buy-back

1) The buying back by a company of its shares from an investor, who put venture capital up for the formation of the company. The shares are bought back at a price that satisfies the investor, which has to be the price the company is willing to pay for its independence. The buy-back may occur if the company is publicly floated or is taken over.

2) The buying back by a corporation, especially in the USA, of its shares to reduce the number on the market, either to increase the return on those shares still available or to remove threatening shareholders. Action by a developing country's government to reduce some or all of its debt to overseas banks by buying back that debt at the market price or at a substantial discount. The attraction for the banks is the removal of a damaging and negative debt, which may already have been provided for in its balance sheet. The advantage to the country in debt is a return to creditworthiness and the possibility of acquiring new loans.