easy · Private Credit & Debt documentation-covenants-terms

A 'Negative Pledge' clause in a credit agreement primarily restricts the borrower from:

1. Paying dividends or making distributions to shareholders while the debt remains outstanding.
2. Granting liens on its assets to any other creditors without the current lender's consent.
3. Issuing public statements that criticize or disparage the lender's reputation.
4. Investing capital in any line of business unrelated to its established core operations.

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