Benefits of mezzanine
- Increasingly supply & demand of capital meet outside the traditional banking markets.
- Mezzanine provides an alternative source of capital in the form of subordinated debt / guarantee capital:
- Retrenching banks make it more difficult for companies to finance growth.
- Mezzanine provider has no ambition to become a shareholder: no discussions about valuation, governance or an exit.
- Mezzanine provides a temporary solution for a temporary problem
- Better terms & conditions of banks as mezzanine strengthens the capital structure.
- Diversification of financing instruments with additional flexibility:
- Interest is tax deductible and only partly paid in cash.
- No amortisation schedule; bullet repayment at maturity.