Firm commitment underwriting

Firm commitment underwriting

An underwriting in which an investment banking firm commits to buy and sell an entire issue of stock and assumes all financial responsibility for any unsold shares. Also known as bought deal.

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 ?
Of the total shares, approximately 3,000,000 were sold directly by the company and not as part of the firm commitment underwriting.
00 per share in a firm commitment underwriting led by Joseph Gunnar & Co.
announced Monday it has entered into a firm commitment underwriting agreement for the sale of 25 million shares of MGM common stock at a price of $10.
Manhattan Maritime, a blank check company formed to acquire one or more vessels and/or one or more businesses in the shipping industry, intends to offer its units pursuant to a firm commitment underwriting to be managed by Ladenburg Thalmann & Co.
Of these shares, approximately 3,000,000 are being sold directly by the company and not as part of the firm commitment underwriting.
The securities are offered through a firm commitment underwriting in minimum denominations of $250,000 to institutional investors.
The shares will be offered in a firm commitment underwriting through Stifel, Nicolaus & Company, Incorporated; Edward Jones; Friedman, Billings, Ramsey & Co.
NYSE:CKH)("SEACOR") announced today that it has entered into a firm commitment underwriting agreement with Morgan Stanley & Co.
The underwriters have agreed with Tier and the selling shareholders to conduct this offering as a firm commitment underwriting.
The option was offered in connection with a previously announced firm commitment underwriting pursuant to an existing shelf registration statement.
A major condition in the Acquisition Agreement was that Pacific Community Banking Group ("PCBG") shall have entered into a firm commitment underwriting agreement for an initial public offering by PCBG.
The offering, which will be conducted through a firm commitment underwriting, is expected to commence in late 2003 or early 2004.