What Is Mezzanine Debt?

---

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 and security to senior debt, but greater in rank to common stock or equity. In a broader sense, mezzanine debt may take the form of convertible debt, junior debt, subordinated debt, private "mezzanine" securities (debt with warrants or preferred equity), second lien debt, and is sometimes referred to as quasi-equity.

---

What are the typical situations for mezzanine financing?

---

•Corporate restructuring;

• Ownership restructuring (especially mergers and acquisitions);

• Emerging growth opportunities;

• Consolidation;

• Recapitalizations.

---

What are the types of Mezzanine instruments?

---

A. Private Mezzanine Instruments

1. Subordinated Loans
2. Participating Loans
3. "Silent" Participations

B. Public Mezzanine Instruments

1. Profit Participation Rights
2. Convertible Bonds
3. Bonds with Warrants

---