recapitalization

(redirected from recapitalize)
Also found in: Dictionary.

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 Federal Reserve has made a dramatic, concerted effort to help the global banking system recapitalize itself principally by keeping rates at near zero.
Austria's Finance Minister Maria Fekter said there was talk about forcing banks to recapitalize, although she said she was not in favor of such a move.
The news reports cited analyst estimates that private equity firms could provide up to $50 billion to recapitalize banks.
Matsushita Investment & Development envisions asking creditor banks to help recapitalize it further, they added.
The company also said it continues to search for alternative ways to recapitalize its long-term debt.
The money is expected to recapitalize the SAIF to prepare it for a merger with the Bank Insurance Fund (BIF) by 1999.
I am pleased to be able to appear here today to offer my thoughts on the proposed legislation to recapitalize the Savings Association Insurance Fund (SAIF), to merge SAIF and the Bank Insurance Fund (BIF), and to merge the thrift and the commercial bank charters.
In response to this threat, management has considered several defensive measures and has decided to recapitalize and implement poison pill provisions.
In contrast to governmental actions taken by the United Kingdom and some other European nations to recapitalize troubled banks in their domain by taking equity stakes in the banks, the US government has begun the process of recapitalizing US banks by taking preferential yet nonvoting equity stakes in a handful of financial institutions.
Governor Panicos Demetriades said that banks which took huge losses on Greek debt and loans would need 'less than EUR10bn' to recapitalize, even in the worst-case scenario.
These new first and second lien credit facilities recapitalize CEC's balance sheet and replace existing debt.
Will your credit union be willing to recapitalize your corporate/primary corporate?