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Standby Underwriting

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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.
standby underwriting
An agreement by underwriters to purchase the portion of a new securities issue that remains after the public offering. Standby underwriting eliminates the issuer's risk of not selling the issue out, but it increases the investment bankers' risk.
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First I address the standby underwriting paradox described by Hansen (1989): the question of why issuing firms do not hire an underwriter on a standby basis and then set a low subscription price so that the underwriter is not required to take up shares, thus keeping costs low.
Rights offerings and corporate financial condition by Ursel, Nancy D. / Financial Management
For two years from the date of the shareholders agreement, Globopar and Telmex, subject to their respective fiduciary duties, upon Telmex's request, may approve future issuances of preferred shares in public offerings with pricing to be established through bookbuilding, and Telmex would agree to provide a standby underwriting commitment to purchase such preferred shares at a price of not less than R$0.
Net Servicos: Further Information on Globopar and Telmex Agreement by Business Wire
35 per share, and Telmex will grant a standby underwriting guarantee for subscription, at the minimum issue price of R$0.
Announcement from Globopar Regarding Its Stake in Net Servicos by Business Wire
 
 
 
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