What is Mezzanine Debt?
Mezzanine debt is a form of financing that is part debt and part equity. It incorporates equity-based options, such as warrants, with a lower-priority debt to provide flexible long term capital for use in buy-outs or growth financings. Frequently unsecured, it usually bears interest at a higher rate than secured loans and often gives the lender a stake in the equity of the company. Mezzanine debt is often used to finance acquisitions, buyouts and accelerated growth. Its repayment profile is often backended over a 5 to 7 year period.
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