Capital that sits between senior debt and equity — extending how much you can raise, with far less dilution than selling equity.
Mezzanine debt is subordinated to senior lenders and senior to equity. It fills the gap between what senior lenders will provide and what the transaction or growth plan requires — priced above senior debt, but typically far less dilutive to owners than raising new equity.
Terms vary by lender and transaction. Not every facility includes every feature.
A current-pay coupon paid on a regular schedule.
A portion that accrues to principal instead of being paid in cash, preserving cash flow.
Warrants or co-investment rights in some transactions.
Typically matures after the senior facility.
Principal repaid at maturity rather than amortized along the way.
Sets the rights and priorities between senior and mezzanine lenders.