I actually went through the filings and could not find a covenant that could be broken that would have an adverse effect for SPF over the next 18 months.
Why am I dwelling on 18 months you ask? As I mentioned before, I'm a former "IRS registered mark to market Day Trader" which basically just means that all profits and losses were treated as ordinary income/losses instead of capital gains/losses. As a former Day Trader my empirical knowledge of business' with the potential of Bankruptcy has always focused around a companies covenants with it's credit facilitators. When they're breached, companies almost always head for the chopping block, but when they're not breached, they survive with the helping hand of the banks or private equity firms that have a financial interest in seeing the companies thrive.
I'm currently retired and spend my time managing my real estate investments. I've studied the cyclical cycles of real estate and have found that the appreciation cycle last approx. 5 years followed by a correction cycle of Approx. 2 years. In essence, real estate follows a 5 steps forward...2 steps back trend that is always moving upwards over the trend line.
The real estate correction cycle this time around will be extended due to a longer than normal appreciation cycle. Greenspan artificially held down interest rates to 45 year lows which encouraged poor lending practices by sub prime lenders... which as we all know, has led to record foreclosures, etc... By my measures, we have about another 18 months before the RE market starts to plateau and about 24 months before inventories reach a 2-3 month supply. This is the magic number which has always signaled the start of another appreciation cycle.
Since the stocks of homebuilders usually begin to rebound before we are technically in an appreciation cycle, an 18 month baseline of survivability is a great standard of current measure. In other words, if SPF can avoid any covenant breaches over the next 18 months, (which from my research and knowledge of the most current filings tells me they will be just fine), SPF is more likely than not to not only survive but thrive. I think the move to drop the dividend was a smart move to help pay down debt. I think the adjusted facilatator terms that take us to 2012 are positive for the company. I'm not at all put off by the shares lent for purposes of hedging (shorting) because I think the fees the company will recieve for lending the shares is a positive for the company and shows the company is very confident in that it has no worries about the hedge against it's company's executuion to reduce debt and garner shareholder value.