medium · Private Credit loan-structures-instruments
If a mezzanine lender targets a 15% gross IRR over 5 years but the equity warrants expire worthless, which of the following adjustments would most likely be required to the contractual debt terms to maintain the target return?
- Reduce the management fee to 1.0%
- Increase the warrant stake to 5%
- Shorten the loan term to 3 years
- Increase the total coupon (Cash + PIK) to 15%
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