Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 39

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 39
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 defaults.

We may also invest in interests in warehousing
facilities. Prior to the closing of a CLO, an investment bank or other entity that is financing the CLO’s structuring may provide
a warehousing facility to finance the acquisition of a portfolio of initial assets. Capital raised during the closing of the CLO is then
used to purchase the portfolio of initial assets from the warehousing facility. A warehousing facility may have several classes of loans
with differing seniority levels with a subordinated or “equity” class typically purchased by the manager of the CLO or other
investors. One of the most significant risks to the holder of the subordinated class of a warehouse facility is the market value fluctuation
of the loans acquired. Subordinated equity holders generally acquire the first loss positions which bear the impact of market losses before
more senior positions upon settling the warehouse facility. Further, warehouse facility transactions often include event of default provisions
and other collateral threshold requirements that grant senior holders or the administrator certain rights (including the right to liquidate
warehouse positions) upon the occurrence of various triggering events including a decrease in the value of warehouse collateral. In addition,
a subordinate noteholder may be asked to maintain a certain level of loan-to-value ratio to mitigate this market value risk. As a result,
if the market value of collateral loans decreases, the subordinated noteholder may need to provide additional funding to maintain the
warehouse lender's loan-to-value ratio.

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Our investments in the primary CLO market involve certain additional risks due to the need to fully “ramp” the portfolio.

Between the pricing date and the effective date
of a CLO, the CLO collateral manager will generally expect to purchase additional collateral obligations for the CLO. During this period,
the price and availability of these collateral obligations may be adversely affected by a number of market factors, including price volatility
and availability of investments suitable for the CLO, which could hamper the ability of the collateral manager to acquire a portfolio
of collateral obligations that will satisfy specified concentration limitations and allow the CLO to reach the target initial par amount
of collateral prior to the effective date. An inability or delay in reaching the target initial par amount of collateral may adversely
affect the timing and amount of distributions on the CLO equity securities and the timing and amount of interest or principal payments
received by holders of the CLO debt securities and could result in early redemptions, which may cause CLO equity and debt investors