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 the only active SBIC based in Pittsburgh, Pennsylvania, FNBCP will focus on mezzanine debt and private equity investments in lower middle market companies.
UK's HSBC Holdings Plc (LSE: HSBA) (NYSE: HBC) (HKG: 0005) has said that it has agreed, through its wholly owned subsidiary HSBC Capital (Canada) Inc, to sell its Canadian private equity fund management and mezzanine debt business to Fulcrum Capital Partners Inc, a new company formed for the purpose by members of HSBC Capital's current management team.
The new entity has purchased all $300 million worth of the senior mezzanine debt on the Manhattan apartment complex, Crain's reported.
The current refinancing gap for middle market companies, created by banks' unwillingness to lend, has opened up some attractive mezzanine debt investment opportunities, according to Mercer.
The mezzanine debt was secured by a perfected, first-priority interest in all the ownership interests in Owner LLC and in two new LLCs: a managing member of a master-lessee and a subtenant.
MANAMA: Investing in property-backed mezzanine debt instruments in the US offers particularly good returns at present, according to Bahrain-based Investcorp,
It currently has some $600 million invested in the mezzanine debt in the US market, the only property market it operates in.
The Evolve Mezzanine Fund will provide mezzanine debt finance to North East SMEs and continue the work of four funds of this type the Newcastle firm has run since 2000.
Earlier this year, he led a team of five Ackman-Ziff professionals to raise over $700 million of senior debt, mezzanine debt and joint venture equity for his client's acquisition of 650 Madison Avenue in New York City.
Horsham, Pennsylvania, announced it originated a $39 million fixed-rate, permanent financing package of first-mortgage and mezzanine debt for Jenkintown, Pennsylvania-based The Galman Group's acquisition of Whitney Apartments in Claymont, Delaware.
European Capital generally invests between euro 5 million and euro 500 million per transaction in equity, mezzanine debt and senior debt to fund growth, acquisitions and recapitalisations.
They're also less expensive than mezzanine debt, which often fills the gap between senior debt and equity.