Company: PDCC
Filing Date: 2025-09-19
Form Type: 424B2
Source: 0001214659-25-013974
Chunk: 127

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-09-19
Form: 424B2
Chunk 127
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 distributed to the equity tranche investors. In limited instances, principal may be reinvested
after the end of the reinvestment period.

| 68 |

CLOs contain structural features and covenants
designed to enhance the credit protection of CLO debt investors, including overcollateralization tests and interest coverage tests. The
overcollateralization tests require CLOs to maintain certain levels of overcollateralization (measured as par value of assets compared
to principal amount of liabilities, subject to certain adjustments). Interest coverage tests require CLOs to maintain certain levels of
interest coverage (measured as expected interest revenues on the assets compared to interest payments on the liabilities). If a CLO breaches
an overcollateralization test or interest coverage test, excess interest-related cash flow that would otherwise be available for distribution
to the CLO equity tranche investors is diverted to prepay CLO debt investors in order of seniority until such time as the covenant breach
is cured. If the covenant breach is not or cannot be cured, the CLO equity investors (and potentially other debt tranche investors) may
experience a deferral of cashflow, a partial or total loss of their investment and/or the CLO may eventually experience an event of default.
For this reason, CLO equity investors are often referred to as being in a first loss position. The Adviser will have no control over whether
or not the CLO is able to satisfy its relevant interest coverage tests or overcollateralization tests.

CLOs also typically have interest diversion tests,
which also acts to ensure that CLOs maintain adequate overcollateralization. If a CLO breaches an interest diversion test, excess interest-related
cashflow that would otherwise be available for distribution to the CLO equity tranche investors is diverted to acquire new loan collateral
until the test is satisfied. Such diversion would lead to payments to the equity investors being delayed and/or reduced while the test
breach is continuing. Once the breach has been cured, the CLO may have more assets and so the cash flow to the CLO equity tranche may
be higher than they were previously.

Cashflow CLOs do not have mark-to-market triggers
and, with limited exceptions (such assets rated “CCC+” or lower (or their equivalent) to the extent such assets exceed a specified
concentration limit, deeply discounted purchases and defaulted assets), CLO covenants are generally calculated using the par value of
collateral, not