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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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.
It offers mergers and acquisitions advisory, divestitures, management buy-outs, debt and equity financing, fairness opinions, business valuation, and leveraged recapitalization consulting services.
(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.
Before restructuring, the taxpayer investigated several options, including (1) maintaining the status quo, (2) a leveraged recapitalization or a full recapitalization with a spin-off of the lesser business divisions, and (3) divestiture of the lesser business divisions, including a targeted stock offering or an initial public offering (IPO) with a split-off or spin-off.
Knight Ridder board meets to consider McClatchy's bid and other alternatives, including a leveraged recapitalization.
In the typical leveraged recapitalization, leveraged buyout, or management buyout transaction, only the interest is deductible.
(Rochester, N.Y.) 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 third alternative, a leveraged recapitalization of an entire company, is riskier than an internal LBO because the former makes the entire company more highly leveraged.
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.
This study finds that stockholders of firms adopting two similar defensive tactics - leveraged buyout (LBO) or leveraged recapitalization (LR) - yield, on average, significant positive abnormal returns during the announcement period, but stockholders of LR firms experience significantly lower gains than LBO firms.