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."
Well, that's true, but it depends how you define "extended". It's shutter the doors and hunker down time. The question is whether things can improve enough by the time they have to roll credit, that's the bet. They survive, you root hog. But they may not, their portfolio could eat crap and take them down. Thus the stock price in relation to book value of course. At this price you're really buying a call without a fixed expiration date.