debt for equity swap

There have been a few opinions bandied around about the impact of a debt for equity swap.

Obviously its impossible to forsee the long-term impact on the share price without a detailed proposal.

Some here have suggested that the banks may accept a note worth say $100 that converts to $100 worth of shares after a certain period of time. That would obviously be the best scenario for shareholders.

Buffett and others have expressed concerns about banks fixing the value of the note at or around the current share price. For example, a $1 billion debt to equity swap with the share price around $0.10 would dilute shareholder value by adding 10 billion shares to the register. Banks would own the majority equity in the company. I am also concerned about this and no longer own CNP shares.

So is the first option possible??

For this answer you would have to ask...

Could banks trade their convertible notes at face value before the conversion date?

What certainty do the banks have that they can maintain or extract their capital after the notes are converted to ordinary equity?

Would appreciate peoples thoughts...

dc1