leveraged recapitalization

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Leveraged recapitalization

Often used in risk arbitrage. A public company takes on significant additional debt with the purpose of either paying an extraordinary dividend or repurchasing shares, leaving the public shareholders with a continuing interest in a more financially leveraged company. Popular form of shark repellent See: Stub.

Leveraged Recapitalization

The act of a publicly-traded company borrowing a significant amount of capital and using it either to pay an extraordinary dividend or to buy back a portion of its own stock. Leveraged recapitalization increases the company's liabilities (because of the extra debt) while reducing its equity. This can make it less attractive to potential acquirers. As a result, leveraged recapitalization is used most often as an anti-takeover measure. See also: Shark repellent.

leveraged recapitalization

A corporate reorganization in which borrowed funds are used to pay a large one-time dividend to shareholders. The result is a company with greater financial risk because of increased debt and reduced equity. In some instances the dividend is paid in shares of stock rather than cash to inside shareholders who increase their proportional ownership and control.
References in periodicals archive ?
Coca-Cola HBC, CCHBC), today announced its intention to improve the efficiency of its capital structure through a leveraged re-capitalization, which will result in a capital return of euros 2 per share to all shareholders.
Underlying business continues to be strong as evidenced by the company's performance in the first half of 2003 and the revised guidance for the full year also announced today * CCHBC's financial ratios remain strong post the leveraged re-capitalization * S&P reaffirmed CCHBC's long term credit rating of A and short term rating of A-1 * Proposed re-capitalization plan will lower CCHBC's Weighted Average Cost of Capital (WACC) by approximately 50 basis points * CCHBC's operational activities, strategic priorities and performance goals remain unaffected
In the past year, the for-profit hospital industry has witnessed two LBOs and a leveraged re-capitalization, and speculation is mounting that continued LBOs are possible among the remaining publicly traded hospital operators.