The correct answer is: A. super poison covenant.
A super poison covenant is a type of protective covenant that is designed to reduce event risk and to control debt cost. It is a very strong covenant that gives the lender a lot of control over the borrower.
A super poison covenant typically includes the following provisions:
- A requirement that the borrower obtain the lender’s consent before taking certain actions, such as selling assets, issuing new debt, or making major capital expenditures.
- A requirement that the borrower maintain a certain level of financial performance, such as a minimum debt-to-equity ratio or a minimum interest coverage ratio.
- A provision that allows the lender to accelerate the maturity of the loan if the borrower breaches the covenant.
Super poison covenants are typically used in loans to companies that are considered to be high-risk. They are designed to protect the lender in the event that the borrower defaults on the loan.
Super poison covenants can be very expensive for borrowers. They can also make it difficult for borrowers to raise capital, as lenders may be reluctant to lend to companies that are subject to such strict covenants.
However, super poison covenants can also be beneficial for borrowers. They can help to reduce the risk of default, which can make it easier for borrowers to obtain financing. They can also help to protect borrowers from being taken advantage of by lenders.
Ultimately, whether or not a super poison covenant is beneficial for a borrower depends on the specific circumstances of the loan.