Often used in risk arbitrage. Popular form of shark repellant whereby a public company takes on significant additional debt with the purpose of either paying an extraordinary dividend or repurchasing shares, leaving the public shareholders with a continuing interest in a more financially- leveraged company. See: stub.
In corporate finance, a leveraged recapitalization is a strategy often used to fend off a hostile acquisition. Under this strategy, a company incurs significant additional debt to repurchase stocks through a buyback program or distribute a large dividend among the current shareholders. This will cause the share price to drop significantly, making the company a less attractive takeover target.