recapitalization

recapitalization, n. An adjustment or recasting of a corporation’s capital structure — that is, its stocks, bonds, or other securities — through amendment of the articles of incorporation or merger with a parent or subsidiary. • An example of recapitalization is the elimination of unpaid preferred dividends and the creation of a new class of senior securities. Cf. REORGANIZATION(2). [Cases: Corporations 38, 581. C.J.S. Corporations §§ 54–61, 792–797.] — recapitalize, vb.

leveraged recapitalization. Recapitalization whereby the corporation substitutes debt for equity in the capital structure, usu. to make the corporation less attractive as a target for a hostile takeover.

— Also termed leveraging up.

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