Hey,
I'm currently doing an internship in sales trading and on Friday one of the derivatives guys gave me something to finish over the weekend. He sent me a couple of documents... credit rating report, balance sheet, cash flow statement, P/L account and some info on the company. The problem is that I don't remember what he asked me to do since he basically just shouted it from the other side of the trading floor whilst heading out of the office.... All I remember is something about mezzanine, debt amount xx mln as a % of equity, equity kicker as a % of ETA (earnings after tax), budgeted statements. -- Note: This is a private company. I don't know anything about mezzanine financing - has anyone of you worked on a deal like this? What are the most basic procedures? For which years does he want me to calculate these %? What are the mechanics of these sort of deals?
Any sort of help is appreciated! Cheers
hahah - i hope someone can help this guy
The terminology can be found on Google / Wiki
Mezz is sub debt and falls right above common stock in the capital structure. It usually shows up on the BS as either notes or preferred stock paying a ridiculously high coupon and or PIK (interest "accretes" to the principal rather than being paid out as cash)
Most likely, he wants you to put together a presentation for the potential mezz lender(s) and there is an equity kicker involved because the RoR is way too low. At the same time, equity holders don't want earnings dilution so there's the tradeoff. Leverage is also important to keep in mind because mezz holders wouldn't want the company's assets to become over-encumbered
Also guessing that your desk will eventually have to structure a derivative against the underlying debt
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