emark, you are correct.Debt for equity swap is dilution. Anyone...

emark, you are correct.

Debt for equity swap is dilution. Anyone who could not work that out is simply plain stupid.

My guess is that ordinary shareholders will suffer a 10:1 dilution.

This is why the BNBG bonds have been trading so cheaply. These bonds are now the different between negative equity position and positive equity position. If you turn the $600M of these bonds into equity, then the company probably has a positive equity position again.

However, one point that everyone so far has missed is that the satellites of the BNB stable are, on the main, starting to recover. This is due to a combination of assets sales, suspension of all dividends, large reductions in staffing and costs, use of operating cashflow to pay down debts.

This sort of announcement will put the wind up bondholders in other BNB satellites. It will be interesting to see if BBI bondholders are forced down this route as well, significantly diluting the ordinary shareholder equity position as well.