medium · Private Equity pe-core
An LBO of 'DefensiveCo' uses $500M of Senior Debt and $200M of Mezzanine. In a downside scenario, the Enterprise Value drops to $600M.
How much of the Mezzanine principal is recovered, and what is its status?
- $100M recovered; Mezzanine is the 'fulcrum security'
- $0 recovered; Mezzanine is 'out of the money'
- $100M recovered; Mezzanine is 'Senior' to the banks
- $200M recovered; Mezzanine is 'in the money'
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