The financially struggling toy maker Mega Brands Inc. has been involved in a major restructuring plan, which is aimed at significantly planning the paying of its heavy debts.

On Thursday, the Montreal-based manufacturer of children's toys stressed that it has managed to come out with a refinancing plan that cuts off about $300 Million out of its total debt of $430 Million.

With the move, there was a major sell off of shares of Mega Brands on the Tokyo Stock Exchange, mainly on the back of concerns that the plans would mostly likely lead to a massive dilution of the equity, with the company issuing over a million new shares.

The company's current share count of 36.6 million shares will soon surge to nearly 556 million.

"Although the interest of current shareholders is being diluted, they will own a stake in a company that is much stronger financially, with significantly greater resources to implement its operating strategy and rebuild shareholder value", said Marc Bertrand, Mega Brands Chief Executive.

The company's ongoing plan to recapitalize is scheduled to close on March 31.