[stinkypete]

think about it this way.

say a company has 100M in debt while it's "worth" 101M based on assets, expected future cash flows, etc.

does this mean the shares should be worth 1M? no. the shares should be worth a lot more than that, because the downside is only 1M while the upside is huge.

the enterprise value of this company will be much higher than 101M, even though its assets and future cashflows only justify a valuation of 101M.

on the other hand, the debt will be worth significantly less than its face value of 100M due to the default risk. if you add the market value of the debt to the market value of the shares, you should get the "true value" (101M) of the company - this will be less than the "enterprise value", which will be 100M + market cap.