What is Debt-equity swap?

Debt-equity swap is an arrangement or a transaction by witch a company cancel out outstanding debts. The process works like this the corporations exchanges his currently existing old bonds (which are the debts) to the freshly new released common stock (called equity). This move usually helps companies which are struggling financially and this way the can cover their old debts. And in these cases other companies profit as well cause if their stock prices are high then they will sell and they will be trading more debt for less stock.