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.
Related Terms
capitalization, leveraged recapitalization
Related Research Articles from the InvestorGuide.com University
Treasury Bonds
Learn about Treasury Bonds, Treasury Notes, CPI-Indexed Treasury Notes (TIPS) and Treasury Bills. Find out about the pros and cons of these kinds of investments.
Corporate Bonds
Thinking of buying a bond issued by a corporation? Learn the basics about corporate bonds as well as how to evaluate the yield, maturity, duration, rating, callability and convertibility.
Advanced Bond Concepts
Learn about callable and non-callable bonds, zero-coupon bonds, secured and unsecured bonds, tax-deferred bonds, put provisions, and other advanced bond concepts.
One should not increase, beyond what is necessary, the number of entities required to explain anything