Subordinate or Mezzanine debt is the funding solution for situations when the need for capital exceeds the level of senior debt raised from margined assets, and the business demonstrates the ability to generate strong, consistent cash flow.

Subordinated Debt provides an alternative to raising additional equity and generally does not require diluting the owners’ equity position.

The debt has repayment priority behind (or subordinate to) the senior credit facilities. It is structured either as an unsecured obligation or with a second security interest behind the senior lender.

As a result, the subordinated debt is riskier and demands a higher return than the senior debt. Typical yields are in the mid-to-upper teens and, in some circumstances, in the 20s.

Typical uses of subordinate debt include providing incremental funding for strategic acquisitions, buyouts, recapitalizations, and expansion projects and initiatives.

Contact:

tom.kessel@glengarrycapitalgroup.com to review your situation and explore whether your business would benefit from our process and the available subordinated debt funding options.