easy · Corporate Credit Analysis

In the context of 'Permitted Liens,' what is the significance of 'Liens existing on the date of the Indenture'?

1. They are automatically subordinated to the new debt by the terms of the negative pledge.
2. They must be immediately discharged using the proceeds of the new bond issue.
3. They are grandfathered in, allowing the company to maintain its current capital structure without violating the new covenant.
4. They can be increased in size by up to 50% without requiring additional permission.

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