Rubico property fund has been suffering falling tennancy and property values since the beginning of the recent conflicts in Ukraine. Rulico's chief executive operator, Mr Rudy Licorop sense the trust may be about to breach its debt convenants and become insolvent. He knows that to save the fund, Rulico would need to issue more equity. Rudy is a majority shareholder in Rulico.

a) Explain using agency theory why Rudy would be hesitant to issue more equity, even though it may save the property fund?

b) Due to almost breaching debt convenants, rulico is unable to borrow from commercial banks as a last ditch effort to save the fund. Explain if mezzanine debt would be a way for Rulico to raise financing and the disadvantages of using it?