Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Mezzanine debt
- This topic has 5 replies, 2 voices, and was last updated 9 years ago by John Moffat.
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- March 2, 2015 at 8:30 pm #231009
Sir can you please explain me in simple language with example what is Mezzanine debt.
ThanksMarch 2, 2015 at 9:38 pm #231017Mezzanine debt is half way between secured debt (which comes first for payout if the company goes bankrupt) and unsecured debt (which comes after mezzanine debt if the company goes bankrupt).
March 3, 2015 at 6:03 pm #231158Thank you so much sir for making it so simple. Can u please give example as well. Thanks
March 4, 2015 at 8:15 am #231192There is no sort of specific example – it all depends on the agreement when the money is borrowed. Usually it will be money borrowed from a bank or other lender.
Usually with mezzanine debt there is no security given against the debt, so debts secured on assets is paid off first. As a result, the interest charged will usually be higher than that charged on secured debt.
March 4, 2015 at 10:00 am #231212Thank you sir.
March 4, 2015 at 12:41 pm #231234You are welcome 🙂
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