Summary
Colt Industries is a conglomerate that is considering undertaking a leveraged recapitalization. The deal would involve a large one-time dividend to stockholders, which would be financed by over $1 billion in new debt. Unlike in an leveraged buyout, however, public shareholders would still retain an equity interest in the company. Shareholders in the company’s employee savings plan would not receive the dividend, but instead would see their percentage ownership in the company substantially increased.