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XYZ Corporation is a manufacturing company experiencing financial distress. The company has $300 million in total debt and $200 million in equity. Due to declining revenues and high fixed costs, the company is considering restructuring options. The proposed restructuring plan involves:

1. Debt Reduction:

   • XYZ Corp. will exchange $150 million of its debt for equity, reducing the total debt to $150 million.

2. Equity Dilution:

   • The debt-for-equity swap will dilute current shareholders by 50%.

3. Operational Improvements:

   • After restructuring, operational improvements are expected to increase EBITDA by 20%.
   • Pre-restructuring EBITDA is $50 million.

4. Interest Rate Adjustment:

   • The new debt will have an interest rate of 7% (down from the current 10% on the total debt).

5. Tax Rate:

   • The corporate tax rate is 25%.

6. Valuation Multiples:

   • The industry-average EV/EBITDA multiple is 8x.

Questions:

1. Calculate the pre-restructuring Enterprise Value (EV).
2. Determine the new EBITDA after operational improvements.
3. Calculate the post-restructuring EV using the industry multiple.
4. Calculate the value created from the restructuring.
5. Determine the new equity value and the impact on existing shareholders.