Whether or not they can use the proceeds to pay out dividends would depend on whether there are any restrictive covenants on the company's debt. Since PE firms would be reluctant to buy a company with such covenants, I'd guess that they can use it for dividends in most cases.
But that's only in general terms. It could differ from case to case.
FYI: there's been a number of articles in the Wall Street Journal recently about PE firms increasingly going for "covenant lite" bonds (those with fewer protective covenants).
hi professor, I've a question: I'd like to know whether is possible or not for private companies to use the cash collected through this instruments to pay dividends to their shareholders (private equity firms, in this case).
Commenting by HaloScan
