Having 1 common share, $2 dollar asset and $1 in debt would mean the 1 share worth $1.
Converting the debt to equity, then we have 2 common share, $2 dollar asset and no debt. And 1 share still worth $1.
The difference would be more shares (around 22B),higher market cap and the company doesn't have to pay the dividends for preferred shares.
just my two cents.