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I am Rudy Aernoudt. I'm professor at the University of Ghent. The topic of today is Mezzanine.
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If you speak about Mezzanine, we speak about something which is between debt and equity. Within debt, we have senior debt, which is the lowest risk debt, and junior debt wich is the highest risk debt. Then, above that we have Mezzanine. Mezzanine is in fact a kind of debt instrument, but it could become equity and that's why we call it Mezzanine. Something between A and B, between debt and equity. Mezzanine can happen in different ways. It can be convertible. Convertible means that the debt can converted into shares, so the debt becomes equity. The alternative, which is often used as well the warrant, which means that the debt on top of the debt, you have the possibility to have an option of some shares. To summarize, Mezzanine, it's not debt, it's not equity, it is something between.
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If you look to the level of risk, then you see of course that the lowest level is senior debt. After that, you call the junior debt. The junior debt has high risk, which means a higher return. Because if you take more risk, if things go well, you could have more return. After that, we have what you call the subordinate debt. Means are debts just like senior debt or junior debt, but in case of failure those are only paid later. The debt holders will lose because the junior and the senior debt will be paid first. If something is left, it's for them. If after the support data debt something is left, then it goes to the preferred shares and the ordinary shares.

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