Senior Debt has always been a mainstay of the private market. Principals with SC LLC have been active in this market since 1979 in arranging senior debt financing. Senior Note financings range in maturity from three to thirty years and can be executed in the traditional private placement market, the bank syndication market, and the asset-backed market.
Given the strong demand for senior note offerings, placements can be arranged for as little as $5 million up to in excess of $500 million. As a leading agent in this particular product, SC LLC has a unique experience and ability to arrange financing for the following senior debt instruments:
SC LLC has extensive experience as an advisor to companies looking to issue mezzanine capital. This form of financing is used extensively as a component of the capitalization in leveraged acquisition financings, where it is usually accompanied by senior debt (provided by banks or institutional investors) as well as the issuance of common or preferred stock.
The other frequent use of mezzanine capital is for growth capital, either exclusively or in conjunction with private equity capital. As such, mezzanine capital is typically arranged as a component of a more comprehensive debt structure. Structured in the form of subordinated debt, mezzanine capital has a longer life than senior debt. Subordinated debt is available for an initial period of seven to twelve years or longer, with an average life range of seven to nine years.
Private placements of subordinated debt for non-investment grade companies generally require an internal rate of return (â��IRRâ��) to the lender of 12% to 25%. This IRR can be achieved by a combination of a fixed cash interest rate of 8% to 12%, payment in kind (â��PIKâ��) interest and some form of â��equity kickerâ��, typically provided through the issuance of warrants.
The transaction size for traditional private subordinated debt issuance can be as low as $5 million or as large as $70 million or more. SC LLC has the ability to place the following types of mezzanine capital:
Private equity can be arranged for any number of reasons including: improving the balance sheet to support future growth; financing an acquisition or leveraged buyout; or recapitalizing a company in order to provide liquidity for existing shareholders. Investors will seek an IRR which varies depending upon the perceived level of equity risk.
A five to seven year investment horizon is typical, with most investors requiring a built-in exit mechanism to provide liquidity for their investment. Transaction sizes range from $3 million to $100 million.
SC LLC can assist a potential private equity issuer in offering a control stake in a company or a minority interest, as circumstances dictate. SC LLC works with the issuer company client to identify the most appropriate equity provider, giving full consideration to current ownership structure, corporate culture, strategic and financial aspirations and acquisition strategies.