Standby agreement

(redirected from Standby Commitments)

Standby agreement

In a rights issue, agreement that the underwriter will purchase any stock not purchased by investors.

Standby Agreement

An agreement between the issuer of a security and its underwriters stating that the underwriters are responsible for any unsold portion of the issue. That is, the underwriters agree to buy the remainder of a new issue if they are unable to place its entirety with investors. This transfers the risk of the unsold portion of the issue from the issuer to the underwriters. This guarantees that the issuer will raise the capital it intends to raise, but leaves the underwriters with the possibility that they must purchase an issue with low value. As a result, underwriters charge a standby fee for a standby agreement. It is also called firm commitment underwriting or a backstopped deal.
References in periodicals archive ?
Under the terms of the program, Freddie Mac will provide participating warehouse lenders with standby commitments to purchase qualifying loans in the event a seller/servicer cannot meet its contract obligations or fails.
Some long-term commitments are only standby commitments and are not expected to be funded unless there are difficulties in finding long-term monies elsewhere.
investors who buy or sell on their own account) in firm commitment transactions or act as agents in best effort and standby commitments.
Standby Commitment: Standby commitments can help developers obtain construction financing for new projects.
and Arklow Capital, LLC pursuant to standby commitments under the previously announced Standby Purchase Agreement, generating aggregate gross proceeds of approximately $75 million.
Because the offering was oversubscribed, no shares will be sold pursuant to standby commitments made by certain large stockholders of Tejon who had agreed to purchase any shares not subscribed for in the offering.
Puebla's financial obligations (Ps715 million) represent standby commitments to support or guarantee debt incurred by the state's municipalities and decentralized agencies with Mexican financial institutions.
6 (c)Excludes standby commitments issued but includes standby conversions.
5 (a) Excludes standby commitments issued but includes standby conversions.
7 million incurred as the result of the entitlement of shares of common stock to Amerin's management as the result of the consummation of the offering; (iii) retirement of Amerin's preferred stock at a redemption value of $46 million; (iv) elimination of fees paid by Amerin to certain of its stockholders in respect of their standby commitments to provide additional equity capital to Amerin under specified conditions, which standby commitments terminated upon consummation of the offering.
These adjustments consist of: (i) increase of investment income, net of applicable taxes at 35%, by $1,773,275 in the quarter ended March 31, 1995; (ii) retirement of Amerin's preferred stock at a redemption value of $46 million; (iii) elimination of fees paid by Amerin to certain of its stockholders in respect of their standby commitments to provide additional equity capital to Amerin under specified conditions, which standby commitments terminated upon consummation of the offering.
5 million in cash or $1 million in cash plus standby commitments for an additional $1.