Luc Nijs
Mezzanine Financing
Luc Nijs
Mezzanine Financing
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An 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. Because mezzanine finance involves no collateral, it accentuates legal terms, term sheets, and contracts, in addition to depicting dynamics of both debt and equity. Experienced chairman, lecturer, and professor of investment banking Luc Nijs presents readers with a thorough description of product groups, structuring and pricing, and cultural discrepancies in terms of regulation and…mehr
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An 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. Because mezzanine finance involves no collateral, it accentuates legal terms, term sheets, and contracts, in addition to depicting dynamics of both debt and equity. Experienced chairman, lecturer, and professor of investment banking Luc Nijs presents readers with a thorough description of product groups, structuring and pricing, and cultural discrepancies in terms of regulation and application in Mezzanine Financing: Tools, Applications and Total Performance. Nijs analyzes common triumphs and failures encountered in mezzanine financing, and he discusses techniques for risk analysis and risk mitigation. A final study of international capital markets, their products' relevance, attractiveness, and liquidity, and the effects on pure equity/fixed-income risk concludes the book.
Conveys a professional's advice through case studies of various regions, industries and contexts
Provides the only complete analysis of mezzanine finance as no other books take on the topic as their only subject
Details an increasingly popular and globally relevant subject in finance
Those seeking a detailed explanation of the complexities within mezzanine financing will encounter a professional account in Nijs's book.
Mezzanine finance products, which have grown increasingly popular in recent years, involve a unique and complex form of analysis because of their hybrid nature. Because mezzanine finance involves no collateral, it accentuates legal terms, term sheets, and contracts, in addition to depicting dynamics of both debt and equity. Experienced chairman, lecturer, and professor of investment banking Luc Nijs presents readers with a thorough description of product groups, structuring and pricing, and cultural discrepancies in terms of regulation and application in Mezzanine Financing: Tools, Applications and Total Performance. Nijs analyzes common triumphs and failures encountered in mezzanine financing, and he discusses techniques for risk analysis and risk mitigation. A final study of international capital markets, their products' relevance, attractiveness, and liquidity, and the effects on pure equity/fixed-income risk concludes the book.
Conveys a professional's advice through case studies of various regions, industries and contexts
Provides the only complete analysis of mezzanine finance as no other books take on the topic as their only subject
Details an increasingly popular and globally relevant subject in finance
Those seeking a detailed explanation of the complexities within mezzanine financing will encounter a professional account in Nijs's book.
Produktdetails
- Produktdetails
- Wiley Finance Series .
- Verlag: Wiley & Sons
- 1. Auflage
- Seitenzahl: 528
- Erscheinungstermin: November 2013
- Englisch
- Abmessung: 250mm x 175mm x 33mm
- Gewicht: 1086g
- ISBN-13: 9781119941811
- ISBN-10: 1119941814
- Artikelnr.: 37294491
- Wiley Finance Series .
- Verlag: Wiley & Sons
- 1. Auflage
- Seitenzahl: 528
- Erscheinungstermin: November 2013
- Englisch
- Abmessung: 250mm x 175mm x 33mm
- Gewicht: 1086g
- ISBN-13: 9781119941811
- ISBN-10: 1119941814
- Artikelnr.: 37294491
Luc Nijs is the founder, chairman and group CEO of The Talitha Group, a global merchant banking group and global investment holding. Before that he was with Arthur Andersen and Deloitte. In addition, Luc provides extensive advisory, executive coaching and financial training for corporations, investment funds and financial institutions, and is active in over 160 countries worldwide on a wide array of strategy, investment and capital allocation issues. He has held academic positions in international taxation, finance and capital markets at UAMS/IPO (Belgium), Instituto de Empresa (Spain) and most recently the Aizkraukles Banka Chair in investment banking, private equity and entrepreneurial finance at the Riga Graduate School of Law (Latvia). Luc is fluent in Dutch, English, French, German, Portuguese and Spanish and is competent in Russian and Chinese. He authored Shaping Tomorrow's Marketplace: Investment Philosophies for Emerging Markets and a Semi-Globalized World which was published by Euromoney in 2011, as well as the upcoming Global Agricultural Markets: Financial Dynamics and Industry Challenges, Palgrave Macmillan, (2014).
Preface xiii 1 Introduction 1 1.1 The Bi-polar World of Finance 1 1.2
Demarcation of the Product Group 5 1.3 Positioning and Use of Mezzanine
Finance 7 1.4 The Risk-Return Conundrum 10 1.5 Providers of Mezzanine
Finance 18 1.6 The Market for Mezzanine Products 18 2 The Mezzanine Product
Group 25 2.1 Categorization of the Mezzanine Product Group 25 2.2 Case
Study: The Kratos Company - Merger Finance 67 3 The Implicit Cost of
Mezzanine Products 77 3.1 Measuring Risk 77 3.2 Types of Risk 80 3.3 Equity
Risk Versus the Risk of Borrowing: Default Risk and the Cost of Debt 87 3.4
Putting It All Together 90 3.5 How Much Risk is There in a Mezzanine
Product? 92 3.6 Cost Versus Return Dynamics for Mezzanine Products 94 4 The
'Pricing' Question and Further Financial Dynamics of Convertible Loans and
Preferred Convertible Shares 97 4.1 Pricing Grid for Mezzanine Products 97
4.2 Financial Dynamics of Convertibility in Convertible Loans and Preferred
Convertible Shares 99 4.3 Case Study: JJ Bars & Restaurants - Mezzanine for
Expansion 121 5 The Mezzanine Product Group and the Financial Industry 139
5.1 The Basel Committee and Framework 140 5.2 The Evolution of the Basel
Rules (Basel I and II) 140 5.3 Objectives of Basel III and the Central
Themes 144 5.4 Impact on the Use of Mezzanine Products in the Financial
Sector 163 5.5 Regulation in the Insurance Sector Impacting the Use of
Mezzanine Products 163 5.6 CoCo Bonds - Contingent Convertible Bonds 171
5.7 Annex I - Summary Basel III 177 5.8 Annex II - Basel III - Specifi c
Features 178 5.9 Case Study Positions: Mezzanine Financing for Financial
Institutions 182 5.10 Case Study 1: Financing the Future of Bank Alhanbra
182 5.11 Case Study 2: Growing the Brazilian Market 184 5.12 Case Study 3:
Financing a South African FI which is Part of a Larger Conglomerate Prior
to an IPO 186 6 Mezzanine and Project Finance 189 6.1 Types of Projects 192
6.2 Financing Aspects 193 6.3 Securitizing Project Loans 195 6.4 Case Study
1: Developing a Toll Road in Poland (A2) 196 6.5 Case Study 2: Building and
Operating a Wind Park 203 7 Real Estate Projects and Mezzanine Finance 211
7.1 Wider Application 212 7.2 Other Applications and Return Issues 214 7.3
Case Study: Financing a Real Estate Company in the CEE Region 220 8
Mezzanine and the Private Equity Space 225 8.1 Drivers of Return 228 8.2
LBO Structure 232 8.3 Tax Implications 247 8.4 Alternative Transactions
Using Similar Financing Structures 247 8.5 Summary of Different
Compartments in the LBO Structure 249 8.6 Summary of Types of Securities in
the Leverage Structure of an LBO 251 8.7 Case Study: Buying Orangina - a
Typical LBO with Some Interesting Questions Ahead! 251 9 Mezzanine Products
and the World of the Rating Agencies and Accountancy Boards 261 9.1 Rating
Agencies and the Debt-Equity Continuum 261 9.2 Case Study: Fitch's Approach
to Rating Hybrid for Corporates 272 9.3 Mezzanine Debt, Rating Agencies,
the Regulator and Financial Institutions After 2008 284 9.4 Appendix 1:
Equity-Content Maximization and Structuring Criteria at Moody's 293 9.5
Appendix 2: S&P's and Moody's Key Structuring Considerations 294 9.6 The
Intricacies of the Accounting World 295 9.7 Demarcation Lines and Product
Modeling 309 10 Term Sheets, Inter-creditor Agreements and Debt
Restructuring 313 10.1 Groups of Covenants 313 10.2 Review of Key Covenants
for Mezzanine Products 316 10.3 Other Covenants 318 10.4 Case Studies: The
Good, the Bad and the Ugly 319 10.5 A Comparison of Debt Asset Classes 321
10.6 Case Study: LyondellBasell and Lyondell Chemical Company 339 11
Outlook 353 11.1 Introduction 353 11.2 The Not-Too-Distant Past 354 11.3
New Kids on the Block 355 11.4 The Unitranche Product 356 11.5
Reorganization of Insolvency Laws in Europe 359 11.6 Islamic Finance:
Sukuks and Non-Risk-Free Bond Look-Alikes 360 11.7 Origination Sources for
Mezzanine 361 11.8 The Role of Governmental Organizations 362 11.9 The Refi
nancing Wall: Opportunities and Challenges 363 11.10 Performance of
Mezzanine Products 363 Appendix 1 Overview of Term Sheets and/or Model
Contracts for the Mezzanine Product Group 367 Appendix 2 First Lien/Second
Lien Inter-creditor Agreement 415 Glossary 479 Case Guidance/Solutions 489
Index 505
Demarcation of the Product Group 5 1.3 Positioning and Use of Mezzanine
Finance 7 1.4 The Risk-Return Conundrum 10 1.5 Providers of Mezzanine
Finance 18 1.6 The Market for Mezzanine Products 18 2 The Mezzanine Product
Group 25 2.1 Categorization of the Mezzanine Product Group 25 2.2 Case
Study: The Kratos Company - Merger Finance 67 3 The Implicit Cost of
Mezzanine Products 77 3.1 Measuring Risk 77 3.2 Types of Risk 80 3.3 Equity
Risk Versus the Risk of Borrowing: Default Risk and the Cost of Debt 87 3.4
Putting It All Together 90 3.5 How Much Risk is There in a Mezzanine
Product? 92 3.6 Cost Versus Return Dynamics for Mezzanine Products 94 4 The
'Pricing' Question and Further Financial Dynamics of Convertible Loans and
Preferred Convertible Shares 97 4.1 Pricing Grid for Mezzanine Products 97
4.2 Financial Dynamics of Convertibility in Convertible Loans and Preferred
Convertible Shares 99 4.3 Case Study: JJ Bars & Restaurants - Mezzanine for
Expansion 121 5 The Mezzanine Product Group and the Financial Industry 139
5.1 The Basel Committee and Framework 140 5.2 The Evolution of the Basel
Rules (Basel I and II) 140 5.3 Objectives of Basel III and the Central
Themes 144 5.4 Impact on the Use of Mezzanine Products in the Financial
Sector 163 5.5 Regulation in the Insurance Sector Impacting the Use of
Mezzanine Products 163 5.6 CoCo Bonds - Contingent Convertible Bonds 171
5.7 Annex I - Summary Basel III 177 5.8 Annex II - Basel III - Specifi c
Features 178 5.9 Case Study Positions: Mezzanine Financing for Financial
Institutions 182 5.10 Case Study 1: Financing the Future of Bank Alhanbra
182 5.11 Case Study 2: Growing the Brazilian Market 184 5.12 Case Study 3:
Financing a South African FI which is Part of a Larger Conglomerate Prior
to an IPO 186 6 Mezzanine and Project Finance 189 6.1 Types of Projects 192
6.2 Financing Aspects 193 6.3 Securitizing Project Loans 195 6.4 Case Study
1: Developing a Toll Road in Poland (A2) 196 6.5 Case Study 2: Building and
Operating a Wind Park 203 7 Real Estate Projects and Mezzanine Finance 211
7.1 Wider Application 212 7.2 Other Applications and Return Issues 214 7.3
Case Study: Financing a Real Estate Company in the CEE Region 220 8
Mezzanine and the Private Equity Space 225 8.1 Drivers of Return 228 8.2
LBO Structure 232 8.3 Tax Implications 247 8.4 Alternative Transactions
Using Similar Financing Structures 247 8.5 Summary of Different
Compartments in the LBO Structure 249 8.6 Summary of Types of Securities in
the Leverage Structure of an LBO 251 8.7 Case Study: Buying Orangina - a
Typical LBO with Some Interesting Questions Ahead! 251 9 Mezzanine Products
and the World of the Rating Agencies and Accountancy Boards 261 9.1 Rating
Agencies and the Debt-Equity Continuum 261 9.2 Case Study: Fitch's Approach
to Rating Hybrid for Corporates 272 9.3 Mezzanine Debt, Rating Agencies,
the Regulator and Financial Institutions After 2008 284 9.4 Appendix 1:
Equity-Content Maximization and Structuring Criteria at Moody's 293 9.5
Appendix 2: S&P's and Moody's Key Structuring Considerations 294 9.6 The
Intricacies of the Accounting World 295 9.7 Demarcation Lines and Product
Modeling 309 10 Term Sheets, Inter-creditor Agreements and Debt
Restructuring 313 10.1 Groups of Covenants 313 10.2 Review of Key Covenants
for Mezzanine Products 316 10.3 Other Covenants 318 10.4 Case Studies: The
Good, the Bad and the Ugly 319 10.5 A Comparison of Debt Asset Classes 321
10.6 Case Study: LyondellBasell and Lyondell Chemical Company 339 11
Outlook 353 11.1 Introduction 353 11.2 The Not-Too-Distant Past 354 11.3
New Kids on the Block 355 11.4 The Unitranche Product 356 11.5
Reorganization of Insolvency Laws in Europe 359 11.6 Islamic Finance:
Sukuks and Non-Risk-Free Bond Look-Alikes 360 11.7 Origination Sources for
Mezzanine 361 11.8 The Role of Governmental Organizations 362 11.9 The Refi
nancing Wall: Opportunities and Challenges 363 11.10 Performance of
Mezzanine Products 363 Appendix 1 Overview of Term Sheets and/or Model
Contracts for the Mezzanine Product Group 367 Appendix 2 First Lien/Second
Lien Inter-creditor Agreement 415 Glossary 479 Case Guidance/Solutions 489
Index 505
Preface xiii 1 Introduction 1 1.1 The Bi-polar World of Finance 1 1.2
Demarcation of the Product Group 5 1.3 Positioning and Use of Mezzanine
Finance 7 1.4 The Risk-Return Conundrum 10 1.5 Providers of Mezzanine
Finance 18 1.6 The Market for Mezzanine Products 18 2 The Mezzanine Product
Group 25 2.1 Categorization of the Mezzanine Product Group 25 2.2 Case
Study: The Kratos Company - Merger Finance 67 3 The Implicit Cost of
Mezzanine Products 77 3.1 Measuring Risk 77 3.2 Types of Risk 80 3.3 Equity
Risk Versus the Risk of Borrowing: Default Risk and the Cost of Debt 87 3.4
Putting It All Together 90 3.5 How Much Risk is There in a Mezzanine
Product? 92 3.6 Cost Versus Return Dynamics for Mezzanine Products 94 4 The
'Pricing' Question and Further Financial Dynamics of Convertible Loans and
Preferred Convertible Shares 97 4.1 Pricing Grid for Mezzanine Products 97
4.2 Financial Dynamics of Convertibility in Convertible Loans and Preferred
Convertible Shares 99 4.3 Case Study: JJ Bars & Restaurants - Mezzanine for
Expansion 121 5 The Mezzanine Product Group and the Financial Industry 139
5.1 The Basel Committee and Framework 140 5.2 The Evolution of the Basel
Rules (Basel I and II) 140 5.3 Objectives of Basel III and the Central
Themes 144 5.4 Impact on the Use of Mezzanine Products in the Financial
Sector 163 5.5 Regulation in the Insurance Sector Impacting the Use of
Mezzanine Products 163 5.6 CoCo Bonds - Contingent Convertible Bonds 171
5.7 Annex I - Summary Basel III 177 5.8 Annex II - Basel III - Specifi c
Features 178 5.9 Case Study Positions: Mezzanine Financing for Financial
Institutions 182 5.10 Case Study 1: Financing the Future of Bank Alhanbra
182 5.11 Case Study 2: Growing the Brazilian Market 184 5.12 Case Study 3:
Financing a South African FI which is Part of a Larger Conglomerate Prior
to an IPO 186 6 Mezzanine and Project Finance 189 6.1 Types of Projects 192
6.2 Financing Aspects 193 6.3 Securitizing Project Loans 195 6.4 Case Study
1: Developing a Toll Road in Poland (A2) 196 6.5 Case Study 2: Building and
Operating a Wind Park 203 7 Real Estate Projects and Mezzanine Finance 211
7.1 Wider Application 212 7.2 Other Applications and Return Issues 214 7.3
Case Study: Financing a Real Estate Company in the CEE Region 220 8
Mezzanine and the Private Equity Space 225 8.1 Drivers of Return 228 8.2
LBO Structure 232 8.3 Tax Implications 247 8.4 Alternative Transactions
Using Similar Financing Structures 247 8.5 Summary of Different
Compartments in the LBO Structure 249 8.6 Summary of Types of Securities in
the Leverage Structure of an LBO 251 8.7 Case Study: Buying Orangina - a
Typical LBO with Some Interesting Questions Ahead! 251 9 Mezzanine Products
and the World of the Rating Agencies and Accountancy Boards 261 9.1 Rating
Agencies and the Debt-Equity Continuum 261 9.2 Case Study: Fitch's Approach
to Rating Hybrid for Corporates 272 9.3 Mezzanine Debt, Rating Agencies,
the Regulator and Financial Institutions After 2008 284 9.4 Appendix 1:
Equity-Content Maximization and Structuring Criteria at Moody's 293 9.5
Appendix 2: S&P's and Moody's Key Structuring Considerations 294 9.6 The
Intricacies of the Accounting World 295 9.7 Demarcation Lines and Product
Modeling 309 10 Term Sheets, Inter-creditor Agreements and Debt
Restructuring 313 10.1 Groups of Covenants 313 10.2 Review of Key Covenants
for Mezzanine Products 316 10.3 Other Covenants 318 10.4 Case Studies: The
Good, the Bad and the Ugly 319 10.5 A Comparison of Debt Asset Classes 321
10.6 Case Study: LyondellBasell and Lyondell Chemical Company 339 11
Outlook 353 11.1 Introduction 353 11.2 The Not-Too-Distant Past 354 11.3
New Kids on the Block 355 11.4 The Unitranche Product 356 11.5
Reorganization of Insolvency Laws in Europe 359 11.6 Islamic Finance:
Sukuks and Non-Risk-Free Bond Look-Alikes 360 11.7 Origination Sources for
Mezzanine 361 11.8 The Role of Governmental Organizations 362 11.9 The Refi
nancing Wall: Opportunities and Challenges 363 11.10 Performance of
Mezzanine Products 363 Appendix 1 Overview of Term Sheets and/or Model
Contracts for the Mezzanine Product Group 367 Appendix 2 First Lien/Second
Lien Inter-creditor Agreement 415 Glossary 479 Case Guidance/Solutions 489
Index 505
Demarcation of the Product Group 5 1.3 Positioning and Use of Mezzanine
Finance 7 1.4 The Risk-Return Conundrum 10 1.5 Providers of Mezzanine
Finance 18 1.6 The Market for Mezzanine Products 18 2 The Mezzanine Product
Group 25 2.1 Categorization of the Mezzanine Product Group 25 2.2 Case
Study: The Kratos Company - Merger Finance 67 3 The Implicit Cost of
Mezzanine Products 77 3.1 Measuring Risk 77 3.2 Types of Risk 80 3.3 Equity
Risk Versus the Risk of Borrowing: Default Risk and the Cost of Debt 87 3.4
Putting It All Together 90 3.5 How Much Risk is There in a Mezzanine
Product? 92 3.6 Cost Versus Return Dynamics for Mezzanine Products 94 4 The
'Pricing' Question and Further Financial Dynamics of Convertible Loans and
Preferred Convertible Shares 97 4.1 Pricing Grid for Mezzanine Products 97
4.2 Financial Dynamics of Convertibility in Convertible Loans and Preferred
Convertible Shares 99 4.3 Case Study: JJ Bars & Restaurants - Mezzanine for
Expansion 121 5 The Mezzanine Product Group and the Financial Industry 139
5.1 The Basel Committee and Framework 140 5.2 The Evolution of the Basel
Rules (Basel I and II) 140 5.3 Objectives of Basel III and the Central
Themes 144 5.4 Impact on the Use of Mezzanine Products in the Financial
Sector 163 5.5 Regulation in the Insurance Sector Impacting the Use of
Mezzanine Products 163 5.6 CoCo Bonds - Contingent Convertible Bonds 171
5.7 Annex I - Summary Basel III 177 5.8 Annex II - Basel III - Specifi c
Features 178 5.9 Case Study Positions: Mezzanine Financing for Financial
Institutions 182 5.10 Case Study 1: Financing the Future of Bank Alhanbra
182 5.11 Case Study 2: Growing the Brazilian Market 184 5.12 Case Study 3:
Financing a South African FI which is Part of a Larger Conglomerate Prior
to an IPO 186 6 Mezzanine and Project Finance 189 6.1 Types of Projects 192
6.2 Financing Aspects 193 6.3 Securitizing Project Loans 195 6.4 Case Study
1: Developing a Toll Road in Poland (A2) 196 6.5 Case Study 2: Building and
Operating a Wind Park 203 7 Real Estate Projects and Mezzanine Finance 211
7.1 Wider Application 212 7.2 Other Applications and Return Issues 214 7.3
Case Study: Financing a Real Estate Company in the CEE Region 220 8
Mezzanine and the Private Equity Space 225 8.1 Drivers of Return 228 8.2
LBO Structure 232 8.3 Tax Implications 247 8.4 Alternative Transactions
Using Similar Financing Structures 247 8.5 Summary of Different
Compartments in the LBO Structure 249 8.6 Summary of Types of Securities in
the Leverage Structure of an LBO 251 8.7 Case Study: Buying Orangina - a
Typical LBO with Some Interesting Questions Ahead! 251 9 Mezzanine Products
and the World of the Rating Agencies and Accountancy Boards 261 9.1 Rating
Agencies and the Debt-Equity Continuum 261 9.2 Case Study: Fitch's Approach
to Rating Hybrid for Corporates 272 9.3 Mezzanine Debt, Rating Agencies,
the Regulator and Financial Institutions After 2008 284 9.4 Appendix 1:
Equity-Content Maximization and Structuring Criteria at Moody's 293 9.5
Appendix 2: S&P's and Moody's Key Structuring Considerations 294 9.6 The
Intricacies of the Accounting World 295 9.7 Demarcation Lines and Product
Modeling 309 10 Term Sheets, Inter-creditor Agreements and Debt
Restructuring 313 10.1 Groups of Covenants 313 10.2 Review of Key Covenants
for Mezzanine Products 316 10.3 Other Covenants 318 10.4 Case Studies: The
Good, the Bad and the Ugly 319 10.5 A Comparison of Debt Asset Classes 321
10.6 Case Study: LyondellBasell and Lyondell Chemical Company 339 11
Outlook 353 11.1 Introduction 353 11.2 The Not-Too-Distant Past 354 11.3
New Kids on the Block 355 11.4 The Unitranche Product 356 11.5
Reorganization of Insolvency Laws in Europe 359 11.6 Islamic Finance:
Sukuks and Non-Risk-Free Bond Look-Alikes 360 11.7 Origination Sources for
Mezzanine 361 11.8 The Role of Governmental Organizations 362 11.9 The Refi
nancing Wall: Opportunities and Challenges 363 11.10 Performance of
Mezzanine Products 363 Appendix 1 Overview of Term Sheets and/or Model
Contracts for the Mezzanine Product Group 367 Appendix 2 First Lien/Second
Lien Inter-creditor Agreement 415 Glossary 479 Case Guidance/Solutions 489
Index 505