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Case Study

Mezzanine Finance on Investment

About

Refinance of existing facilities of ~$25M.

Challenges

Our client is asset-rich, with one-off profits tied to project completion and sales, but with limited recurring sources of income.

They were looking to secure longer-term refinance of existing facilities to provide time to clear debt through a selldown program.

The client also was keen to retain the benefit of low-cost senior debt, however, there was no bank appetite for higher leverage on the asset class of underlying security.

Solution

Ocian secured a Trusted Private Lender Mezzanine Debt Facility in combination with existing Bank Senior Debt Facility.

Results

We helped secure a 2-year extension of all facilities to allow for an ideal selldown program.

The deal required surgical precision in managing all stakeholders. This included security for both lenders that was limited to mortgages over the subject security, with an inter-creditor agreement managing the relationship between the financiers.

As a result, the blended cost of funds was more than 25% lower than through a refinance under a non-bank stretch senior facility. Another win for the client was in the absence of any default, the senior lender permitted the repayment of the mezzanine facility first giving the opportunity to further reduce borrowing costs.

Additionally, the mezzanine lender provided interest capitalisation across both facilities, freeing up the Borrower’s other cashflows.

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