The loans on the balance sheet were not incurring any interest payments so the conversion to equity will not reduce operational expenditure in this respect. Therefore the conversion will not affect FFP is my understanding.
FFP (P&S) allows £39m to be lost over 3 consecutive seasons IF the owner injects £24m of Equity, OR extends loans that are guaranteed to convert to equity.
Given nobody externally knows the precise definition of those Group Undertakings (loans) it is highly possible that at least an element of the Group loans were specified as convertible to equity.
Either way he has been nowhere near FFP limits even without injecting equity OR loans converting to equity. There are massive allowances/adjustments to the reported Pre Tax losses for FFP.
So from a purely FFP perspective he could choose to increase the operating loss having now officially injected the max permissible equity under Profitability and Sustainability Championship rules.
That said, if he spends more on players/wages to lose more, that increased loss is very much a real world loss and would require funding.
Nobody truly knows his motives and not worth speculating, but there are some facts:
1. The move to switch debt to equity will make MFC Balance Sheet look astoundingly better.
2. The move will make Bulkhaul's Balance Sheet look less juicy.
3. It is a massive demonstration of visible commitment.
4. It means GON has actually put in £193m effectively covering the vast majority of the Club's losses since his involvement.
5. It makes the Club become saleable, rather than saddled with enormous debt. It gives him a more attractive entity to eventually sell IF he ever wants to.
6. Because the Club in the Championship will continue to lose money he is still able to offset that loss against Bulkhaul profit for tax benefits.
Rob - you have this access, but it could be used more usefully for all.