recapitalization

Definition

A change in a company's capital structure, such as an exchange of bonds for stock. Recapitalization is often undertaken with the aim of making the company's capital structure more stable, and sometimes to boost the company's stock price (for example, by issuing bonds and buying stock). Companies that do not want to become hostile takeover targets might undergo a recapitalization by taking on a very large amount of debt, and issuing substantial dividends to their shareholders (this makes the stock riskier, but the high dividends may still make them attractive to shareholders). Also, bankrupt companies often undertake a recapitalization as a part of their reorganization process.

Use recapitalization in a sentence

You should try and make sure that you are fully prepared before you decide to take on any recapitalization at your work place.

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Because our executive committee was afraid of hostile takeover by a competitor, we had to issue emergency recapitalization to our shareholders.

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The pharmaceutical company in my town that was in danger of being taken over by another company planned a huge recapitalization by building several additional complexes and expanding it's campus to include real estate that would burden the company that would choose to take them over.

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adjustment bond leveraged recapitalization