Back Stop

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Back Stop

In an issue of new stock, a guarantee made by an investor, usually an institution, to a publicly-traded company that it will buy the remainder of an issue if the company is unable to place it all with other investors. For example, an institution may announce that it will provide 100% back stop to a company's new issue up to $50 million. If the company only raises $35 million by placing the security with other investors, the institution will buy the remaining $15 million worth of stock.
References in periodicals archive ?
Springfield Armory burst onto the American gun scene when the enterprising Reese brothers bought the machinery and backstocks of the eponymous government arsenal.
This new facility allows ShopKo to pursue growth opportunities in this geographical area, improve service to the stores, reduce backstocks and optimize network inventories," says chairman, president and chief executive officer William Podany.