greenshoe

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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 ?
0 million shares of Welcome Home common stock (and an additional 450,000 shares issuable upon exercise of an over-allotment option granted by Welcome Home to its underwriters) through Welcome Home's managing underwriters, Donaldson, Lufkin & Jenrette Securities Corporation and Alex.
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.
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.
NASDAQ-NMS: ENCD) today announced the underwriters exercised the over-allotment option for 225,000 shares of Common Stock.
DAYTON, Ohio -- Dayton Superior Corporation (NASDAQ:DSUP) announced today that the underwriters of its initial public offering have exercised 250,000 shares of the 1,177,500 shares available under the over-allotment option Dayton granted them in connection with the offering.
IPG Photonics Corporation (Nasdaq: IPGP) announced that the underwriters exercised the over-allotment option to purchase 1,350,000 shares of common stock of the Company from certain existing stockholders.
NCU's initial public offering consists of 3,250,000 shares of common stock with an over-allotment option of 325,000 shares; NFO's initial public offering consists of 2,400,000 shares of common stock with an over-allotment option of 240,000 shares; NJU's initial public offering consists of 1,900,000 common shares with an over-allotment option of 190,000 shares; NRY's initial public offering consists of 1,800,000 shares of common stock with an over-allotment option of 180,000 shares; and NAP's initial public offering consists of 2,550,000 shares of common stock with an over-allotment option of 255,000 shares.
If the over-allotment option is exercised, Brookfield Asset Management has agreed to purchase, directly or indirectly, an equivalent number of shares on a pro rata basis, up to 1.
NASDAQ: KMGB), a global provider of specialty chemicals in carefully focused markets, today announced that the underwriters of its recent public offering have exercised their over-allotment option in full to purchase an additional 420,000 shares of common stock.
3 million shares of common stock with over-allotment option of 195,000 shares, RNJ consists of 1 million shares of common stock with an over-allotment option of 150,000 shares, RAA consists of 1 million shares of common stock with over-allotment option of 150,000 shares and RFA consists of 1 million shares of common stock with an over-allotment option of 150,000 shares.
In addition, Northstar announced that it completed the sale of 8,165,000 shares of its common stock, including the underwriters' over-allotment option.