Back Stop

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Back Stop

In an issue of new stock, a guarantee made by an investor, usually an institution, to a publicly-traded company that it will buy the remainder of an issue if the company is unable to place it all with other investors. For example, an institution may announce that it will provide 100% back stop to a company's new issue up to $50 million. If the company only raises $35 million by placing the security with other investors, the institution will buy the remaining $15 million worth of stock.
References in periodicals archive ?
Constructed of anodized aluminum with a tool steel pinch blade that can be adjusted using forward and back stops to regulate its stroke, this pinch valve is normally open and uses the full force of pneumatic power to close it.
Atmos' $350 million revolving credit facility that back stops it commercial paper provides more than adequate near-term liquidity.