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covenant
(redirected from covenantor)

   Also found in: Dictionary/thesaurus, Medical, Legal, Encyclopedia, Wikipedia, Hutchinson 0.07 sec.
Covenant
An agreed action to be undertaken (Positive) or not done (Negative). A breach of a covenant is a default.

covenant
A clause in a loan agreement written to protect the lender's claim by keeping the borrower's financial position approximately the same as it was at the time the loan agreement was made. Essentially, covenants spell out what the borrower may do and must do in order to satisfy the terms of the loan. For example, the borrower may be prohibited from issuing more debt by using certain assets as collateral. Likewise, the borrower may be required to issue reports to bondholders on certain dates. Also called protective covenant, restrictive covenant. See also negative covenant, positive covenant.
Case Study In February 2002 Qwest Communications issued a warning that the company was in danger of violating a bank loan covenant by the end of June. A major slump in the telecom business combined with heavy indebtedness caused concern that the firm's debt would exceed the specified maximum of 3.75 earnings before interest, taxes, depreciation, and amortization. A month later the company announced that in return for agreeing to use $608 million from a $1.5 billion bond issue to reduce bank debt, the bankers agreed to a concession that raised the covenant maximum to 4.25 until the end of September, and 4.00 during the following six months. The covenant had been included as part of the original bank loan agreement in order to help insure that Qwest could continue to meet its existing obligations before taking on additional debt.

Covenant
A provision in an indenture. An indenture sets the terms of a bond; its terms include the coupon rate, the period until maturity, and whether the bond comes with any special features like convertibility or whether it is callable. A covenant within an indenture states what actions the issuer and the bondholder may or may not take in certain situations. Covenants (and indentures generally) exist to reduce the risk to all parties to a bond.

covenant

An agreement. For example,one can make a “covenant not to compete”a provision of a business sale,or one can write a restrictive covenant regarding the use of real property into the real estate records,which binds all owners whether it is contained in their specific deed or not.



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Landlords may also require the addition of an indemnifier or guarantor if there is not one in place already, or to expand the obligations of any existing covenantors.
Price includes return flights, coach travel in Scotland, three nights half-board staying at the Covenantors Inn, Aberfoyle, single rail journey from Arrochar and Tarbet to Oban, single journey from Crianlarich to
Jackson, decided five years after Shelley, where damages were sought against a covenantor who violated a racially restrictive covenant, the Court found state action reasoning that damages would have "coerced to continue to use her property in a discriminatory manner" such that it was not "respondent's voluntary choice but the State's choice that she observe her covenant or suffer damages.
 
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