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 ?
The ratings are pro forma for a planned leveraged recapitalization.
TPG Capital (formerly Texas Pacific Group) is one of the world's largest private-equity investment firms focused on leveraged buyout, growth capital and leveraged recapitalization investments in distressed companies and turnaround situations.
Reuters)Mar 7, 2013 - Dell Inc said shareholder Carl Icahn has urged the company to pursue a leveraged recapitalization and pay a $9 per share dividend instead of going private.
The perfect solution may well be a leveraged recapitalization or recap.
was winding up a leveraged recapitalization that took it off the stock exchange and back under private control, the prominent gear-machine builder also worked out a deal with sometime competitor Kashifuji Works Ltd.
The board of directors of CareMatrix Corporation, a Needham, Massachusetts-based assisted living company, has instructed management to explore entering into a leveraged recapitalization or other strategic alterative to maximize shareholder value.
The March 1995 leveraged recapitalization, which transformed QFC from a debt-free mid-capitalization company to a high-leverage micro-capitalization, causing inevitable institutional investor fallout.
24 billion leveraged recapitalization transaction, in which Mitsubishi's stake was redeemed for $406 million, and Carbide received a $347 million special dividend, while retaining a 25 percent stake in UCAR.
A significant flotation of new public debt or a leveraged recapitalization in which previous equity holders now possess a new package of debt and equity interests can produce new user groups.
The 'B' IDR also reflects ABILITY's weaker financial profile relative to this peer group, with a highly leveraged balance sheet pro forma for a contemplated leveraged recapitalization.
The leveraged recapitalization of the company that will remove it from trading on the open (NYSE) market will become finalized at a special stockholders meeting set for March 29th.
TA completed a $130 million minority leveraged recapitalization of AAC in October 2006.