PIK Toggle Notes Clause Samples
A PIK (Payment-in-Kind) Toggle Notes clause allows the issuer of debt securities to choose between paying interest in cash or in additional securities (PIK interest) at specified intervals. In practice, this means the issuer can conserve cash by issuing more notes instead of making cash interest payments, often at a higher interest rate when the PIK option is exercised. This clause provides financial flexibility for the issuer, particularly useful during periods of cash flow constraints, by deferring cash outflows and helping to manage liquidity.
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PIK Toggle Notes. With respect to any PIK Toggle Notes owned by any of the Issuers or the Guarantors (the “Purchased PIK Toggle Notes”):
(a) none of the Issuers or any Guarantor shall consent to, propose or otherwise direct or allow the PIK Toggle Notes Trustee to effectuate any amendments, supplements, consents or waivers with respect to the PIK Toggle Notes or the PIK Toggle Notes Indenture, except as provided in Section 4.15(b) hereof; and
(b) on the Business Day immediately prior to the original stated maturity date of the PIK Toggle Notes, the Issuers and the Guarantors, as applicable, shall consent, and shall direct the PIK Toggle Notes Trustee to consent, to extending the maturity date for the Purchased PIK Toggle Notes, in accordance with the terms of the PIK Toggle Notes Indenture, to a date that is six months after the maturity date of the Notes, such consent and extension to become effective as of the original stated maturity date of the PIK Toggle Notes.