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 ?
Through broad participation from both insiders and non-insider investors, together with funds committed through the related standby commitments, the company raised $45,000,000 from the rights offering.
As announced on 28th September 2011, the Company has terminated all the remaining unutilised Standby Commitments amounting to [pounds]49.
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.
and Arklow Capital, LLC pursuant to standby commitments under the previously announced Standby Purchase Agreement, generating aggregate gross proceeds of approximately $75 million.
Boliden Limited today announced the final results of its $243 million equity offerings which consisted of a $105 million common share rights offering to the Company's existing shareholders fully secured by subscription and standby commitments and a $138 million common share offering directed to existing shareholders, certain Swedish investors and the Company's lenders fully secured by purchase commitments.
investors who buy or sell on their own account) in firm commitment transactions or act as agents in best effort and standby commitments.
The termination of the remaining Standby Commitments will be effective on 30th September 2011.
In addition to the holders of record, a group consisting of certain of Penn Treaty's top producing insurance agents issued standby commitments to purchase shares in connection with the Rights Offering.
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.
Excludes standby commitments issued but includes standby conversions.
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.