recapitalization


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Recapitalization

The act of changing a company's capital structure. For example, a highly leveraged company (one that is largely financed with debt) may repay most of its debt and issue stock so that it is financed with equity. On the other hand, a company may make a self-tender offer and buy back most of its stock while issuing bonds so that it becomes debt-financed. Some companies may believe that recapitalization can be advantageous, but the capital structure irrelevance principle states that a company's capital structure has no bearing on its profitability. Recapitalization is also called an e-type reorganization.

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.
References in periodicals archive ?
The approval by the debtholders and shareholders represents a significant milestone towards the completion of the recapitalization.
1 billion floating rate loan for its purchase of the property, debt that the bank converted to a 5% fixed rate as part of the building's recapitalization last year.
In past discussions about Air Force recapitalization, aircraft usually took center stage.
2701 "would not apply, for example, to a recapitalization not involving a contribution to capital if all shareholders held substantially identical interests both before and after the recapitalization.
Finally, Lehman Brothers will assist in evaluating recapitalization alternatives for Triads II through V, which currently are developing 14 communities.
When the authors segment the sample, based on whether the recapitalization occurred prior to or after the NYSE's decision to not automatically delist firms adopting a dual class capital structure, they find no significant wealth impact for the firms recapitalizing after the moratorium.
The cost of a leveraged recapitalization tends to ne lower than taking the company private in an LBO.
On February 9, 2010, the Special Committee of the Board and HCC approved and executed a Recapitalization Term Sheet, representing non-binding terms of recapitalization transactions for the Company.
Growth Of The Equity Recapitalization And Acquisition Program--Real estate owners and operators took advantage of Carlton's expertise and access to the abundance of cheap capital in the marketplace to replace expensive capital partners, refine their business objectives and "cash out" on the appreciation of their investments.
On April 10, 2002, the vice chief of staff of the Army approved the Apache recapitalization program.
The attorney recommended a plan of recapitalization under which Mario and Marie Bosca would exchange their shares of voting common stock for an equal number of nonvoting shares that carried the same dividend and liquidation rights as the shares surrendered.
H Partners has also delivered a letter to the Board of Directors of ITC in which it questions the rationale for the recapitalization plan announced by ITC on June 11, 2007.