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 ?
(BBH) Capital Partners has announced the completion of a recapitalization of Massachusetts-based Ethos Veterinary Health LLC, the company said.
Most recapitalizations are led by PE firms, which invest pools of privately raised capital (ie, funds).
Cushman & Wakefield's Hospitality Group also represented PMG in the recapitalization of Hotel 57 and Thirty Thirty.
For this purpose, the word "transfer" can, under certain circumstances, include a recapitalization or other change in the corporation's capital structure; see Sec.
This paper documents evidence of the emergence of monitoring substitutes in the context of dual class recapitalizations. We examine whether firms that adopt dual class recapitalizations initiate other actions that provide for strengthened alternative monitoring activity.
Chapter 11 bankruptcy and quasi reorganizations are included here, as are unleveraged recapitalizations and subsidiary spinoffs.
One popular method of maximizing shareholder value while remaining independent is to perform a leveraged recapitalization, or a recap.
BANKING AND CREDIT NEWS-July 24, 2015-DDC receives USD515m recapitalization from Behrman Capital
Equity recapitalizations have become a hot trend in real estate as owners and operators look for alternative methods to replace expensive capital partners, modify their business objectives, and/or cash out on the appreciation of their investments, all while retaining a majority ownership of their properties.
* A recapitalization of a family member's junior equity interest into a senior equity interest.
Michaels is arranging $200 million of preferred equity for the recapitalization of a premier office building located on the West Side of Manhattan.
In a recapitalization, preferred stock issued as a dividend on outstanding common stock is generally considered Section 306 stock, to the extent that the issuing corporation has undistributed "earnings and profits." For this purpose, the term "earnings and profits" has a special meaning.