mezzanine financing

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Mezzanine financing

The next stage of financing that follows venture capital financing.

Mezzanine Financing

A type of debt financing whereby a company issues debt that the holders may convert into equity if the debt is not repaid in due course. This debt carries a high interest rate, as there is little or no collateral, but it is low-risk compared to other forms of debt financing because of its convertibility. Mezzanine financing is listed on a company's balance sheet as an asset; some companies use mezzanine financing because it makes it easier for them to obtain financing from other sources. Mezzanine financing is sometimes associated with leveraged buyouts.

mezzanine financing

High-yield debt issued in connection with a leveraged buyout.

mezzanine financing

A hybrid of debt and equity funding.Usually shortened to “mezz financing.” The provider loans money on a second or even third mortgage basis and may either take an ownership interest in addition or may reserve the right to take over an ownership interest if the loan is not paid on time and in full.The loans are generally extended in emergency situations, such as to buy property quickly before bank lending can be arranged, or to engage in expansion activities and “grow” a company out of a cash crunch that is preventing it from securing a conventional loan. Because of the subordinate nature of the debt,the risky nature of the activities being funded by the money, and the lack of time to perform due diligence, mezz lenders usually want a high return on their money,in the 20 to 30 percent range.

References in periodicals archive ?
As head of the alternative investment team, she managed a team of 10 professionals and was responsible for all fund, direct private equity co investment and mezzanine debt opportunities sourced from TIAA's relationships with fund managers.
The investment was made by Babson Capital Australia Pty Ltd (Babson Capital Australia), a wholly owned subsidiary of Babson Capital based in Sydney, as trustee and manager of the BCA Mezzanine Debt Trust.
will focus on investments in mezzanine debt and equity securities of middle-market companies located primarily in Australia and New Zealand as well as select developed countries in Asia, including Hong Kong, Japan, Singapore, South Korea and Taiwan.
Maranon's investment consisted of $28 million of senior revolving credit and term debt and $10 million of mezzanine debt.
The transaction involved highly complicated senior and mezzanine debt, and all of the separate pieces needed to close simultaneously.
Ares Capital Corporation invests primarily in first and second lien senior loans and mezzanine debt, which in some cases includes an equity component, and, to a lesser extent, in equity investments in private middle market companies.
Since the inception of RCG Longview in 1999, the managers, Peter Cohen and Michael Boxer (Ramius Capital Group, LLC), Jeffrey Feil and Jay Anderson (The Feil Organization), Morton Olshan (Mall Properties), and Jon Estreich (Estreich & Company) have originated more than $750 million in real estate mezzanine debt and other related instruments through RCG Longview fund vehicles.
In addition to being a direct provider of mezzanine debt and equity capital, Commercial Alliance Group, Inc.
a Japanese trading company, where he was responsible for the origination of mezzanine debt in a variety of institutional property types.
Since close, the pool has migrated towards more whole loans and A notes (to 58% from 39%), and less B notes, second mortgages, mezzanine debt, and preferred equity (to 35% from 42%), and maintained its exposure to commercial real estate collateralized debt obligation securities (7%).
Carlton is providing senior mortgage and mezzanine debt acquisition financing for the buyer.
The firm focuses not only on equity investment but is also an active provider of subordinated mezzanine debt across all property types, including commercial, hospitality and residential properties.