That’s an easy one. The bank takes the put position and the company the call position using the Authorized shares they sold to the bank for so much money. The bank then uses the shares to underwrite a put position on there call position. The put position is then sold to the public and the proceeds are then again used to write another put position to collateralize the written call position.
They end up with billions of shares as long as there is buyers to buy the equity. Value and collateral is all produced by a sweep of the pen. More of a sales tool to sell equity to the public.
More the stock falls more collateral produced more calls writen and the more capital the company receives.
It’s the huge deficit and what the company does with the money raised that becomes the issue. At the end of the day it’s still debt that needs to be repaid minus the accumulated administration costs “ deficit “.
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