Legal Definitions - repurchase price

The repurchase price is the specific amount of money agreed upon or legally stipulated for an original seller or issuer to buy back an asset, security, or property that they previously sold or issued. It represents the cost incurred by the original party to regain ownership or control of something they had previously transferred.

Here are some examples to illustrate this concept:

• Corporate Stock Buyback: A large technology company decides to reduce the number of its outstanding shares in the market. It announces a program to purchase its own stock directly from shareholders. The price per share that the company pays to acquire these shares is the repurchase price. This action aims to increase the value of the remaining shares and return capital to investors.

• Real Estate Right of Repurchase: A farmer sells a portion of their land to a developer, but includes a clause in the sales contract stating that if the developer fails to begin construction within five years, the farmer has the right to buy the land back for a predetermined amount. This predetermined amount is the repurchase price, allowing the original seller to regain ownership under specific conditions.

• Financial Repurchase Agreement (Repo): A bank needs short-term cash, so it sells government bonds to another financial institution with an agreement to buy them back the next day at a slightly higher price. The higher price at which the first bank buys back its bonds is the repurchase price, effectively acting as a short-term, secured loan where the bonds serve as collateral.