What Is A Recapitalization Agreement

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A company can resort to leveraged recapitalization when its share price drops. In this case, the Company may issue debentures to finance the repurchase of its outstanding shares on the market. By reducing the number of shares outstandingWeighted average amount outstandingThe weighted average number of shares outstanding refers to the number of shares of a corporation calculated adjusted for changes in share capital during a reporting period. The weighted average number of shares outstanding is used in the calculation of measures such as earnings per share (EPS) in a company`s financial statements, with the company expecting to increase the price per share. Recapitalization is a type of corporate restructuring aimed at changing the capital structure of a company. Typically, companies perform recapitalization to shape their capital structureCapital structureMaterial structure refers to the amount of debt and/or equity used by a company to fund its operations and assets. The capital structure of a company is more stable or optimal. Recapitalization is essentially exchanging one type of financing for another – debt for equity or equity for debt. An example is when a company spends debt costs The cost of debt is the return that a company offers to its creditors and creditors.

Borrowing costs are used in wacc calculations for valuation analysis. for the repurchase of shares. It is an important tool for a company to manage its capital structure. If its share price falls, the Company may use this agreement to issue debt and repurchase a portion of its common shares. This prevents prices from falling further. It must take into account this repurchase of its common shares (called recapitalization accounting). The shares thus purchased may be withdrawn or reissued at a later date. A significant drop in the share price is a reason for a company`s management to consider a recapitalization. In this scenario, the main objective is to prevent a further decline in the share price. The company will issue debt to buy back its shares, and the forces of supply and demand will hopefully push the share price higher. Nationalization is a particular type of capital recapitalization when the government in which the company has its headquarters buys a sufficient number of shares of the company to obtain a majority stake. A leveraged buyback is a type of leveraged recapitalization initiated by an external party.

In a debt buyout, a company is purchased by an external party using a significant amount of debt to meet acquisition costs, and the company`s cash flow is used as collateral to secure and repay debt obligations. THIS RECAPITALIZATION AGREEMENT dated June 18, 2015 (this “Recapitalization Agreement”) sets forth the agreement between North American Palladium Ltd. (the “Company”) and BCP III NAP L.P. (“Brookfield”) by its complementary partner, Brookfield Capital Partners Ltd., with respect to a series of transactions (the “Recapitalization”), as set forth in the final and binding condition sheet dated June 15. April 2015 between the Company and Brookfield, which is attached to Schedule B (the “Terms sheet”, together with the terms and conditions agreed to in this Recapitalization Agreement, the Support Agreement and the Backstop Agreement, which are the “Recapitalization Terms”), under which, among other things, (a) the common shares in the capital of the Company (the “Common Shares”) to Brookfield in full final satisfaction and in exchange for all Entities (b) The common shares will be issued to the holders (“Debentures”) This Agreement focuses on the terms of the recapitalization between the Company and the shareholders.

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