Quote Originally Posted by The Hooded Claw View Post
Converting debt to equity means that the club effectively owes the money to its shareholders instead of lenders.
It just so happens that Vincent Tan is both.
Say there are £50m shares and £100m debt. Someone buying the club would need to buy the shares and eventually repay the debt, so that’s £150m.
If the £100m debt is converted to equity, then that’s £150m in shares, so the purchase price remains the same.
What does change is that the club’s books show no loan, but more shares.
This makes the club look healthier, since shares are basically only ever paid back in the event of a liquidation of the club and that’s only going to happen if the club goes bust - and there wouldn’t be any money left to pay the shareholders.
But tan couldn't "just take his money out". He'd have to sell his shares.