Transition fund:
Bridge fund is a kind of short-term financing, the term is limited to six months, and it is a kind of fund connected with long-term funds. The purpose of providing bridge funds is to achieve the conditions of docking with long-term funds through bridge fund financing, and then replace bridge funds with long-term funds. Crossing the bridge is only a temporary state.
Bridging loan:
Bridge loan is also called bridge loan. Generally speaking, bridge loan is a short-term loan, which belongs to a transitional loan. Bridge loan is an effective tool to directly capitalize buying opportunities, and the biggest advantage of bridge loan is its quick recovery. Bridge loan has a short term, no more than one year, and the interest rate is relatively high, with some mortgages such as real estate or inventory as collateral. Therefore, bridge loan is also called "bridge financing", "medium-term financing", "gap financing" or "swing loan".
In foreign countries, bridge loan usually refers to short-term financing provided by intermediaries to meet the capital needs of their service companies before arranging complex medium-and long-term loans. As far as the capital operation of Chinese enterprises is concerned, bridge loan refers to the short-term financing needs of the acquirer before the implementation of merger and acquisition, which are recommended and guaranteed by investment banks or other financial consultants and provided by banks and other financial institutions.
Foreign classic cases:
Bridge loan, as one of the external financing methods of foreign enterprise M&A, is a kind of high-interest short-term financing supported by its own capital provided by investment banks, so as to promote the smooth completion of M&A transactions, provided that M&A enterprises will replace this transitional loan financing by issuing junk bonds in the future.
Take Beazer's acquisition of Koppers in the United States as an example, in which Lehman Investment Bank acted as the planner and organizer of the whole M&A transaction. Pizza Company, Lehman Brothers and Netwest jointly established a holding company named BNS, holding 49%, 46. 1% and 4.9% shares respectively. BNS company is the carrier of Pisa company to use off-balance sheet tools. Using this off-balance-sheet tool, Pisa company hides the debt of $6,543.8+$30.7 million on the consolidated balance sheet. When Pizza Company holds 50% or more equity of BNS Company in the future, the debt will be reflected in the consolidated balance sheet of Pizza Company.
The total capital of BNS Company is $65.438+$566 million, including $65.438+$307 million in debt capital and $259 million in equity capital (including $50 million in common stock and $209 million in preferred stock). BNS acquired Cooper from various sources, of which $65.438+30.7 million in debt capital was provided by Lehman and Citibank, $500 million in bridge loan was provided by Lehman (bridge loan refinanced by issuing $300 million junk bonds in the United States), and Citibank provided $807 million in syndicated loans (of which $487 million was syndicated loans from other banks, and the interest rate was based on the basic interest rate plus 65.438). BNS's common stock capital of US$ 50 million is provided by Pisa Company and two investment banks, Lehman Bank and Netherfield Bank, with shareholding ratios of 49%, 46. 1% and 4.9% respectively. BNS's preferred stock capital of US$ 209 million is provided by Pisa, and credit support of US$ 200 million is provided by Knight West Investment Bank.