Dividend recapitalization
The company borrows new debt and pays the proceeds to its owners as a dividend.
Dividend recapitalization in round numbers
Hypothetical: a company raises US$15m of incremental debt and distributes the same US$15m to its owners, ignoring fees and other uses. The owners receive cash while retaining their equity interest and its downside exposure.
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| Cash flow | Amount |
|---|---|
| Incremental borrowing | US$15m |
| Distribution to owners | US$15m |
Terms Related to Dividend recapitalization
Leverage · Debt/EBITDA multiple · Sale-leaseback · Share buyback · All of the glossary