Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 57

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 57
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 until the related first lien loan is paid in full. Moreover, any amounts that might be realized as a result of collection
efforts or in connection with a bankruptcy or insolvency proceeding involving a second lien loan must generally be turned over to the
first lien secured lender until the first lien secured lender has realized the full value of its own claims. In addition, certain of the
second lien loans contain provisions requiring the CLO issuer’s interest in the collateral to be released in certain circumstances.
These lien and payment obligation subordination provisions may materially and adversely affect the ability of the CLO issuer to realize
value from second lien loans and adversely affect the fair value of and income from our investment in the CLO’s securities.

An economic downturn or an increase in interest
rates could severely disrupt the market for high-yield debt securities and loans and adversely affect the value of such outstanding securities
and the ability of the issuers thereof to repay principal and interest.

Issuers of high-yield debt securities and loans
may be highly leveraged and may not have available to them more traditional methods of financing. The risk associated with acquiring (directly
or indirectly) the securities of such issuers generally is greater than is the case with highly rated securities. For example, during
an economic downturn or a sustained period of rising interest rates, issuers of high-yield debt securities and loans may be more likely
to experience financial stress, especially if such issuers are highly leveraged. During such periods, timely service of debt obligations
also may be adversely affected by specific issuer developments, or the issuer’s inability to meet specific projected business forecasts,
or the unavailability of additional financing. The risk of loss due to default by the issuer is significantly greater for the holders
of high-yield debt securities and loans because such securities may be unsecured and may be subordinated to obligations owed to other
creditors of the issuer of such securities. In addition, the CLO issuer may incur additional expenses to the extent it (or any investment
manager) is required to seek recovery upon a default on a high yield bond (or any other debt obligation) or participate in the restructuring
of such obligation.

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We are subject to risks associated with loan assignments and participations.

The CLOs in which we invest will purchase loan
participations and assignments. Loan participations are interests in loans to obligors which are administered by the lending bank or agent
for a syndicate of lending banks, and sold by the lending bank