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Mezzanine Capital

Money provided as a loan or preferred equity to finance a project where the money provided has the last priority of payback before common shareholders in case of default. Thus if a project is financed by a bank loan which holds a mortgage on the property as security, a second bank loan that is subservient to the first bank loan, and a loan of Mezzanin Capital, the project company must first meet financial obligations under the bank loans and then can using remaining funds to meet obligations under the agreement with the provider of Mezzanine Capital. Thus Mezzanine Capital undertakes the most risk and usually is the most expensive source of financining, generally provided for a shorter period of time. There are many ways that Mezzazine Capital can be structured.

Term in Russian