Firstfolio shareholders have approved the company's recapitalisation. At an extraordinary general meeting held yesterday, shareholders voted in favour of a A$50.2 million equity injection that will result in control of the business passing to a private equity investor.The recapitalisation will be undertaken using a number of steps. A placement of 1.3 billion shares will be made to IZN Investments ACE Management as trustee for the IZN Investments Australian Capital Enterprise Trust. One billion of the shares will be issued at 3.5 cents a share and 300 million at 1.5 cents a share. The placement will raise A$39.5 million.Following the placement, the trustee will underwrite a one for one renounceable rights issue entitlement offer, which will raise $10.7 million.If all goes according to plan, early next year Firstfolio's issued capital will be consolidated on the basis that every 10 shares on issue being consolidated into one share.The sole unit holder of the trust is Australian Capital Enterprise (HK) Ltd, a private equity investment company. Depending on the outcome of the rights issue, the trust will hold between 50.8 per cent and 75.4 per cent of Firstfolio.The proceeds will be used to repay a Commonwealth Bank senior debt facility of $16.5 million, a National Australia Bank facility of $1.4 million and a related party loan (the Welas facility) of $13.5 million.The company will have $16.4 million available for working capital and marketing and to finance asset growth.Firstfolio, a mortgage distribution company, has been on a buying spree in recent years, and it ended up with a highly geared business just as the housing finance market slowed to a standstill.Without the recapitalisation it would have had difficulty repaying debt and risked breaching its loan covenants. There would have been uncertainty as to whether it would have been able to continue as a going concern.