- Includes senior 1st Lien or 2nd Lien debt or subordinated debt
- Can be Secured or Unsecured
- Lowest Cost – typically the return comes from the upfront fee and the coupon
- Financial Covenants – Incurrence and/or Maintenance
- Lenders not Owners
- Maturity can range from very short to very long
- Buyers include banks, insurance companies, hedge funds, BDC’s and opportunity funds.
- Hybrid Securities – Can include debt with warrants, convertible debt and convertible preferred stock
- Costs more than straight debt but less than equity
- In structure, can be customized either more debt-like or more equity-ish
- Generally has an equity kicker which can take many forms including buying equity, receiving warrants or having convertibility
- Unsecured
- Maturity five years and beyond
- Buyers include accounts that focus on either Debt or Equity
- Typically common stock or convertible perpetual preferred stock
- Highest cost security
- No Covenants, but preferred stocks have Protective Provisions
- Company Pre-Money Valuation is the critical metric
- Exit Provisions – Provisions to provide holders liquidity after a specified time period through registration rights or put
- Buyers include private equity funds, sovereign wealth funds, family offices and hedge funds
- Almost always have Board Representation
- Includes senior 1st Lien or 2nd Lien debt or subordinated debt
- Can be Secured or Unsecured
- Lowest Cost – typically the return comes from the upfront fee and the coupon
- Financial Covenants – Incurrence and/or Maintenance
- Lenders not Owners
- Maturity can range from very short to very long
- Buyers include banks, insurance companies, hedge funds, BDC’s and opportunity funds.
- Hybrid Securities – Can include debt with warrants, convertible debt and convertible preferred stock
- Costs more than straight debt but less than equity
- In structure, can be customized either more debt-like or more equity-ish
- Generally has an equity kicker which can take many forms including buying equity, receiving warrants or having convertibility
- Unsecured
- Maturity five years and beyond
- Buyers include accounts that focus on either Debt or Equity
- Typically common stock or convertible perpetual preferred stock
- Highest cost security
- No Covenants, but preferred stocks have Protective Provisions
- Company Pre-Money Valuation is the critical metric
- Exit Provisions – Provisions to provide holders liquidity after a specified time period through registration rights or put
- Buyers include private equity funds, sovereign wealth funds, family offices and hedge funds
- Almost always have Board Representation
