Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 66

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 66
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 in which we invest.

Investors will bear indirectly the fees and expenses
(including management fees and other operating expenses) of the CLO equity securities in which we invest. CLO collateral manager fees
are charged on the total assets of a CLO but are assumed to be paid from the residual cashflows after interest payments to the CLO senior
debt tranches. Therefore, these CLO collateral manager fees (which generally range from 0.35% to 0.50% of a CLO’s total assets)
are effectively much higher when allocated only to the CLO equity tranche. The calculation does not include any other operating expense
ratios of the CLOs, as these amounts are not routinely reported to shareholders on a basis consistent with this methodology; however,
it is estimated that additional operating expenses of 0.30% to 0.70% could be incurred. In addition, CLO collateral managers may earn
fees based on a percentage of the CLO’s equity cashflows after the CLO equity has earned a positive internal rate of return of its
capital and achieved a specified “hurdle” rate.

We and our investments are subject to reinvestment risk.

As part of the ordinary management of its portfolio,
a CLO will typically generate cash from asset repayments and sales and reinvest those proceeds in substitute assets, subject to compliance
with its investment tests and certain other conditions. The earnings with respect to such substitute assets will depend on the quality
of reinvestment opportunities available at the time. If the CLO collateral manager causes the CLO to purchase substitute assets at a lower
yield than those initially acquired (for example, during periods of loan compression or need to satisfy the CLO’s covenants), or
sale proceeds are maintained temporarily in cash, it would reduce the excess interest-related cashflow that the CLO collateral manager
is able to achieve. The investment tests may incentivize a CLO collateral manager to cause the CLO to buy riskier assets than it otherwise
would, which could result in additional losses. These factors could reduce our return on investment and may have a negative effect on
the fair value of our assets and the market value of our securities. In addition, the reinvestment period for a CLO may terminate early,
which would cause the holders of the CLO’s securities to receive principal payments earlier than anticipated. In addition, in most
CLO transactions, CLO debt investors are subject to the risk that the holders of a majority