Mezzanine Finance vs Loan Stock

Loan stock does not use shares as collateral. It is usually secured on the assets of the company and is therefore the least risky for investors (because they get their money first if the company goes bankrupt). Mezzanine finance is not secured on the assets but it usually convertible into shares. It is therefore more risky than pure debt finance (such as loan stock) but less risky than investing directly in shares. (That is why it is called 'mezzanine' because it lies between the two, just as the mezzanine in a building is a bit like a balcony and is half way between the ground floor and the floor above.) (Shares are not called 'stock' in the UK nor in the ACCA exams :-) )

thanks

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