Investments glossary

Leveraged Recapitalization

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.

Click to rate this post!
[Total: 0 Average: 0]

Leave a Reply

Your email address will not be published. Required fields are marked *