greenshoe

(redirected from Over-allotment option)

Greenshoe Option

A provision in some underwriting contracts allowing the underwriter to sell more shares to investors than were originally agreed. In an underwriting agreement, the underwriter agrees with the issuer of a security to place a certain amount with investors. If demand for the security exceeds the underwriter's supply, the greenshoe option allows the underwriter to avoid a sudden jump in price by increasing supply. Normally, the greenshoe option allows the underwriter to increase supply up to 15%. It is important to note that not all underwriting contracts have greenshoe options, especially in situations in which the issue is for a limited project for which the issuer only needs a certain amount of capital. It is also called an overallotment option.

greenshoe

An underwriting agreement provision that permits syndicate members to purchase additional shares at the original offering price. Shares in the greenshoe may consist of additional shares from the issuing company or may come from existing shareholders as a secondary offering. For example, the 2002 IPO of CIT Group included 200 million shares plus a greenshoe of 20 million additional shares that could be purchased by syndicate members at the $23 offering price within 30 days. Also called overallotment option.
References in periodicals archive ?
Global Banking News-November 6, 2017--Sachem Capital closes over-allotment option shares
UN)(NYSE:BEP) disclosed on Thursday that its the underwriters have exercised in full their over-allotment option to purchase an additional 1,598,250 LP units at a price of CAD37.
NORDIC BUSINESS REPORT-December 1, 2014-Lifco announces exercise of over-allotment option in connection with the listing of its shares
Pan American Silver Corporation (TSX: PAA) (NASDAQ:PAAS), a Canada-based company that explores for silver in Latin American countries, has announced completion of exercise of an over-allotment option as a part of a finance offering.
NASDAQ: SOLR), announced that the underwriters for the recently announced secondary offering of GT Solar common stock have exercised in part their over-allotment option to purchase an additional 650,000 shares of GT Solar's common stock.
Royal Bank of Canada (TSX: RY) NYSE) has announced that the underwriters of its recent common share offering have exercised their full over-allotment option.
Nasdaq:OCLS) announced that the underwriters of the Company's recent initial public offering have exercised their over-allotment option granted by the Company to purchase 328,550 additional shares of common stock at the public offering price of $8.
M2 EQUITYBITES-December 1, 2014-Lifco announces exercise of over-allotment option in connection with the listing of its shares
U) announced today the completion of the over-allotment option for its initial public offering for an additional 2,340,000 units on February 16, 2007.
M2 EQUITYBITES-October 31, 2014-Synergy Pharmaceuticals reports full exercise of additional USD25m convertible senior notes in over-allotment option
Aradigm Corporation (OTCBB:ARDM) today announced that it has closed its public offering of 37,950,000 shares of common stock, which includes the exercise in full by the underwriters of their over-allotment option of 4,950,000 shares.