recapitalization (redirected from recapitalisation)

Recapitalization

Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable.

Notes:

Companies often want to diversify their debt-to-equity ratio to improve liquidity.

A good example is when a company issues stock in order to buyback debt securities. By doing this, the company is also able to raise its stock price.

See also: Balance Sheet, Buyback, Capital Structure, Debt Equity Ratio, Debt Security

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recapitalization

A change a company makes in the long-term financing mix it uses. For example, a firm may borrow long-term funds (that is, it may sell bonds) in order to acquire the money needed to repurchase a block of its outstanding stock. Because recapitalization will often affect the level and the volatility of earnings per share, it is of interest to stockholders. Recapitalization often occurs when a firm attempts to reorganize while in bankruptcy proceedings.