Utilization of Mezzanine Financing Instruments by Enterprises in the Czech Republic

Svedik, Jan

doi:10.5593/sgemsocial2014/b22/s6.108

Cited by 2 publications

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“…At the same time, the holders of subordinated bonds are satisfied before the providers of the equity capital (Iannotta, 2010). Also, in this case, the subordination, which is typical for the equity capital, is a reason for classification of subordinated bonds among mezzanine financing instruments (Svedik & Tetrevova, 2014b).…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

“…The reason why they have been included in this mezzanine category is the fact that these instruments are, in the corporate financial structure, a part of the equity capital, but they do not fulfil one or more basic characteristics of equity, e.g. the right to take part in the management of the company or nonpayability of the given source (Meluzin & Zinecker, 2009;Svedik & Tetrevova, 2014b).…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

“…Debt mezzanine includes participating loans, participating bonds, subordinated loans, subordinated bonds, convertible bonds, and bonds with warrants. The reason why they have been included in this mezzanine category is the fact that these instruments are, in the corporate financial structure, a part of the debt, but they also have some features that are typical for equity (Svedik & Tetrevova, 2014b).…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

“…Although some mezzanine financing sources were first used in the USA as early as in the 80's of the 20th century and then in Europe in the 90's, they still have not seen broad utilization in a number of countries, see more e.g. in (Amon & Dorfleitner, 2013;Dec & Masiukiewicz, 2017;Knežević, Ljumović, & Pavlović, 2015;Sazanov et al, 2016;Svedik & Tetrevova, 2014b).…”

Section: Introductionmentioning

confidence: 99%

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Mezzanine Financing Instruments in Comparison to the Classic Financing Sources

Tetrevova

Svedik

2018

Business, Management and Education

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The paper deals with innovated financing in the form of mezzanine financing instruments (sources). The authors aimed to identify, characterize, and assess mezzanine financing instruments in comparison to the classic corporate financing sources. Mezzanine financing represents an innovated form of financing interconnecting the features of equity and debt. The paper specifies the sources and characterizes and assesses pros and cons of each of them. Subsequently, it presents an overall evaluation of mezzanine financing instruments in comparison to the selected equity and debt financing sources. This evaluation was performed on the basis of 14 set criteria using a binary scale.

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Section: Literature Review and Hypothesesmentioning

confidence: 99%

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Mezzanine Financing Instruments in Comparison to the Classic Financing Sources

Tetrevova

Svedik

2018

Business, Management and Education

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“…Mezzanine financing is a source of capital used in large industries in Europe and North America. It is considered a hybrid instrument owing to its equity and debt characteristics [41,42].…”

Section: Mezzanine Financingmentioning

confidence: 99%

Shareholder Option Valuation in Mezzanine Financing Applied to CO2 Reduction in Sustainable Infrastructure Projects: Application to a Tunnel Road in Medellin, Colombia

2022

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This research uses real options analysis (ROA) to examine a lender’s conversion option in a mezzanine debt for a sustainable infrastructure project. We examine a transport infrastructure case in Medellin, Colombia, called “Tunel del Oriente” (Eastern tunnel), which meets sustainable criteria to allow the access to credit through a sustainable bond. This study proposes a model to evaluate the right to exercise the conversion option by employing ROA with a binomial approach under the concept of a call option. The underlying assets are based on revenues from the forecast of estimated demand and the alternative sales of carbon credits as the sustainable factor. The results indicated that the financial captured value (FCV), with one as the conversion ratio, could be up to 39.10% of the investment when the lender decides to become a shareholder. Furthermore, the FCV can increase by 6% more if the project sells TonCO2e saved by the sustainable factor, highlighting that the tax benefits are approximately 11% of the FCV if the project is sustainable. Additionally, the option value is 39.09% of the debt amount. Finally, this study demonstrates that project finance using mezzanine debt proves to be an effective and attractive method for any lender wanting to boost profit while supporting stakeholders and the environment with sustainable projects and responsible investment.

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Utilization of Mezzanine Financing Instruments by Enterprises in the Czech Republic

Cited by 2 publications

References 0 publications

Mezzanine Financing Instruments in Comparison to the Classic Financing Sources

Mezzanine Financing Instruments in Comparison to the Classic Financing Sources

Shareholder Option Valuation in Mezzanine Financing Applied to CO2 Reduction in Sustainable Infrastructure Projects: Application to a Tunnel Road in Medellin, Colombia

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