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Finance Dictionary and Glossary of Investment Terms
Leveraged Recapitalization
Definition 1.
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.
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Definition 2.
Often used in risk arbitrage. A public company takes on significant additional debt with the purpose of either paying an extraordinary dividend or repurchasing shares, leaving the public shareholders with a continuing interest in a more financially leveraged company. Popular form of shark repellent See: Stub.
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Definition 3.
Tactic used by the target of a hostile takeover in which a company makes itself less desirable by borrowing a large sum of money and distributing it to its shareholders, by either initiating a buyback program or paying larger than normal dividends. In this way, the company might be able to scare away undesirable acquirers who do not want to take on so much debt, while at the same time retaining shareholder interest in the company (in spite of it being so heavily leveraged).
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