Email this pageSubordinated Debt
Deschutes Capital can structure and arrange a cash flow based subordinated loan, subordinated debt or mezzanine debt financing to meet your company's needs, based on the level and stability of your company's historical cash flow from operations or EBITDA, and return on equity ( ROE ). Whether your company needs financing to :
- refinance corporate debt,
- finance expansion and company growth,
- acquire additional corporate assets,
- leveraged buyout or management buyout,
- corporate recapitalization, or
- corporate restructuring,
Deschutes Capital can help.
We welcome the opportunity to work with private equity sponsors, corporate acquisition groups, chief financial officers ( CFO's ) and treasurers to structure and arrange a subordinated loan, subordinated debt or mezzanine debt financing at a competitive rate. Subordinated debt structures can vary significantly and are subject to and dependent upon market conditions and your company's cash flow and credit profile. Typically subordinated loans are cash flow loans and structured in the Prime + 2% to Prime + 8% range ( balanced on cash flow ), requiring at least a 1.2 interest coverage ratio. Common maturities are from three (3) to eight (8) years. Interest only payments may be permitted for the initial one (1) to three (3) years. In addition, equity warrants or other forms of an equity kicker may be required to balance the level of risk and achieve the lender's targeted return on investment ( ROI ). When the subordinated loan is used to facilitate an acquisition, the acquisition valuation should be in excess of $20 million at three (3) to five (5) times EBITDA, with the subordinated loan or mezzanine debt not exceeding 20% to 30% of that value.
The vetting process will include evaluating your company's historical cash flow from operations and EBITDA, as well as, the business cycle risk of your industry, seasonality of your business, and credit risk profile and concentration of your company's customer base. We can also employ risk management financial structuring products, such as, credit insurance and financial derivatives, when appropriate.
Deschutes Capital welcomes the opportunity to work with you and your company. Whether your company needs a subordinated loan or subordinated financing to complete the acquisition of a company or assets, to exploit growth opportunities or refinance a maturing loan, please submit a corporate finance inquiry form so that an account executive can call to discuss your company's subordinated debt financing needs.
To explore the full range of financing alternatives that Deschutes Capital provides, please go to the top of this page and click on the corporate finance service which is best suited for your company and circumstances.
We pride ourselves on integrity, knowledge and relationships to deliver the service you deserve.
