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 ?
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.
The securities are offered through a firm commitment underwriting in minimum denominations of $250,000 to institutional investors.
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.
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.
NASDAQ-NM Symbol: ESTLF) announced today that the 3,000,000 Ordinary Shares which are the subject of its current public offering pursuant to a firm commitment underwriting (and any additional shares that may be issued upon exercise of the underwriters' over-allotment option) will be newly-issued shares of the Company.
ICH") today announced that it has filed an amendment to its previously filed registration statement with the Securities and Exchange Commission to effect its initial public offering of common stock pursuant to a firm commitment underwriting rather than pursuant to the previously announced subscription rights method.
This relates to an offering by the company of 1,000,000 shares of common stock pursuant to a firm commitment underwriting.
NASDAQ:JTAX), today announced that the company intends to file a registration statement with the Securities and Exchange Commission (the "SEC"), whereby it proposes to offer and sell 1,000,000 shares of common stock pursuant to a firm commitment underwriting.
This offering is expected to occur in early 1997 and is expected to be a firm commitment underwriting.