Mezzanine financing question
Question about mezzanine financing:
So, I have this mezzanine financing, coupon payments are 10% cash, 5% PIK and there are warrants for say 10% of equity ownership.
My question relates as to how do I evaluate this deal? What do warrants represent in a typical PE mezzanine deal?
Is it a right to convert some of the loan into equity ownership? If yes, at what rate? I'm not sure I understand what rights a warrant give the mezzanine subordinated debt holder.