Effective Strategies in Financial Distress for ABC Corporation

ABC Corporation, a medium-sized manufacturing firm, is currently experiencing financial distress due to declining sales and increasing operational costs. The company has a high level of debt, and its interest coverage ratio has fallen below 1, indicating that it is unable to meet its interest obligations from its operating income. The management is considering various strategies to improve its capital structure and avoid bankruptcy. Options being considered include restructuring its debt, issuing new equity, and cutting operational costs.

In light of ABC Corporation's financial situation, which of the following strategies would most likely be the most effective in addressing the issues arising from their capital structure and financial distress?