Mezzanine Debt offers a unique combination of a high-yielding fixed income security with the capital appreciation potential of an equity security.

Mezzanine Debt Characteristics

1.           Typically Subordinated Debt

2.           Capital proceeds used to support buyouts, recapitalizations or growth strategies

3.           Long-term maturities

4.           Returns generated through a combination of current income and equity participation -

conversion feature or warrants

5.           Covenants provide an early warning of declining performance

PCGC Group's Mezzanine Advantage

Discipline Investment Process

When we consider a potential investment, we employ a rigorous, bottom-up evaluation process.

Key factors assessed include:

§       Quality of a company's sponsor/shareholder group

§       Quality and depth of company management

§       Strength of business model

§       Drivers of past and future product or service demand

§       Market conditions and a company's competitive position

§       Customer, supplier and competitor perceptions of the company's products, services and management Historical and projected financial statement

§       Company's need for additional capital

§       Potential exit opportunities

Constant Communication

Our active investment management approach to Mezzanine and Private Equity activities includes frequent and detailed communications with both sponsor groups and portfolio company management. Often, we will maintain board observation rights, which allow our investment professionals opportunities to review and consider strategic issues being faced by our portfolio companies.

Sensible Diversification

Additionally, we believe in prudent diversification across industries and sectors. We look to invest in companies where we perceive there to be low operating risks. These companies will typically have profitable track records and offer products and services that have little risk of becoming obsolete. We avoid companies with weak competitive positions or cyclical exposure.