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Sunrise Senior Living Inc. Message Board

  • assoma21 assoma21 Jan 21, 2009 10:37 PM Flag

    RT Question

    What is a negative covenant part. Doesnt that mean we cant really get any other loans til we pay back BAC loan.

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    • Assoma21:

      You asked "what is negative covenant part" and my reply is as follows:

      Its a covenant to a previously signed agreement that prevents certain activities from happening unless agreed to by the parties involved. Its also referred to as a "restrictive covenant". As for your comment about getting other loans until we pay back the BAC loan, there are too many unseen variables to pinpoint that issue.

      Cheers and good investing,

      • 1 Reply to retiredtechie
      • it reads to me that the 400,000 fee is to secure the loan and the march delay is just for the official closing. the interest rate appears to be attractive and the total debt seems to be shrinking..I see it as they have their financing and the 400m fee confirms it. this is not unusual and is why the banks like fee revenue. this financing was secured well before the deadline as promised and the actual closing date is not relevant. tell me where this is wrong. chart objective is 10-13

    • Investopedia explains Negative Covenant...
      Think of a negative covenant as a promise not to do something. Usually, negative covenants limit the amount of dividends a firm can pay to shareholders and restrict the ability of the firm to issue additional debt. Generally, the more negative covenants exist in a bond issue, the lower the interest rate on the debt will be since the restrictive covenants make the bonds safer in the eyes of investors.

      • 1 Reply to assoma21
      • Ok here found it.

        negative covenant - A provision in the lender's documents that prohibits the borrower from doing something in the future. For example, a provision prohibiting the borrower from acquiring additional debt during the term of the loan.

        RT please explain what this means for us. Did they cut us off from getting other loans, from other banks?