Capital Alternatives

Senior debt

Using the assets and cash flow of the underlying business as collateral, a business typically utilizes senior debt to cover a substantial portion of the funding needed to operate the business. Senior loans are exposed to the least amount of risk because they command a senior position with respect to scheduled interest, principal payments and collateral. However, unlike senior subordinated and junior subordinated debt, these senior loans typically do not entitle the lender to obtain warrants to purchase equity of the borrower. As such, senior debt generally does not participate in the equity appreciation value of the business. In today’s capital markets, companies have access to a broad array of senior debt products, offering a full range of options in terms, including covenants, fixed or floating rate structures, asset-based or cash flow-based structures, prepayment flexibility and amortization. GPG negotiates with funding sources to craft the most advantageous senior debt structure for our clients. GPG is experienced in placing the following senior debt instruments:

  • Asset-Based Credit Facilities;
  • Cash Flow-based Credit Facilities;
  • Term A and B Loans;
  • Senior Subordinated Debt (Fixed or Floating Rate); and
  • Second Lien Loans

Mezzanine debt

Mezzanine debt generally refers to the layer of financing between a company's senior debt and equity. Structurally, it is subordinate in rights to receive principal and interest payments from the borrower to the rights of the holders of senior debt and senior subordinated debt. The risk profile of subordinated debt is higher than senior debt, which permits the junior subordinated lender to obtain a higher interest rate and warrants to purchase a portion of the borrower’s equity. GPG is well positioned to be a leading advisor to electronics companies seeking to issue mezzanine debt. GPG is experienced in placing the following types of subordinated capital:

  • Enterprise Value Loans;
  • Coupon-Only Subordinated Debt;
  • Convertible Subordinated Debt; and
  • Subordinated Debt with Warrants

Equity and linked securities

Private equity can be arranged for a number of reasons, including future growth opportunities, acquisitions, leveraged buyouts or recapitalizations to provide liquidity for existing shareholders. Private equity capital typically makes up the difference between a transaction's total purchase value and the amount provided by senior and subordinated debt lenders in leveraged change of control transactions. Throughout the process we give important consideration to current ownership structure, corporate culture, fit with the potential equity sponsor and strategic corporate objectives. GPG has the ability to place the following types of private equity capital:

  • Common Stock;
  • Private Investment in Public Equity (PIPE);
  • Participating Preferred Stock;
  • Convertible Preferred Stock; and
  • Redeemable Preferred Stock