Mezzanine Debt

Mezzanine Debt is a combination of equity and debt lending that allows lenders the ability to convert debt into equity in the situation of a default. What we mean by this is that mezz debt serves as a blurred line between debt and equity. It falls under debt in the cap stack, but above plain equity. Often, mezz debt is seen as a hybrid of both equity and debt due to where it falls between them.