PDCNs & LBOs

Perpetual Digital Credit Note Tokens (PDCN) represent a revolutionary tool in structuring modern leveraged buyouts by providing a new form of debt capital that converges TradFi with DeFi, that is staked by digital assets, yield-bearing, and perpetual in nature. Traditionally, LBOs rely heavily on bank debt or high-yield bonds, which often come with restrictive covenants, principal repayment schedules, and refinancing risk. Forcing acquirers in most cases to sell off company assets to pay back the debt, which wasn’t always trimming the fat but an asset sale to pay off the debt incurred with the acquisition. PDCNs break that mold by offering a decentralized,  digital asset staked, smart contract yield producing based alternative that allows acquisition financing without rigid principal maturity terms or periodic renegotiations.

In an LBO scenario, an acquiring firm can issue PDCNs staked dollar for dollar by digital assets such as PECU Coins, creating immediate access to debt capital without equity dilution. These tokens can offer anywhere from 8–15% annual yield that is distributed over 365 days and paid daily in Yield Tokens that are redeemable quarterly or semi-annually for fiat currency by the issuer. This provides consistent passive returns to private credit lenders, funds and managers while giving investors a yield bearing alternative in secondary markets. The perpetual nature of PDCNs eliminates the burden of principal refinancing, while the staked digital assets remain in place for the duration of the debt which significantly mitigates risk. Where Yield Tokens are automated which reduces counterparty and operational risks. Issuers benefit from flexibility, transparency, and global access to debt capital markets in a different way, while providing transparency in pricing, staking and transaction to private credit lenders, funds and managers via platforms like HootDex and other decentralized or centralized secondary platforms in the future. This makes PDCNs an ideal instrument to power the next generation of buyout strategies in the convergence of TradFi and DeFi.