easy · Private Credit & Debt loan-structures-instruments
A Payment-in-Kind (PIK) feature in a loan to Apex Manufacturing results in which of the following mechanical outcomes?
- The borrower must pay a higher cash dividend to the PE sponsor.
- The lender receives equity warrants in exchange for reducing the interest rate.
- The outstanding principal balance increases each period as interest is capitalized.
- The loan is automatically converted into ordinary shares at maturity.
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