Mezzanine debt capital generally refers to that layer of financing between a company's senior debt and equity. Structurally, it is subordinate in priority of payment to senior debt, but senior in rank to common stock or equity. In a broader sense, mezzanine debt may take the form of convertible debt, senior subordinated debt or private "mezzanine" securities (debt or preferred equity).
Refers to non-conventional debt that has a greater element of risk than secured debt but has less risk than equity.
Debt which ranks and is repaid after senior debt but before junior/institutional loan stock. Generally carries an option, warrant or redemption fee, which tends to distinguish it from senior debt reflecting the inherent risk nature of such a debt instrument.
Mezzanine financing is the "level" of financing between Senior Debt and Common Equity. When there is a gap to fill between senior debt and the equity, a mezzanine piece may be a vehicle for accomplishing financing. Mezzanine financing includes a broad array of financing vehicles including various forms of debt and various forms of equity.
Mezzanine debt is a kind of loan finance where there is little or no security left after the main bank loan debt has been secured. To reflect the higher risk of mezzanine funds, the lender will charge a rate of interest of perhaps four to eight per cent over bank base rate, may take an option to acquire some equity and may require repayment over a shorter term.
Mezzanine debt generally corresponds to contributions in the form of bonds with detachable warrants subscribed by banking institutions or specialised investment funds. The principal repayment takes place at expiration and part of the interests may be capitalised.
Debt that incorporates equity-based options, such as warrants, with a lower-priority debt. Mezzanine debt is actually closer to equity than debt, in that the debt is usually only of importance in the event of bankruptcy. Mezzanine debt is often used to finance acquisitions and buyouts, where it can be used to prioritize new owners ahead of existing owners in the event that a bankruptcy occurs.
Higher risk, less well secured debt. Mezzanine debt usually attracts a higher rate of interest than senior debt.
High yielding unsecured securities ranking between secured debt and equity in terms of priority of payments.