Junior debt

  • Financing provided in addition to other types of financing, mainly bank financing
  • This debt is junior in terms of repayment and collateral in relation to other financing entities
  • It allows the company to finance further business development without the need to find external equity investors and change the ownership structure
  • Junior debt can be used for investments, acquisitions, strengthening of working capital, payment of dividends or purchase of own shares
  • Offers flexibility of payment service, allowing the company to capitalize a portion of the interest expense (a “payment-in-kind” structure)
  • The source of repayment (usually up to 5 years) are operating cash flows, with the possibility of repayment at the end of the financing period