Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 60

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 60
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 which such an investment is held could suffer significant losses, including
the loss of that part of our or the CLO’s portfolio financed through such a transaction, declines in the value of our investment.

We are subject to risks associated with defaults on an underlying asset held by a CLO.

A default and any resulting loss as well as other
losses on an underlying asset held by a CLO may reduce the fair value of our corresponding CLO investment. A wide range of factors could
adversely affect the ability of the borrower of an underlying asset to make interest or other payments on that asset. To the extent that
actual defaults and losses on the collateral of an investment exceed the level of defaults and losses factored into its purchase price,
the value of the anticipated return from the investment will be reduced. The more deeply subordinated the tranche of securities in which
we invest, the greater the risk of loss upon a default. For example, CLO equity is the most subordinated tranche within a CLO and is therefore
subject to the greatest risk of loss resulting from defaults on the CLO’s collateral, whether due to bankruptcy or otherwise. Any
defaults and losses in excess of expected default rates and loss model inputs will have a negative impact on the fair value of our investments,
will reduce the cashflows that we receive from our investments, adversely affect the fair value of our assets, and could adversely impact
our ability to pay dividends. Furthermore, the holders of the equity and junior debt tranches typically have limited rights with respect
to decisions made with respect to collateral following an event of default on a CLO. In some cases, the senior-most class of notes can
elect to liquidate the collateral even if the expected proceeds are not expected to be able to pay in full all classes of notes. We could
experience a complete loss of our investment in such a scenario.

In addition, the collateral of CLOs may require
substantial workout negotiations or restructuring in the event of a default or liquidation. Any such workout or restructuring is likely
to lead to a substantial reduction in the interest rate of such asset and/or a substantial write-down or write-off of all or a portion
the principal of such asset. Any such reduction in interest rates or principal will negatively affect the fair value of our portfolio.

We are subject to risks associated with CLO Warehouses.

We may invest in in CLO Warehouses provided for
the purposes of enabling the borrowers to acquire assets (“Collateral”) which are ultimately