medium · Corporate Credit Analysis
In the context of 'adequate protection' for a primed secured lender, what does the term 'indubitable equivalent' imply?
- The DIP interest rate is set to match the pre-petition interest rate exactly.
- The lender must receive a cash payment exactly equal to the par value of their debt.
- The protection provided must be so robust that there is no reasonable doubt the lender's economic position is preserved.
- The lender receives equity in the parent company that is 'equivalent' in value to their original bond position.
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