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 ?
Major benefits of the recapitalization, as described by Boart Longyear, include:
Following the recapitalization, Blackstone is now the majority owner of the venture.
He noted that he is mindful of the pressing June 30 deadline for the recapitalization of the banking sector set out by the European Banking Authority, following the haircut of the Greek sovereign debt.
In the first step toward recapitalization, Takinogawa Shinkin revised its articles of association on Nov.
In past discussions about Air Force recapitalization, aircraft usually took center stage.
As a result, that stock was not nonqualified preferred stock and, thus, not "other property" that could trigger gain on the recapitalization. Apparently, the IRS concluded that (1) the new class A stock's right to participate in 20% (or on a 1:4 ratio with the new class B stock) of the "upside" of the company was participating in corporate growth significantly; and (2) the fact that the class A stock had limited rights to liquidation proceeds was inconsequential, because the likelihood of liquidation was remote.
The government capital participation through the recapitalization reduced control by private bankers.
Finally, Lehman Brothers will assist in evaluating recapitalization alternatives for Triads II through V, which currently are developing 14 communities.
A significant flotation of new public debt or a leveraged recapitalization in which previous equity holders now possess a new package of debt and equity interests can produce new user groups.
BBH typically invests between USD 30 million and USD 125 million per platform investment, and capital is used to support a variety of transactions, including management or leveraged buyouts, growth financings, recapitalizations (including dividend recapitalizations), buy-and-build strategies and acquisitions.
The Document will cease to be effective in case that the recapitalization plan of the PGBank is not implemented as scheduled, and that its General Meeting of Shareholders adopts a change of the recapitalization plan which has already been approved by the SBV.
The recapitalization was strategically executed pursuant to a joint venture agreement with a prominent global institutional pension fund.