Standby agreement

(redirected from Stand-By Arrangements)

Standby agreement

In a rights issue, agreement that the underwriter will purchase any stock not purchased by investors.

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 ?
New York, May 27 -- Sri Lanka became the 63rd country to sign a Memorandum of Understanding on stand-by arrangements for United Nations peacekeeping operations.
The United Nations Stand-by Arrangement System (UNSAS) was established in 1994, to promote more efficient peacekeeping operations.
Nicki Bennett, Senior Humanitarian Affairs Officer, OCHA, Pakistan, said that UN had taken all the stand-by arrangements to grapple with floods in Sindh and half-a-million people in the vulnerable districts of Sindh were relocated to safer avenues.
Turkey has signed 19 stand-by arrangements with the IMF, but it could successfully complete only the last two of them.
Turkish officials and an IMF delegation have been negotiating on a possible loan deal for months after Turkey completed in May 2008 a 10-billion USD stand-by arrangement with the Washington-based lender.
The 2005 World Summit Outcomes document would (among other things) strengthen the military "stand-by arrangements" already in existence with 80 nations (for the United Nations to call up troops from national armies) and would initiate a new standing UN police force.
IMF stand-by arrangements are intended to provide short-term assistance to countries with balance of payments difficulties in exchange for their adoption of policies to tackle the issue.
Stand-by arrangement is one of the mostly-used IMF mechanisms.