Converting debt to equity raises a lot of regulatory hurdles. 
Depending on the ownership qualifications of the debholders, foreign debtholders would be restricted to no omre than 19.9% of voting equity.  So, much of the debt may be converted to non-voting shares.  Add to that restrictons on the appointment of directors and officers by the debtholders.  There are several cases where the CRTC imposed significant restrictions including the acquisition of Alliance Atlantis, and the proposed acquisition of Bell Media - which did not proceed to a completed transaction.

This news did not seem to help the stock price. Its now at 8 cents.

RadioActive wrote:

So it went from 10 cents to 8 after this announcement? I'm pretty sure that wasn't what they were aiming for. Eight cents a share! Almost worth buying some stock using mad money to see if it bounces back.

Do I want to buy a case of beer or 60% of Corus?

Wow, I just checked the Corus stock, down to 4 cents a share

I'm waiting till it drops below zero and they just start giving it away.

The stock is now down to 3.5 cents this morning, a market cap of just $6.52 million.
Under the recapitalization, if I understand it correctly, the bond holders will hold 99 per cent of the shares of the restructured company in exchange for something like $750 million in debt that they hold. So in total the current 3.5-cent shares are only for 1 per cent of the restructured company's shares.
About a year ago, there was a bank analyst who came out with a 1 cent valuation on Corus shares. The analyst saw where this was going and his valuation is proving to be prescient.
The Shaw family walks away with next to nothing too and gives up their voting shares. But don't feel too sorry for them because they had already made their money off Corus from the dividends when they were still being paid and from the extra value created for the sale of Shaw Communications to Rogers by earlier carving out the Corus operations.