medium · Private Credit loan-structures-instruments
A 'Bifurcated Unitranche' is compared to a 'Unitranche + HoldCo PIK' structure.
What is the key advantage of the latter for an OpCo senior lender?
- The HoldCo PIK is structurally subordinated and does not share in the OpCo collateral pool.
- The HoldCo PIK provides a guarantee that OpCo's leverage will never exceed 4.0x.
- The HoldCo structure eliminates the need for an Inter-creditor Agreement (ICA).
- The HoldCo PIK allows the OpCo lender to receive all PIK interest accrued at the parent level.
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