/holders end up owning.
or put another way:
To end up with 4% dilution, divide current shares on issue by 4% (0.04)
Original SE / 4% = Assets - $35M
352 becomes 8.8Bn shares = $800M
352/8800 x $800M = $32M
This does not affect the "Value" of your Shares directly as such (unless the market thinks that the company is being materially under- or over-valued) - however the marketability in a register with 8.8Bn shares on issue and majority held by a hedge fund might well keep a lid on the price for the foreseeable future. That's probably more a question for the traders.
Short version - D4E done at roughly $0.09 and wiping out pretty much all of the debt.
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