Deleveraging — Shares to Issue to Repay Debt

Company Y has 50 million shares outstanding and a market capitalization of 2 billion. It also has 756 million in debt outstanding. The company plans to delever by issuing new equity and completely repaying all the debt. Assume perfect capital markets.

1. What is the current share price (in R$)?

2. How many new shares must be issued (in millions)?

1) Share price:

✅ Share price = Market Cap (million R$) / Shares Outstanding (million) = 40 .

2) New shares to issue:

✅ New Shares = Debt / Share Price = = $ 18.9 million.