Equity Kicker
Warrants attached to debt that give the lender the right to purchase equity at a specified strike price, typically exercisable at exit or change-of-control. Used to lift mezzanine-debt total-return expectations from the cash coupon yield (12-14%) to the all-in target return (16-20%) over the hold. The presence of a kicker at closing signals that the original underwriter viewed the mezz risk as higher than its cash coupon alone justified — i.e., the underwriter priced the deal as needing equity-like upside in addition to debt-like income.
Lessons that use this term
Related terms
Absorption Rate · AFFO per Share · Allowed Return on Equity · Alternative Investments · Anchor Tenant · Assets Under Management
Open this term in the app → — no account needed; browse the full glossary while you research.