firm commitment

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.

firm commitment

In securities offerings, a commitment by the underwriter to purchase securities from the issuer for resale to the public. Thus, the sale is guaranteed by a firm commitment to the issuer. With a firm commitment, the risk of being unable to sell an entire issue at the offering price is transferred from the issuer to the underwriter. Also called bought deal.

firm commitment

A lender's unqualified and irrevocable promise to grant a loan for a specified amount, which may be a firm amount or a certain percentage of the appraised value.The commitment will also specify the interest rate,term,and collateral.For commercial mortgages,the borrower should ask that the firm commitment include a statement of anticipated legal fees and other fees and expenses and,if possible,negotiate an upper limit to attorneys'fees.

References in periodicals archive ?
For example, a company with a subsidiary in Japan, with a net investment balance of $100 million and yen as the functional currency, may also expect yen-denominated export sales unrelated to the subsidiary -- sales that don't qualify as a firm commitment or as an anticipated transaction.
We were the first lender to process a LEAN transaction going immediately to firm commitment, without submitting a pre-application," Bernaciak said.
McKenna, who joined Glickenhaus two years ago to restart the firm's public finance department, points out that his organization has capital resources in excess of $130 million and a firm commitment to bring Glickenhaus to the forefront of the region's underwriters.
Started in 1986, the program benefited a great deal from top management's firm commitment of time, effort and money.
The new transportation agreement, which is effective immediately, will add a firm commitment to transport volumes increasing to 175,000 MMBtu per day of natural gas on the Ozark Gas Transmission system in the latter stages of the contract.
investors who buy or sell on their own account) in firm commitment transactions or act as agents in best effort and standby commitments.
The drill program is part of the $500,000 first year firm commitment by Agnico-Eagle.
They are part of ENDESA's firm commitment to enhancing and extending its Spanish distribution network, in which it invested Euro 4.
0 million over a four-year period, including a firm commitment of US$100,000 in exploration expenditures in the first year.
Our launch demonstrates PMI Europe's firm commitment to grow our business across the European Union consistent with local compliance regulations.
The agreement forms part of ENDESA's strategy to reduce the environmental impact of its thermal groups and make them more efficient and illustrates the Company's firm commitment to an innovative technology manufactured fully in Spain.
Spherion has a firm commitment and proven track record of diversity and equality in its employment practices," said Roy Krause, Spherion president and chief executive officer.