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.
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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.
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 ?
Fitch estimated that the likely fiscal cost of restructuring and recapitalizing the Spanish banking sector could be as high as 100 billion euros, which is 9 percent of Spanish gross domestic products.
Wetekam said the Air Force's priorities are winning the war on terrorism, developing and caring for airmen, and modernizing and recapitalizing aircraft and equipment.
And certainly the Chief is right about recapitalizing. We have to recapitalize our equipment.
As we are recapitalizing our fleet and looking at weapons system and capabilities to come, there is a human in each system--manned or unmanned.
(New York) to assist in evaluating alternatives for recapitalizing the company's long-term debt.
"By recapitalizing the SAlE Congress has fixed a structural defect in the deposit insurance system that threatened not only the SAIF but the strength of the deposit insurance system as well," she said.
banks and savings institutions must contribute to paying off the $780 million annual interest payments on $8 billion of Financing Corporation (FICO) bonds that were issued in the late 1980s to bail out the savings and loan industry by recapitalizing the defunct Federal Savings and Loan Insurance Corporation.
What can you do to recapitalize yourself?' If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalizing the bank, and if necessary the uninsured deposit holders.'
And as we work our way through this Global War on Terrorism, and as we work our way through recapitalizing an Air Force, I would only ask you to keep in mind that this is the oldest inventory we've ever operated, and we're going to have to modernize this inventory.
It takes us to recapitalizing an aging fighter force.