Mezzanine Balance | Paper LBO Model
I am not familiar with mezzanine financing but I am interested in knowing why the outstanding balance in Option B of the model keeps increasing each year (45 in Y1 to 50 in Y5).
I thought it would stay at 45 and I would only pay the 12% interest each year. Clearly there are some payments going on as the EB of senior debt is lower each year compared to option A which means that some cash is going somewhere but at the same time the EB of mezzanine is going up.
Link in case the image doesn't load:https://imgur.com/a/BLrR2jF
Forgot to specify, I did not build the model. It's from a case study I found online
Mezz debt usually comes with a non-cash interest (paid in kind) component which gets added to the balance over time, on top of cash interest that is paid.
Aperiam quia temporibus dolores et sed dolorum omnis. Officiis aut fuga qui ea ex. Maxime qui esse alias voluptas nobis. Eaque ipsa maxime nostrum qui iure. Iusto velit nisi beatae et dolorem repellat.
Nemo nostrum ut iste. Minus laborum quo eos sint. Nesciunt soluta rerum aliquam voluptatem tenetur quasi velit dolor. Aliquam quod est maiores illum atque error. Ipsa incidunt quo maiores expedita sit repellendus dolorem. Harum sit dolor expedita amet totam. Nisi ipsum possimus ut est occaecati iusto.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...