working capital management Working Capital Management | Page 8

MEZZANINE LOAN
To start with, what exactly is a
mezzanine loan? Mezzanine
financing
is
a
unique
financing instrument which
doesn’t cleanly fall into a
specific class of the capital
markets financing quadrant.
It’s a wellknown term that
refers to any financing vehicle
that bridges the gap between
senior debt and sponsor
fairness. it is able to be
structured as desired fairness
or as debt.
In popular, conventional mezzanine financiers are not
entitled to get hold of returns on their investments until
senior debt holders are fully compensated. due to its
subordinate position, the mezzanine loan assumes a
better chance profile than senior debt however retains a
much less unstable role than preferred fairness. With
this knowledge, Mezzanine debt investors are looking
for returns among senior debt lenders and preferred
fairness traders however this may in large part depend
on how the deal is dependent.