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Recapitalization
Recapitalization is a type of corporate reorganization involving substantial change in a company's capital structure. Recapitalization may be motivated by a number of reasons. Usually, the large part of equity is replaced with debt or vice versa. In more complicated transactions, mezzanine financing and other hybrid securities are involved. Leveraged recapitalization One example of recapitalization is a leveraged recapitalization in which the company issues bonds to raise money and then buys back its own shares. Usually, current shareholders retain control. The reasons for such a recapitalization include: * Desire of current shareholders to partially exit the investment * Providing support of falling share price * Disciplining the company that has excessive cash * Protection from a hostile takeover * Rebalancing positions within a holding company * Help to improve the stock of the company during a time of poor economic conditions Leveraged buyout Another example is a leveraged b ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Leveraged Recapitalization
In corporate finance, a leveraged recapitalization is a change of the company's capital structure, usually substitution of debt for equity. Overview Such recapitalizations are executed via issuing bonds to raise money and using the proceeds to buy the company's stock or to pay dividends. Such a maneuver is called a leveraged buyout when initiated by an outside party, or a leveraged recapitalization when initiated by the company itself for internal reasons. These types of recapitalization can be minor adjustments to the capital structure of the company, or can be large changes involving a change in the power structure as well. Leveraged recapitalizations are used by privately held companies as a means of refinancing, generally to provide cash to the shareholders while not requiring a total sale of the company. Debt (in the form of bonds) has some advantages over equity as a way of raising money, since it can have tax benefits and can enforce a cash discipline. The reduction in eq ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Leveraged Buyout
A leveraged buyout (LBO) is the acquisition of a company using a significant proportion of borrowed money (Leverage (finance), leverage) to fund the acquisition with the remainder of the purchase price funded with private equity. The assets of the acquired company are often used as collateral for the financing, along with any equity contributed by the acquiror. While corporate acquisitions often employ leverage to finance the purchase of the target, the term "leveraged buyout" is typically only employed when the acquiror is a financial sponsor (a private equity investment firm). The use of debt, which normally has a lower cost of capital than Equity (finance), equity, serves to reduce the overall cost of financing for the acquisition and enhance returns for the private equity investor. The equity investor can increase their projected returns by employing more leverage, creating incentives to maximize the proportion of debt relative to equity (i.e., debt-to-equity ratio). Whi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bond (finance)
In finance, a bond is a type of Security (finance), security under which the issuer (debtor) owes the holder (creditor) a debt, and is obliged – depending on the terms – to provide cash flow to the creditor (e.g. repay the principal (i.e. amount borrowed) of the bond at the Maturity (finance), maturity date and interest (called the coupon (bond), coupon) over a specified amount of time.) The timing and the amount of cash flow provided varies, depending on the economic value that is emphasized upon, thus giving rise to different types of bonds. The interest is usually payable at fixed intervals: semiannual, annual, and less often at other periods. Thus, a bond is a form of loan or IOU. Bonds provide the borrower with external funds to finance long-term investments or, in the case of government bonds, to finance current expenditure. Bonds and Share capital, stocks are both Security (finance), securities, but the major difference between the two is that (capital) stockholders h ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Hostile Takeover
In business, a takeover is the purchase of one company (law), company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are publicly listed, in contrast to the mergers and acquisitions, acquisition of a private company. Management of the target company may or may not agree with a proposed takeover, and this has resulted in the following takeover classifications: friendly, hostile, reverse or back-flip. Financing a takeover often involves loans or bond issues which may include junk bonds as well as a simple cash offer. It can also include shares in the new company. Takeover types Friendly takeover A ''friendly takeover'' is an acquisition which is approved by the management of the target company. Before a bidder makes an tender offer, offer for another company, it usually first informs the company's board of directors. In a private company, because the shareholders and the board are ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Capital Structure
In corporate finance, capital structure refers to the mix of various forms of external funds, known as capital, used to finance a business. It consists of shareholders' equity, debt (borrowed funds), and preferred stock, and is detailed in the company's balance sheet. The larger the debt component is in relation to the other sources of capital, the greater financial leverage (or gearing, in the United Kingdom) the firm is said to have. Too much debt can increase the risk of the company and reduce its financial flexibility, which at some point creates concern among investors and results in a greater cost of capital. Company management is responsible for establishing a capital structure for the corporation that makes optimal use of financial leverage and holds the cost of capital as low as possible. Capital structure is an important issue in setting rates charged to customers by regulated utilities in the United States. The utility company has the right to choose any capital ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Mezzanine Financing
Mezzanine capital is a type of financing that sits between senior debt and equity in a company's capital structure. It is typically used to fund growth, acquisitions, or buyouts. Technically, mezzanine capital can be either a debt or equity instrument with a repayment priority between senior debt and common stock equity. Mezzanine debt is subordinated debt that represents a claim on a company's assets which is senior only to that of the common shares and usually unsecured. Redeemable preferred stock equity, with warrants or conversion rights, is also a type of mezzanine financing. Mezzanine capital is often a more expensive financing source for a company than secured debt or senior debt. The higher cost of capital associated with mezzanine financings is the result of it being an unsecured, subordinated (or junior) obligation in a company's capital structure (i.e., in the event of default, the mezzanine financing is only repaid after all senior obligations have been satisfied) ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Nationalization
Nationalization (nationalisation in British English) is the process of transforming privately owned assets into public assets by bringing them under the public ownership of a national government or state. Nationalization contrasts with privatization and with demutualization. When previously nationalized assets are privatized and subsequently returned to public ownership at a later stage, they are said to have undergone renationalization (or deprivatization). Industries often subject to nationalization include telecommunications, electric power, fossil fuels, railways, airlines, iron ore, media, postal services, banks, and water (sometimes called the commanding heights of the economy), and in many jurisdictions such entities have no history of private ownership. Nationalization may occur with or without financial compensation to the former owners. Nationalization is distinguished from property redistribution in that the government retains control of nationalized pro ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Controlling Interest
A controlling interest is an ownership interest in a corporation with enough voting stock shares to prevail in any stockholders' motion. A majority of voting shares (over 50%) is always a controlling interest. When a party holds less than the majority of the voting shares, other present circumstances can be considered to determine whether that party is still considered to hold a controlling ownership interest. In the United States, Delaware corporations have a 2/3 vote requirement for a motion to pass. In theory, this could mean that a controlling interest would have to be over two-thirds of the voting shares. A 2019 study published in the Virginia Law Review said dual-class stock structures, common to newly public technology companies, creates governance risks and costs, including the potential loss of economic value for non-voting shares held by public investors. See also * Consolidation (business) * Holding company * Minority interest * Parent company * Subsidiary A subsi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Eminent Domain
Eminent domain, also known as land acquisition, compulsory purchase, resumption, resumption/compulsory acquisition, or expropriation, is the compulsory acquisition of private property for public use. It does not include the power to take and transfer ownership of private property from one property owner to another private property owner without a valid public purpose. This power can be legislatively delegated by the state to municipalities, government subdivisions, or even to private persons or corporations, when they are authorized to exercise the functions of public character. The most common uses of property taken by eminent domain have been for roads, government buildings and public utility, public utilities. Many railroads were given the right of eminent domain to obtain land or easements in order to build and connect rail networks. In the mid-20th century, a new application of eminent domain was pioneered, in which the government could take the property and transfer it to ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
