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 ?
It currently has some $600 million invested in the mezzanine debt in the US market, the only property market it operates in.
Today, the current interest coupon on mezzanine debt approximates the 10-year treasury rate plus 5 percent, or roughly 13 to 14 percent.
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.
FINOVA Realty Capital's bridge and mezzanine debt financing programs continue unchanged.
Ares Capital originates and invests in senior secured loans, mezzanine debt and, to a lesser extent, equity investments through its national direct origination platform.
Capitala Specialty Lending Corp's exclusive focus on senior debt investments is a substantially different strategy than prior Capitala-sponsored funds, which have historically been raised to invest in subordinated and mezzanine debt.
A subsidiary of Marriott International, who originated the mezzanine debt in December 2016, was the seller.
Hana will be underwriting $150 million in senior debt and $155 million in mezzanine debt. It appointed two asset managers to resell the debt to local institutional investors.
The acquisition was funded with senior debt from BMO Harris Bank and BBVA Compass, and mezzanine debt from Madison Capital Funding LLC.
"Our position is that the mezzanine debt was subordinated to the senior debt and that mezzanine debt could not be repaid by our client until the mortgage was satisfied," attorney Vincent Syracuse, who represents Karmely, said.
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.