ZZ, using the terms below to define what a default is, please explain what CNP has defaulted against.
Not withstanding the fact the the short term borrowings were always going to have to be refinanced.
That is a new long term loan arrangment was going to pay out the existing short term loan arrangement.
What could not be agreed upon was the terms of the new loan with the current debt levels.
I don't see default.
In finance, default occurs when a debtor has not met its legal obligations according to the debt contract, e.g. it has not made a scheduled payment, or has violated a loan covenant (condition) of the debt contract. Default may occur if the debtor is either unwilling or unable to pay their debt. This can occur with all debt obligations including bonds, mortgages, loans, and promissory notes.
The term default should be distinguished from the terms insolvency and bankruptcy. "Default" essentially means a debtor has not paid a debt. "Insolvency" is a legal term meaning that a debtor is unable to pay his debts. "Bankruptcy" is a legal finding that imposes court supervision over the financial affairs of those who are insolvent or in default.
Default can be of two types: debt services default and technical default. Debt service default occurs when the borrower has not made a scheduled payment of interest or principal. Technical default happens when an affirmative or a negative covenant is violated.
With most debt (including corporate debt, mortgages and bank loans) a covenant is included in the debt contract which states that the total amount owed becomes immediately payable on the first instance of a default of payment. Generally, if the debtor defaults on any debt to any lender, a cross default covenant in the debt contract states that that particular debt is also in default.
In corporate finance, upon an uncured default, the holders of the debt will usually initiate proceedings (file a petition of involuntary bankruptcy) to foreclose on any collateral securing the debt. Even if the debt is not secured by collateral, debt holders may still sue for bankruptcy, to ensure that the corporation's assets are used to repay the debt.
Not withstanding the fact the the short term borrowings were always going to have to be refinanced.
That is a new long term loan arrangment was going to pay out the existing short term loan arrangement.
What could not be agreed upon was the terms of the new loan with the current debt levels.
CNP Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
