LeverageRückführung

LeverageRückführung is a term used in corporate finance to describe the deliberate reduction of a company's financial leverage through the repatriation of cash and capital from foreign subsidiaries to the parent company. By returning earnings and excess liquidity, a firm can strengthen its balance sheet, lower debt, and optimize its capital structure.

Implementation typically involves evaluating foreign-currency reserves, tax consequences, and intercompany financing options. Common methods include declaring dividends from subsidiaries, repaying intragroup loans, or refinancing foreign debt at the parent level. The repatriated funds may be used to retire existing debt, fund share buybacks, or invest in higher-return projects at the parent level.

Benefits include improved leverage ratios, reduced interest expense, enhanced credit profile, and greater financial flexibility. Repatriation can also simplify tax and regulatory reporting in some jurisdictions when profits are taxed at the parent level. However, tax planning is essential, as repatriation can trigger withholding taxes or unrepatriated-earnings taxes.

Risks include tax costs, currency fluctuations, potential disruption to foreign operations, and the possibility that capital owners prefer to reinvest abroad. Timing and sequencing are important to avoid adverse effects on subsidiaries' liquidity.

See also: capital structure optimization, cash pooling, intragroup financing, repatriation of earnings.