The actual MF comment was: "A debt for equity swap would involve...

The actual MF comment was:
"A debt for equity swap would involve something like Slater & Gordon issuing $100 million new equity in the firm to the banks for every $50 million of outstanding debt."

That doesn't mean new shares being issued at 50c each. It means that $100M in new equity would be issued which, at the current SP would result in 363M new shares being issued @27.5c. But, more likely, the banking syndicate would require a discount to the current SP, so if for example at 25c = 400M but if @20c = 500M, etc.

There is no way that the banking syndicate will give up having a higher placed ranking (as secured creditors) in favour of the lowest placed ranking (as ordinary shareholders) without extreme dilution occurring. A more pointed example of this, as suggested in the MF article was the convertible notes alternative of SGH "issu(ing) say $500 million of convertible notes to the banks that would become scrip at a future date at say 5 cents each".

Whilst this would (in a quasi sense) remove $500M in direct debt from the Balance Sheet (although depending upon the accounting rules, it might still need to be characterised as debt going forward), the risk of future dilution would be with the banking syndicate having the potential to convert the notes held into 10 billion new future shares. Almost certainly such an approach would condemn the future SP to a sub-27.5 rating where today's share price would be regarded as the future dreamt of high water mark as the effective ultimate dilution would be >96% relative to the present shareholding base.