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 ?
For this purpose, the word "transfer" can, under certain circumstances, include a recapitalization or other change in the corporation's capital structure; see Sec.
Michaels is arranging $200 million of preferred equity for the recapitalization of a premier office building located on the West Side of Manhattan.
We examine whether firms that adopt dual class recapitalizations initiate other actions that provide for strengthened alternative monitoring activity.
One popular method of maximizing shareholder value while remaining independent is to perform a leveraged recapitalization, or a recap.
The sale price, together with a prior dividend recapitalization, generated a return of more than three times Trivest's original equity investment.
Commenting on the recapitalization, Charlie Appleby, President of Advanced Disposal, stated, "This marks an exciting new chapter for the company.
The firm invests in management buyouts, leveraged buildups and recapitalizations of established growth businesses.
Simultaneous with the CMX acquisition, Trivest led a dividend recapitalization of Schoor DePalma with the Company's existing lender, American Capital Strategies.
The firm was formed in 1999 and typically invests $5 million to $15 million of equity capital to sponsor recapitalizations, growth capital investments and buyouts involving lower middle market companies.
WASHINGTON -- Allied Capital Corporation (NYSE:ALD) announced today that it has invested $162 million to finance a management-led recapitalization of Norwesco, Inc.
Orca Bay Partners is a private equity investment firm providing equity capital for transactions ranging from recapitalizations of mature businesses to growth capital for emerging companies.
invests private equity capital in compelling leverage buyouts, recapitalizations and growth capital opportunities alongside superior management teams.