MEZZANINE FINANCING INSTRUMENTS AS ALTERNATIVE SOURCES OF FINANCING INDUSTRIAL ENTERPRISES

The paper deals with mezzanine financing instruments as a possible source of financing large industrial enterprises. Mezzanine financing instruments represent a hybrid form of funding combining the debt and equity features. Generally, these instruments can be considered as suitable tools for financing large enterprises with capital-intensive manufacturing, such as metallurgical, chemical, or machinery industry enterprises. These enterprises can use them both for implementation of development projects and for restructuring projects. However, there is a whole range of mezzanine financing instruments, and each of them has its specific characteristics. The authors of the paper aimed to compare the advantages and disadvantages of individual mezzanine financing instruments, in particular of participating loans, participating bonds, subordinated loans, subordinated bonds, convertible bonds, bonds with warrants, silent participations and preferred stocks. Individual instruments were evaluated on the basis of the identified key factors, which included the volume of the provided capital, its availability for enterprises of different sizes, individual conditions concerning its provision and repayment, the limiting conditions from the side of the creditors, non-extension of the control over the corporate activities, the increased demands on the credit capacity of the enterprise, improvement of the company creditworthiness, the financial risk growth, the sanctions for non-payment, participation of the provider in growing profits or incurred losses, tax deductibility of payments, the necessity of securing, and the existence of issue costs. The evaluation was performed using the binary scale, where individual instruments were subsequently compared with each other.