Bond Covenants and Forgone Opportunities: The Case of Burlington Northern Railroad Company
通过伯灵顿北方铁路公司为放松债券契约而支付巨额补偿的案例，展示了债券契约的代理成本之一：错失的机会，对研究公司金融和债券市场的学者有参考价值。
In 1896, J.P. Morgan and the Deutsche Bank developed a reorganization plan for Northern Pacific Railroad that included the issuance of $181.6 million of bonds with very restrictive covenants. Years later, Burlington Northern Railroad Company, which had assumed the Northern Pacific bonds, attempted to get around those restrictions. However, the indentures of the two series of bonds withstood the attacks of presumably clever bond lawyers. In 1987, Burlington Northern Railroad agreed to pay bondholders $35.5 million plus court costs to relax the covenants. This case provides an interesting illustration of one of the agency costs of bond covenants - forgone opportunities. While the payment to the bondholders amounted to 30% of the face value of the bonds, the gain to shareholders amounted to about $475 million in the form of abnormal returns.