Lagan Industries has 80 million shares outstanding and a market capitalization (equity value) of $2.5 billion. It has $500 million of debt. Management have decided to delever the firm by issuing new equity to repay all outstanding debt. Assume perfect capital markets.

a) How many new shares must the firm issue?

b) Suppose you are a shareholder holding 100 shares, and you disagree with this decision. Describe the steps you can take to undo the effect of this decision. If you follow these steps, how many Lagan shares will you hold in your portfolio?