By Tim Cleary, Managing Director Article Overview: There are three ways of handling the ESOP repurchase obligation: (1) recycling, (2) redeeming, and (3) releveraging. Recycling and redeeming are the most commonly used strategies. This chapter compares and contrasts the three methods and addresses the circumstances under which releveraging may be a viable strategy. Recycling is the exchange of cash for the shares subject to repurchase within the ESOP. Redeeming can occur either when the company redeems the stock that has been distributed to an ESOP participant, or when it redeems shares directly from the ESOP. In releveraging, the company redeems shares from the participant or the ESOP and sells some or all those shares back to the ESOP in exchange for a promissory note. Download PDF _ Original content written by Tim Cleary, Contributing Writer for The National Center for Employee Ownership, The ESOP Repurchase Obligation Handbook, Fifth Edition (2018). The full digital publication is available for purchase from NCEO here.