A firm announces intent undertake levered recapitalization, Corporate Finance

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A firm announces its intent to undertake a levered recapitalization, issuing debt to repurchase a fraction of the outstanding common stock.

Upon the announcement, its stock price declines. Describe (list) 2 reasons why you might have expected that the price would instead have risen and 2 reasonable potential explanations for the decline.

Each explanation should be very brief, concise and to the point with complete sentences.

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