Mezzanine. Mezzanine versus bank and equity презентация

”Don't waste your love on somebody, who doesn't value it.” William Shakespeare, Romeo and Juliet

Characteristics of both
Own funds
Quasi-equity
Own funds in bankers’ eyes
No collateral
Subordinated
Convertible
Buy-back through
Puts
Calls
Debts
Reimbursable
Fixed term
Fixed interest
No dilution
Equity kicker
Warrant
Option

Mezzanine versus bank & equity

Debt securities

Types of investors and their risk profiles
Senior Debt
Return
Risk
Junior debt
Subordinat
debt
Ordinary Shares
Preferred
Shares
PE Funds
Mezzanine
Banks

Risk and return

Use of Mezzanine
Management buy-out (MBO)
Management buy-in (MBI)
Leverage buy-out (LBO): MBO via mezzanine
Leverage buy-in (LBI): : MBI operatie via mezzanine
Buy-in management buy-out (BIMBO): MBO followed by MBI
LIMBO: leveraged BIMBO

LBO illustration
2 conditions:
Lending capacity (EV/BT) – Debt max 2 x Own funds
Pay back capacity (CF): 5 to 7 years
Case:
Take-over attempt by VC ‘Wild gease’
Manager can remain temporary; Exit owners
Limit ‘own funds’ to be invested

Balance Ltd Nina
(in thousand euro)
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Ltd NINA (in thousand euros)
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LtD NINA
Value
EBITDA x 6//8
Fork: 60 to 80 Million euro
Agreed: 65 Million euro
Leverage capacity:
Balance structure: EV 25 K
Gross CF: 9 K
Financing structure
Mezzanine: 50
EV x 2
LTD/CF = 5,5
Equity financing: 15
Conclusion: I buy for 15 K a company worth 65 K = leverage
After LBO company is
Less solid
Less liquid