leveraged ESOP

Leveraged ESOP

An employee stock ownership plan in which the sponsoring company borrows funds in order to purchase shares from itself, which it then distributes or sells to employees as part of their compensation. It repays the loan with annual contributions.

leveraged ESOP

An Employee Stock Ownership Plan that borrows funds to purchase securities of the employer.
References in periodicals archive ?
In a leveraged ESOP, the ESOP may borrow the funds to acquire
Michael Oneal, a Tribune reporter, worked out the numbers, and as he said, there is a "rich upside and chilling downside" to the heavily leveraged ESOP deal.
A leveraged ESOP has greater privileges than any other retirement program, however.
In a leveraged ESOP, the company borrows money, then loans it to a tax-favored ESOP trust created specifically for this purpose.
Furthermore, under current law, employers may deduct dividends paid on employer stock held in an ESOP, provided that either the dividends are paid out in cash to plan participants or the dividends are used to make loan payments for a leveraged ESOP.
It covers such topics as: the requirements for initial and continuing qualification under section 401(a); the uses of funds contributed to a leveraged ESOP; and, techniques for using a leveraged ESOP to provide financing to the employer corporation or as an alternative to a redemption of outstanding securities.
His firm completed its leveraged ESOP about nine years ago and just bought it back in again this year.
In a typical leveraged ESOP, a sponsoring company forms a tax-qualified ESOP trust, which borrows funds from a lending institution to buy stock from the sponsoring employer.
General Manager Jerry Lintz researched the possibility of purchasing the Green Bay property through a leveraged ESOP.
At the heart of a leveraged ESOP is The Loan--the mechanism for determining how many total shares of stock the plan will credit to participants' accounts.
His experience there includes mergers and acquisitions, strategic-alternatives assessments, leveraged ESOP transactions, solvency opinions, fairness opinions and general business valuations.