Mezzanine Capital Puns

I bought shares in Intermediate Capital Group (LON: ICP) last year for £3.03, they're currently at £4.49 but they've hit highs of £5.05.

I'll be entirely honest here, and I don't really know what it is they do. I bought them after getting a tip from a Friend that's got a pretty good track record, and they've just trundled along.

However a recent Magazine article was extremely luke warm about them. I think they were as negative about the industry more than the company.

Is anyone else here familiar with the Company or the world of mezzanine finance ?

How is it different to normal equity/debt capital raising and what are the benefits/risks?

Here is text from the revised 10-Q

"The Company had cash and cash equivalents of approximately $587.0 million and an accumulated deficit of $259.7 million at March 31, 2021 and a net loss of $125.2 million for the quarter ended March 31, 2021. Since inception, the Company has been developing its flagship vehicle, the Endurance, an electric full-size pickup truck. The Company’s ability to continue as a going concern is dependent on its ability to complete the development of its electric vehicles, obtain regulatory approval, begin commercial scale production and launch the sale of such vehicles. The Company believes that its current level of cash and cash equivalents are not sufficient to fund commercial scale production and the launch of sale of such vehicles. These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year from the date of issuance of these unaudited condensed consolidated financial statements.

To alleviate these conditions, management is currently evaluating various funding alternatives and may seek to raise additional funds through the issuance of equity, mezzanine or debt securities, through arrangements with strategic partners or through obtaining credit from government or financial institutions. As we seek additional sources of financing, there can be no assurance that such financing would be available to us on favorable terms or at all. Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry. "

In other words EXACTLY what they said on the earnings call - they need to raise money to hit full production. This is a huge overreaction.

1. Core Concepts Explained

2. The Ongoing 2008 Financial Crisis Explained

3. The Ongoing COVID Crisis Explained

4. Connection to GameStop

5. Conclusion (TL;DR)

---

[This DD seeks to further simplify u/Criand’s Mother of All DDs -- The Bigger Short -- for the ultimate smooth brains.]

[If you find Section 1 too long, it is suggested that you start with Section 2, and refer back to Section 1 using "Find" browser function (CTRL + F). Cross references are made for readers' convenience.]

[None is financial advice. I am a retard.]

1. Core Concepts Explained

1.1 Derivatives are contracts which derive their values from the performance of the underlying asset, index, or entity. The following types of derivatives are mentioned in the DD:

1.1.1 Option -- a contract that gives the buyer the right, but not the obligation, to buy or sell the underlying asset by a specified date (a.k.a. “expiration date”) at a specified price (a.k.a. “strike price”). The buyer purchases such rights with an “option premium”. Options sellers are expected to be in a stable financial standing.

The two most common types of options are calls and puts.

1.1.1.1 Calls give the buyer the right to buy the underlying asset at the strike price specified in the contract. Investors buy calls when they believe the price of the underlying asset will increase and sell calls if they believe it will decrease.

Illustration 1:

A gives B $1,000 for taking a house off the market, in exchange for the option to buy the house for $100,000 within the next 3 months. This is a call option.

Here, “$1,000” is the option premium, “$100,000” is the strike price, and “within 3 months” is the expiration date.

A enters into the call option contract with B because A expects the house’s price to rise above $100,000 within 3 months. If the price rises to, say, $200,000 within 3 months, A would want to exercise the option and gain $100,000 for reselling the house.

Within the 3 months, if A later thinks the house’s price will fall to $50,000 (below the strike price of $100,000), A would sell the call option to C who believes the house’s price will rise. In this way, A could recover the $1,000 option premium.

*If, after 3 months, A does not exercise or sell the option and the house’s price does fall to $50,000, A

BROKEN DOWN INTO SECTIONS, Starting with COMPANY'S VIEWS, RISKS, PLANS & then POSITIVES.

LMC’s current opinion of their own cash situation: -"The Company believes that our current level of cash and cash equivalents are not sufficient to fund commercial scale production and the launch of sale of such vehicles."

What they intend to do about it: -"To alleviate these conditions, management is delaying certain expenditures in order to fund operations at reduced levels and currently evaluating various funding alternatives and may seek to raise additional funds through the issuance of equity, mezzanine or debt securities, through arrangements with strategic partners or through obtaining credit from government or financial institutions."

What immediate cost risks are there? -Retooling the rest of the facility for EV. -Building and testing Betas for other models of commercial fleet vehicles (Vans). -Hiring and training key staff for supply chain / operations as facility grows to use full square footage.
-Cost of securing capital / loans may increase due to economic conditions.

Biggest Risks: -“We have no current customers or pending orders.” -"No assurance that non-binding orders will convert to binding.” -“Long process of scaling to profitability”. (They will lose money for a while) -They haven’t secured suppliers for all components yet. -Components that they have secured, may be delayed or costs increased. -Lack of company experience in high-volume manufacturing could create bottlenecks in production or delays in supplying necessary components from vendors. -Lack of previous supply & demand history may lead to under/over production per customer’s needs, thus creating bottlenecks or cost overruns. -LMC’s entire initial revenue source will be generated from one model of vehicle, as opposed to competition who have multiple models.

Important market factors that LMC can’t control: -Price competition between combustion and EV. -Competitors may build more attractive EV vehicles. -Total maintenance costs through life of the vehicle compared to combustion. -Financing availability for EV fleet vehicles. -Lithium batteries can catch on fire if not managed appropriately. -Tax incentives for EV purchases. -Government regulations on gas/fossil fuels. -Fuel prices. -Corporate “Green” initiatives. -Raw material costs. -Tariffs / Macro-Economic factors. -Availability of replacement parts. -Limited Drive Range between charges. -Electric grid capacity. -Public c

Incoming sophomore at semi-target w current internship at boutique IB firm and a boutique PE internship lined up for fall. I want to look for a private credit internship in the winter/spring. I plan on recruiting in spring.

I’m really interested in private credit (over IB and PE) for a few reasons

1. I don’t like cold calling/sourcing very much (most growth analyst PE roles)

2. Credit looks at and closes way more deals (seemingly less of that “my work is pointless” feeling from PE and IB roles where 99% of your deals get shafted.)

3. It’s a more predictable industry with a better work-life balance than IB (important for me since I’m a competitive athlete and ideally want free time to keep that up recreationally.)

My ideal job is a private credit analyst role (with clear track to associate) at a notable firm that works with mezzanine/distressed debt primarily (I want experience with both debt and equity). That way I can also learn skills transferable to PE or other equity roles if I wanted to make a switch. I want to work with modeling/due diligence/capital structure and rate decisions. I’m not sure this job exists but just putting this out there. Basically I’m saying I don’t want to be working only on underwriting cuz then I’m super pigeon-holed to credit.

Are there any good private credit analyst programs out of undergrad? Or should I just network with all the large credit firms and see if they are taking on any undergrads this year. Will I be pigeon-holing myself in credit if that’s the route I choose? General thoughts?

P.S. if anyone here works at a private credit firm that hires undergrads or went straight to credit from undergrad please DM me I’d love to chat. Thanks!

Hello Fellow Apes 🦍

In the last three months this stock has gone up $1.75. From $7.33 to $9.08.

$.63 of that has come from the last week.

This is a business development that It specializes in middle market, mature, mezzanine finance, later stage, emerging growth, leveraged buyouts, refinancing, acquisitions, recapitalizations, turnaround, growth capital, development, capital expenditures and subordinated debt tranches of collateralized loan obligations, cash flow term loans, market place lending and bridge transactions. It also makes real estate investments particularly in multi-family residential real estate asset class.

What are your thoughts on this one? Has anyone else been following it?

Heres the source: 10-Q

https://investor.lordstownmotors.com/static-files/f0d0d2f4-d298-4576-9344-61f82e345e19

And summary of what seems the be the reason of the massive sell off today on page 21, 2nd Pharagraph:

>We had cash and cash equivalents of approximately $587.0 million and an accumulated deficit of $259.7 million at March 31, 2021 and a net loss of $125.2 million for the quarter ended March 31, 2021. Our ability to continue as a going concern is dependent on our ability to complete the development of our electric vehicles, obtain regulatory approval, begin commercial scale production and launch the sale of such vehicles. We believe that our current level of cash and cash equivalents are not sufficient to fund commercial scale production and the launch of sale of such vehicles. These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year from the date of issuance of the unaudited condensed consolidated financial statements included in this report.

>To alleviate these conditions, management is currently evaluating various funding alternatives and may seek to raise additional funds through the issuance of equity, mezzanine or debt securities, through arrangements with strategic partners or through obtaining credit from government or financial institutions. As we seek additional sources of financing, there can be no assurance that such financing would be available to us on favorable terms or at all. Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry.

>We accepted an invitation from the U.S. Department of Energy to start the process toward securing an ATVM loan. If we are successful in completing this stage, we may receive a term sheet, but we cannot guarantee we will reach that stage or be approved for a loan or provide any assurance as to the amount or timing of any loan that we may receive. Broadly speaking, prior ATVM loans were offered at Treasury rates for interest expense, required that the proceeds be spent on plant retooling or R&D activities and have imposed initial cash collateral requirements. We are currently in the due diligence phase and there can be no assurance when or if we will rec

This is not vestment advice, I am not an investment advisor. This post is sentiment and guesswork only.

Preface: a whole lotta apes are confused.

I want to put this in simple terms. Prior to covid some HFs went around scouring for retail debt, they found a few companies publicly traded that were not doing so well, on a downward trend, but still had high credit rating. HFs mgmt bought that debt (AAA senior tranch). They also found companies with even more debt at AA rating (Senior/Middle Level guys within a hedge fund or other HFS) and bought that debt. And then even went as low to find junk bonds and bought that debt. Then they packaged the shit out of it put some legalize on it to hide what it really was and then insured it as high as they could go on it and with a lowish premium. Why insure it? Because they want it to fail and strike payday. Ok, so that’s good and all but the HFs are greedy.

The HFS don’t want to pay the insurance premiums, want additional protection, and of course they want gains. Next they start adding in rich investors seeking high rate of return on this lumped package of debt shit. They find the Rich people, the “1%“ and add them as Junior and Mezzanine levels to the packaged debt and put these rich fucks in leveraged CSOs that are negative sentiment against retail. based off how much risk, insurance, collateral they have and willing to risk. The “1%er” dumb money are Junior tranch and more aligned to the junk/BBB- rating with lower insurance premium (most % gains) but higher risk. The Rehypothecation is the collateral the HFS accept from 1%er and will get forced to liquidate if the overall scheme goes south ie. HF needs more cash to buy shorts or insurance premiums go too high. The smart 1%ers are higher up the ladder with higher insurance premiums and thus less gains, but less risk for liquidation of their rehypo assets as the Junior tranch will be liquidated first.

But keep in mind the HFS need to short the stock, and leverage the CSOs with long term OTM put options that are bought as well; so any 1%’er joining will have an upfront expense getting into the CSOs for buying more put options, and an interest fee based off short interest fees + insurance on the base credit package that the AAA and AA HF Senior guys joined in at and don’t want to pay. See where the HFS lie within these tranches now? They are playing with other peoples money.

ok now fast forward to Covid19 where public companies needed cash, c

Real Estate Investment Trusts (REITs) can be wonderful investments for dividend seekers. With regulations stating that 90% of their net income must be paid out as a dividend, it is no wonder that these can be favorites of dividend hunters. The key is to make sure one is not over paying for the dividend. This is what I look for.

• Actively traded REITs
• Funds From Operations are positive
• Current Yield > 4%
• A persistent annual increase in the dividend
• Present Value of the REIT based on a Discount Dividend Model must be greater than the current price.

The only passing candidate is Arbor Realty Trust Inc (NYSE: $ABR). Arbor Realty Trust, Inc. invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States. The company operates in two segments, Structured Business and Agency Business. It primarily invests in real estate-related bridge and mezzanine loans, including junior participating interests in first mortgages, and preferred and direct equity, as well as real estate-related joint ventures, real estate-related notes, and various mortgage-related securities. The company offers bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property; financing by making preferred equity investments in entities that directly or indirectly own real property; mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower's equity in a transaction; junior participation financing in the form of a junior participating interest in the senior debt; and financing products to borrowers who are looking to acquire conventional, workforce, and affordable single-family housing. In addition, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was incorporated in 2003 and is headquartered in Uniondale, New York.

Why you should look at Arbor Realty?

• Over the last 12 months, their funds from operations are $687 million
• The current yield is 7.53%
• The dividend has increased every fiscal year since 2013
• The present value of future divid

Hi everybody,

I’ve been working on a startup for nearly 2 years, and finally in a position to grow. I’ve got a deal where I’ll be buying 40% and paying the remainder through a seller note.

I’m funding this through the SBA so they want 10% down which would be a measly 30k but I don’t have it and I can’t get it from credit cards or friends/family. The other issue is, I’m having trouble finding legit investors, many either think this is too small or want to wait since this will be my first deal.

What are some places I could go, terms/names I could search to help find investors and institutions that will act as the private investor or mezzanine piece to pay for the 10% down payment of this deal?

Since we’ve structured it with the sellers note, I’ll be able to pull out a Working Capital and Line of Credit (200k combined) loans to pay it off immediately, or if they’d prefer over time and with an equity piece, fine too. The deal can already handle a requirement of the SBA DSCR minimum of 1.33 all the way to 2.0.

Thank you

Phil

Me: Hi pregnant, I'm Dad!

Wife: No you're not.

Sudden Lee

Go post NSFW jokes somewhere else. If I can't tell my kids this joke, then it is not a DAD JOKE.

If you feel it's appropriate to share NSFW jokes with your kids, that's on you. But a real, true dad joke should work for anyone's kid.

Mods... If you exist... Please, stop this madness. Rule #6 should simply not allow NSFW or (wtf) NSFL tags. Also, remember that MINORS browse this subreddit too? Why put that in rule #6, then allow NSFW???

Please consider changing rule #6. I love this sub, but the recent influx of NSFW tagged posts that get all the upvotes, just seem wrong when there are good solid DAD jokes being overlooked because of them.

Thank you,

A Dad.

So far nobody has given me a straight answer

..... Will get a reward.

Because they work on many levels

Thought I wanna do a giveback to the community on an annual basis.

Those who know me will know me and those who don't here is a short description.

Poly dude from SP DCPE, went to NUS Law, transfered to CS+USP, dropped out, took on massive debt to attend Cambridge Engineering, graduation due in 4 months.

Topics I'm happy to discuss:

1. Poly stuff in general

2. NUS Law/CS/USP, NTU Biz+Computing

3. Scholarships in general. Went through some 20+ application and interview rounds. Could talk about taking on debt for overseas education as well

4. Cambridge and UK in general

5. Offered a place in Stanford. Happy to discuss US apps

6. SAT 1/ 2 were 2380/2390. It's a lot easier now but happy to discuss

7. Internships/interviews/jobs. Here is where it gets fun and where the real meat of my experiences is. Applied to 200 jobs in my first year, 300 in the second, 100 in the third. Interned at 19 places over 3 years. Search me up on LinkedIn if you like. Sectors include: Software Engineering, Corporate Finance (Investment Banking), Investments (Private Equity, Real Estate, Mezzanine Debt, Search Fund, Venture Capital, Fundraising), Consulting (MBB etc)

8. Networking. Cold emailed 2000 people in the industry, spoke with 50 of them, and secured a number of internships. A lot of fun stuff here.

Realized that this place may not have the right target audience, so if anyone knows anyone else not in this forum looking to speak, do share with them. Post might get archived pretty quickly, so PM me if you see this thread after it gets archived.

Cheers.

Ps. Try NOT to PM me unless this is archived. Post it here. Others can learn. The thread survives longer.

Well, toucan play at that game.

Argon does not react.

Windows

Martin Freeman, and Andy Serkis.

They also play roles in Lord of the Rings.

I guess that makes them the Tolkien white guys.

She said apple-lutely

Valuation: Undervalued

Investment Thesis:

• Sixth Street is a business development company out of San Francisco and invests in both debt and equity.
• Sixth street has a TMM revenue of $315.16M, a TTM EBITDA of $214.5M, and a market cap of $1.58B.
• On the lowest end, the potential upside for this investment would be 9.1%, however according to my valuation an upside between 28.8-31.6% is more likely.
• With Sixth Street recently beating their earnings estimate, being upgraded by multiple analysts, and recent insider buying the future is looking good for Sixth Street.

Company Overview:

Sixth Street Specialty Lending Inc. is a business development company based out of San Francisco, California. Sixth Street provides senior secured loans, mezzanine debt, non-control structured equity, and common equity with a focus on organic growth, acquisitions, market/product expansion, restructuring, recapitalizations, and refinancing.

Sixth Street seeks out mid-market cap companies ($50M-$1B) located in the USA in the following industries: business services, software/technology, healthcare, energy, consumer/retail, manufacturing, industrials, education, and specialty finance. Sixth street also looks for companies with an EBITDA between $10-250M (average EBITDA is $41M).

In total, Sixth Street has invested in 68 companies, with an average transaction size of $35M. Their portfolio of diversified investments has grown to over $50B AUM (March 2021).

Most of the debt that Sixth street invests into is not rated by any rating agencies, however if they were Sixth Street believes it would be rated at BBB (by Standard and Poor’s) and would be classified as “junk debt”. This kind of debt offers a higher yield (return) to investors because there is a larger credit risk (risk of the company offering these bonds to go bankrupt and not be able to pay investors out) involved. However, Sixth street is able to make consistent returns on this debt as a result of them hedging against their debt (call protection).

Sixth Street is able to generate their revenues through interest income from the investments that they hold in their portfolio. Furthermore, they make income off of dividends, special dividends, capital gains, and other fees that are not as steady sources of income as their interest income.

Sixth street classifies their investments risk on a scale of 1 to 5. On their scale 1 means that there are no concerns about the underlying company’s (who’s bonds Sixth

'Eye-do'

This is my first post pls don't kill me lol.

The people in the comment section is why I love this subreddit!!

Cred once again my sis wants credit lol

Keep in mind, my son is 4 years old, so everything is an original to him.

I had to work late into the evening yesterday, and he was just going to bed when I got home. I had left home for the office nearly 14 hours prior, had a long day, lots of meetings, traffic, etc.

When I walked through the door, I was exhausted, run down, and starving. My wife hugged me and asked how my day was, and I replied, "Done. It was a good day, but has got me exhausted. I just want to grab a bite and go to bed. I'm hungry."

From my son's bedroom, I hear him shout, "Hi Hungry! Nice to meet you!"

Not only did it make me laugh, but I completely forgot about how hungry and tired I was. I went to his bedroom, and we laughed together about it. It was exactly what I needed.

Edit: Thanks for all the awards, kind strangers! I'll let my son know y'all enjoyed his joke too!

I heard parents named their children lance a lot.

First post please don't kill me

Edit: i went to sleep and now my inbox is dead, thank you kind strangers for the awards!

To get to the... Bottom...

(as told by my 5yo son, I'm so proud)

Japan.

The best travel credit cards

Best Travel Credit Cards

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The Platinum Card from American Express

Platinum card from American Express

Platinum card from American Express

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Annual payment: $550 (see rates and fees)

Why it’s worth it: It’s not just the 75,000-point welcome offer that lands this card on our list of the foremost valuable travel cards. Besides the up to $500 in credits every year and various lounge access options, the Amex Platinum may be a stellar premium travel card that will provide amazing redemptions. Among the Membership Rewards program’s travel partners is Singapore Airlines‘ KrisFlyer, which is the only thanks to book the ultra-prem

"No, the regular kind!" I laughed.