easy · Private Equity & LBOs

If a sponsor uses a 'Holding Company (HoldCo) PIK' note, where is that debt typically located relative to the operating company's debt?

1. It is pari passu with the OpCo's trade payables.
2. It is 'above' the OpCo debt and has a first lien on assets.
3. It is at the OpCo level and is Senior Secured.
4. It is structurally subordinated and relies on dividends from the OpCo to be repaid.

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