Leveraged recapitalization

Leveraged recapitalization,

Definition of Leveraged recapitalization:

  1. Usually, a leveraged recapitalization is used to prepare the company for a period of growth, since a capitalization structure that leverages debt is more beneficial to a company during growth periods. Leveraged recapitalizations are also popular during periods when interest rates are low since low interest rates can make borrowing money to pay off debt or equity more affordable for companies.

  2. A leveraged recapitalization is a corporate finance transaction in which a company changes its capitalization structure by replacing the majority of its equity with a package of debt securities consisting of both senior bank debt and subordinated debt. A leveraged recapitalization is also referred to as leveraged recap. In other words, the company will borrow money in order to buy back shares that were previously issued, and reduce the amount of equity in its capital structure. Senior managers/employees may receive additional equity, in order to align their interests with the bondholders and shareholders.

  3. Borrowing a large sum of money and distributing it among existing shareholders, so as to make a firm a less attractive hostile takeover target. See also poison pill.

Meaning of Leveraged recapitalization & Leveraged recapitalization Definition

Leveraged Recapitalization,

What Does Leveraged Recapitalization Mean?

  1. Leveraged Recapitalization refers to Leveraged recapitalization is a corporate finance transaction in which a company transforms its large capital structure, converting most of its capital into a series of lending instruments, including senior bank loans and subsidiary loans. Leveraged recapitalization is also called leveraged recapitalization. That is, the company will borrow money to repurchase previously issued shares and reduce the actual amount in its capital structure. Managers / employees can raise additional capital to link their interests with bondholders and shareholders.

Literal Meanings of Leveraged Recapitalization


Meanings of Leveraged:
  1. Use of leverage for (investment) in the hope that the return will be higher than the interest payable.

  2. Make the most of something)

Sentences of Leveraged
  1. Without a clear legal claim on their property, they have property that cannot be used as collateral for a loan.

  2. The organization must use its basic resources.