The covenants that SFI is close to breaking make it so SFI cannot raise additional debt. The covenants do not allow for the bond debt to be called for payment.
From the conference call last quarter:
"The fixed charge coverage ratio in our bond covenant is an incurrence test, which means that if we were to breach the covenant in future quarters, we would not be able to incur additional debt. As we discussed earlier, based on our liquidity profile, we do not expect to raise additional debt or equity in 2008 or 2009."
How will bailout affect SFI if at all? Would SFI be able to sell off any of their portfolio to the Fed? Or is the benefit just that hopefully this unfreezes the credit markets and SFI's borrowers are able to refi?
And at these prices, if SFI is really worth anywhere near $34, is hostile takeover a risk?