{"product_id":"mezzanine-financing-9781119941811","title":"Mezzanine Financing","description":"\u003cb\u003eBook Synopsis\u003c\/b\u003e\u003cbr\u003eAn in-depth explanation of mezzanine finance    Mezzanine finance products, which have grown increasingly popular in recent years, involve a unique and complex form of analysis because of their hybrid nature.\u003cbr\u003e\u003cbr\u003e\u003cb\u003eTable of Contents\u003c\/b\u003e\u003cbr\u003e\u003cp\u003ePreface xiii\u003c\/p\u003e \u003cp\u003e\u003cb\u003e1 Introduction 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e1.1 The Bi-polar World of Finance 1\u003c\/p\u003e \u003cp\u003e1.2 Demarcation of the Product Group 5\u003c\/p\u003e \u003cp\u003e1.3 Positioning and Use of Mezzanine Finance 7\u003c\/p\u003e \u003cp\u003e1.4 The Risk–Return Conundrum 10\u003c\/p\u003e \u003cp\u003e1.5 Providers of Mezzanine Finance 18\u003c\/p\u003e \u003cp\u003e1.6 The Market for Mezzanine Products 18\u003c\/p\u003e \u003cp\u003e\u003cb\u003e2 The Mezzanine Product Group 25\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e2.1 Categorization of the Mezzanine Product Group 25\u003c\/p\u003e \u003cp\u003e2.1.1 Subordinated debt with step-up rates 26\u003c\/p\u003e \u003cp\u003e2.1.2 Subordinated debt with PIK interest 29\u003c\/p\u003e \u003cp\u003e2.1.3 Subordinated debt with profit participation 33\u003c\/p\u003e \u003cp\u003e2.1.4 Subordinated debt with warrants 40\u003c\/p\u003e \u003cp\u003e2.1.5 Convertible loans 51\u003c\/p\u003e \u003cp\u003e2.1.6 Preferred shares 58\u003c\/p\u003e \u003cp\u003e2.1.7 The wider space of hybrid instruments 64\u003c\/p\u003e \u003cp\u003e2.2 Case Study: The Kratos Company – Merger Finance 67\u003c\/p\u003e \u003cp\u003e2.2.1 Kratos Inc. – A closer look 69\u003c\/p\u003e \u003cp\u003e2.2.2 Case guidance 72\u003c\/p\u003e \u003cp\u003e2.2.3 Datasets 73\u003c\/p\u003e \u003cp\u003e\u003cb\u003e3 The Implicit Cost of Mezzanine Products 77\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e3.1 Measuring Risk 77\u003c\/p\u003e \u003cp\u003e3.1.1 Risk and return expectations 77\u003c\/p\u003e \u003cp\u003e3.1.2 How do you measure risk? 78\u003c\/p\u003e \u003cp\u003e3.1.3 What risks do we compensate for? 79\u003c\/p\u003e \u003cp\u003e3.2 Types of Risk 80\u003c\/p\u003e \u003cp\u003e3.2.1 Diversification as a rule reduces or eliminates firm-typical risk 81\u003c\/p\u003e \u003cp\u003e3.2.2 Modern financial theory is eyeing a certain type of investor 81\u003c\/p\u003e \u003cp\u003e3.2.3 Measuring market risk: the CAPM (capital asset pricing model) theory 82\u003c\/p\u003e \u003cp\u003e3.2.4 The capital asset pricing model 82\u003c\/p\u003e \u003cp\u003e3.3 Equity Risk Versus the Risk of Borrowing: Default Risk and the Cost of Debt 87\u003c\/p\u003e \u003cp\u003e3.3.1 What are the drivers behind default risk? 87\u003c\/p\u003e \u003cp\u003e3.3.2 The risk-free rate 88\u003c\/p\u003e \u003cp\u003e3.4 Putting It All Together 90\u003c\/p\u003e \u003cp\u003e3.5 How Much Risk is There in a Mezzanine Product? 92\u003c\/p\u003e \u003cp\u003e3.6 Cost Versus Return Dynamics for Mezzanine Products 94\u003c\/p\u003e \u003cp\u003e\u003cb\u003e4 The ‘Pricing’ Question and Further Financial Dynamics of Convertible Loans and Preferred Convertible Shares 97\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e4.1 Pricing Grid for Mezzanine Products 97\u003c\/p\u003e \u003cp\u003e4.2 Financial Dynamics of Convertibility in Convertible Loans and Preferred Convertible Shares 99\u003c\/p\u003e \u003cp\u003e4.2.1 Convertible bonds 99\u003c\/p\u003e \u003cp\u003e4.2.2 Convertible preferred stock (CPS) 107\u003c\/p\u003e \u003cp\u003e4.2.3 Valuation and pricing of (embedded) options 110\u003c\/p\u003e \u003cp\u003e4.3 Case Study: JJ Bars \u0026amp; Restaurants – Mezzanine for Expansion 121\u003c\/p\u003e \u003cp\u003e4.3.1 Europewide Capital Partners 122\u003c\/p\u003e \u003cp\u003e4.3.2 The Dutch and European restaurant industry 122\u003c\/p\u003e \u003cp\u003e4.3.3 Industry segments 123\u003c\/p\u003e \u003cp\u003e4.3.4 JJ Bars \u0026amp; Restaurants 123\u003c\/p\u003e \u003cp\u003e4.3.5 Datasets 128\u003c\/p\u003e \u003cp\u003e4.3.6 Questions: JJ Bars \u0026amp; Restaurants 138\u003c\/p\u003e \u003cp\u003e\u003cb\u003e5 The Mezzanine Product Group and the Financial Industry 139\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e5.1 The Basel Committee and Framework 140\u003c\/p\u003e \u003cp\u003e5.2 The Evolution of the Basel Rules (Basel I and II) 140\u003c\/p\u003e \u003cp\u003e5.2.1 The first pillar 141\u003c\/p\u003e \u003cp\u003e5.2.2 The second pillar 142\u003c\/p\u003e \u003cp\u003e5.2.3 The third pillar 142\u003c\/p\u003e \u003cp\u003e5.2.4 Capital definitions under Basel II 142\u003c\/p\u003e \u003cp\u003e5.3 Objectives of Basel III and the Central Themes 144\u003c\/p\u003e \u003cp\u003e5.3.1 Capital definitions under Basel III 145\u003c\/p\u003e \u003cp\u003e5.4 Impact on the Use of Mezzanine Products in the Financial Sector 163\u003c\/p\u003e \u003cp\u003e5.5 Regulation in the Insurance Sector Impacting the Use of Mezzanine Products 163\u003c\/p\u003e \u003cp\u003e5.5.1 Solvency II 164\u003c\/p\u003e \u003cp\u003e5.5.2 Regulated capital under Solvency II 165\u003c\/p\u003e \u003cp\u003e5.6 CoCo Bonds – Contingent Convertible Bonds 171\u003c\/p\u003e \u003cp\u003e5.6.1 Outlook for the product 176\u003c\/p\u003e \u003cp\u003e5.7 Annex I – Summary Basel III 177\u003c\/p\u003e \u003cp\u003e5.8 Annex II – Basel III – Specific Features 178\u003c\/p\u003e \u003cp\u003e5.9 Case Study Positions: Mezzanine Financing for Financial Institutions 182\u003c\/p\u003e \u003cp\u003e5.10 Case Study 1: Financing the Future of Bank Alhanbra 182\u003c\/p\u003e \u003cp\u003e5.10.1 Case guidance 183\u003c\/p\u003e \u003cp\u003e5.11 Case Study 2: Growing the Brazilian Market 184\u003c\/p\u003e \u003cp\u003e5.11.1 Case guidance 186\u003c\/p\u003e \u003cp\u003e5.12 Case Study 3: Financing a South African FI which is Part of a Larger Conglomerate Prior to an IPO 186\u003c\/p\u003e \u003cp\u003e5.12.1 Case guidance 187\u003c\/p\u003e \u003cp\u003e\u003cb\u003e6 Mezzanine and Project Finance 189\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e6.1 Types of Projects 192\u003c\/p\u003e \u003cp\u003e6.2 Financing Aspects 193\u003c\/p\u003e \u003cp\u003e6.3 Securitizing Project Loans 195\u003c\/p\u003e \u003cp\u003e6.4 Case Study 1: Developing a Toll Road in Poland (A2) 196\u003c\/p\u003e \u003cp\u003e6.4.1 Other fi nancial peculiarities 202\u003c\/p\u003e \u003cp\u003e6.4.2 Case guidance 203\u003c\/p\u003e \u003cp\u003e6.5 Case Study 2: Building and Operating a Wind Park 203\u003c\/p\u003e \u003cp\u003e6.5.1 Security 209\u003c\/p\u003e \u003cp\u003e\u003cb\u003e7 Real Estate Projects and Mezzanine Finance 211\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e7.1 Wider Application 212\u003c\/p\u003e \u003cp\u003e7.2 Other Applications and Return Issues 214\u003c\/p\u003e \u003cp\u003e7.3 Case Study: Financing a Real Estate Company in the CEE Region 220\u003c\/p\u003e \u003cp\u003e7.3.1 Projections 223\u003c\/p\u003e \u003cp\u003e7.3.2 Points for consideration 223\u003c\/p\u003e \u003cp\u003e\u003cb\u003e8 Mezzanine and the Private Equity Space 225\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e8.1 Drivers of Return 228\u003c\/p\u003e \u003cp\u003e8.2 LBO Structure 232\u003c\/p\u003e \u003cp\u003e8.2.1 Senior debt 234\u003c\/p\u003e \u003cp\u003e8.2.2 Second lien 235\u003c\/p\u003e \u003cp\u003e8.2.3 Mezzanine\/HY loans 236\u003c\/p\u003e \u003cp\u003e8.2.4 PIK notes 246\u003c\/p\u003e \u003cp\u003e8.2.5 Equity 246\u003c\/p\u003e \u003cp\u003e8.3 Tax Implications 247\u003c\/p\u003e \u003cp\u003e8.4 Alternative Transactions Using Similar Financing Structures 247\u003c\/p\u003e \u003cp\u003e8.5 Summary of Different Compartments in the LBO Structure 249\u003c\/p\u003e \u003cp\u003e8.6 Summary of Types of Securities in the Leverage Structure of an LBO 251\u003c\/p\u003e \u003cp\u003e8.7 Case Study: Buying Orangina – a Typical LBO with Some Interesting Questions Ahead! 251\u003c\/p\u003e \u003cp\u003e8.7.1 Getting the deal done! 253\u003c\/p\u003e \u003cp\u003e8.7.2 Valuation, pricing and deal mechanics 255\u003c\/p\u003e \u003cp\u003e8.7.3 Case guidance 255\u003c\/p\u003e \u003cp\u003e8.7.4 Datasets 256\u003c\/p\u003e \u003cp\u003e8.7.5 How did it all end? 259\u003c\/p\u003e \u003cp\u003e\u003cb\u003e9 Mezzanine Products and the World of the Rating Agencies and Accountancy Boards 261\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e9.1 Rating Agencies and the Debt–Equity Continuum 261\u003c\/p\u003e \u003cp\u003e9.1.1 Permanence and deferral characteristics 271\u003c\/p\u003e \u003cp\u003e9.1.2 Simplified continuum for banks’ (FIs’) and insurers’ hybrid capital security 272\u003c\/p\u003e \u003cp\u003e9.2 Case Study: Fitch’s Approach to Rating Hybrid for Corporates 272\u003c\/p\u003e \u003cp\u003e9.2.1 At initiation and thereafter when fundamentals are acceptable; coupon payments are occurring as expected 273\u003c\/p\u003e \u003cp\u003e9.2.2 As fundamentals decline and the probability of some form of loss absorption increases 275\u003c\/p\u003e \u003cp\u003e9.2.3 When loss absorption features are activated 275\u003c\/p\u003e \u003cp\u003e9.2.4 When normal payments are resumed (and the instrument resumes debt‐like performance) 276\u003c\/p\u003e \u003cp\u003e9.3 Mezzanine Debt, Rating Agencies, the Regulator and Financial Institutions After 2008 284\u003c\/p\u003e \u003cp\u003e9.3.1 The impact of Basel III 285\u003c\/p\u003e \u003cp\u003e9.3.2 Phasing out of hybrid capital due to regulatory changes 286\u003c\/p\u003e \u003cp\u003e9.3.3 Notching down and structuring 287\u003c\/p\u003e \u003cp\u003e9.3.4 Capacity limits in the balance sheets of financial institutions and insurers 289\u003c\/p\u003e \u003cp\u003e9.3.5 Basel III and Solvency II 289\u003c\/p\u003e \u003cp\u003e9.4 Appendix 1: Equity–Content Maximization and Structuring Criteria at Moody’s 293\u003c\/p\u003e \u003cp\u003e9.5 Appendix 2: S\u0026amp;P’s and Moody’s Key Structuring Considerations 294\u003c\/p\u003e \u003cp\u003e9.6 The Intricacies of the Accounting World 295\u003c\/p\u003e \u003cp\u003e9.6.1 Classification and measurement 296\u003c\/p\u003e \u003cp\u003e9.6.2 Impairment methodology 297\u003c\/p\u003e \u003cp\u003e9.6.3 Hedge accounting 297\u003c\/p\u003e \u003cp\u003e9.6.4 Substance over form 299\u003c\/p\u003e \u003cp\u003e9.6.5 Examples of equity instruments 301\u003c\/p\u003e \u003cp\u003e9.6.6 IFRS 9 requirements in relation to hybrid instruments 307\u003c\/p\u003e \u003cp\u003e9.6.7 Hybrid financial liabilities 308\u003c\/p\u003e \u003cp\u003e9.6.8 Preferred shares 309\u003c\/p\u003e \u003cp\u003e9.7 Demarcation Lines and Product Modeling 309\u003c\/p\u003e \u003cp\u003e9.7.1 Contractual obligation to deliver cash or other financial assets 309\u003c\/p\u003e \u003cp\u003e\u003cb\u003e10 Term Sheets, Inter-creditor Agreements and Debt Restructuring 313\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e10.1 Groups of Covenants 313\u003c\/p\u003e \u003cp\u003e10.2 Review of Key Covenants for Mezzanine Products 316\u003c\/p\u003e \u003cp\u003e10.3 Other Covenants 318\u003c\/p\u003e \u003cp\u003e10.4 Case Studies: The Good, the Bad and the Ugly 319\u003c\/p\u003e \u003cp\u003e10.4.1 Good covenants 319\u003c\/p\u003e \u003cp\u003e10.4.2 Bad covenants 320\u003c\/p\u003e \u003cp\u003e10.4.3 Ugly covenants 320\u003c\/p\u003e \u003cp\u003e10.5 A Comparison of Debt Asset Classes 321\u003c\/p\u003e \u003cp\u003e10.5.1 Covenants which relate specifically to liquidity events in private market transactions 321\u003c\/p\u003e \u003cp\u003e10.5.2 Mezzanine providers and inter-creditor agreements 323\u003c\/p\u003e \u003cp\u003e10.5.3 Lien subordination and inter-creditor agreements 326\u003c\/p\u003e \u003cp\u003e10.5.4 A quick reminder of the distinction between lien and payment subordination 326\u003c\/p\u003e \u003cp\u003e10.6 Case Study: LyondellBasell and Lyondell Chemical Company 339\u003c\/p\u003e \u003cp\u003e10.6.1 Specifics of the Lyondell DIP facility 344\u003c\/p\u003e \u003cp\u003e10.6.2 Resistance against the proposed DIP facility 345\u003c\/p\u003e \u003cp\u003e10.6.3 The outcome 346\u003c\/p\u003e \u003cp\u003e10.6.4 Datasets 347\u003c\/p\u003e \u003cp\u003e10.6.5 Case guidance 352\u003c\/p\u003e \u003cp\u003e\u003cb\u003e11 Outlook 353\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e11.1 Introduction 353\u003c\/p\u003e \u003cp\u003e11.2 The Not-Too-Distant Past 354\u003c\/p\u003e \u003cp\u003e11.3 New Kids on the Block 355\u003c\/p\u003e \u003cp\u003e11.4 The Unitranche Product 356\u003c\/p\u003e \u003cp\u003e11.5 Reorganization of Insolvency Laws in Europe 359\u003c\/p\u003e \u003cp\u003e11.6 Islamic Finance: Sukuks and Non-Risk-Free Bond Look-Alikes 360\u003c\/p\u003e \u003cp\u003e11.7 Origination Sources for Mezzanine 361\u003c\/p\u003e \u003cp\u003e11.8 The Role of Governmental Organizations 362\u003c\/p\u003e \u003cp\u003e11.9 The Refinancing Wall: Opportunities and Challenges 363\u003c\/p\u003e \u003cp\u003e11.10 Performance of Mezzanine Products 363\u003c\/p\u003e \u003cp\u003eAppendix 1 Overview of Term Sheets and\/or Model Contracts for the Mezzanine Product Group 367\u003c\/p\u003e \u003cp\u003eAppendix 2 First Lien\/Second Lien Inter-creditor Agreement 415\u003c\/p\u003e \u003cp\u003eGlossary 479\u003c\/p\u003e \u003cp\u003eCase Guidance\/Solutions 489\u003c\/p\u003e \u003cp\u003eIndex 505\u003c\/p\u003e","brand":"John Wiley \u0026 Sons Inc","offers":[{"title":"Default Title","offer_id":49407191351639,"sku":"9781119941811","price":52.25,"currency_code":"GBP","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0817\/1739\/5799\/files\/9781119941811.jpg?v=1730498499","url":"https:\/\/bookcurl.com\/products\/mezzanine-financing-9781119941811","provider":"Book Curl","version":"1.0","type":"link"}