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leveraged recapitalization

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Financial Dictionary

Leveraged Recapitalization

A strategy where a company takes on significant additional debt with the purpose of either paying a large dividend or repurchasing shares. The result is a far more financially leveraged company.

Investopedia Commentary

This is often used in risk arbitrage. It is also a form of shark repellent.

Related Links

Trading the Odds with Arbitrage
When Companies Borrow Money
The Wacky World of M&As

See also: Leverage, Risk Arbitrage, Shark Repellent, Stub

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Cite This Source
Go Public W/ Your Company
We Take You Public. 310 888 1870 Leverage Finance Buyouts Go Public
www.TCC5.com
ESOP Consulting
Nation's largest ESOP advisor will help structure optimized deal
www.CsgFin.com
Financial Dictionary

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 by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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