What is a backstop provision?
If a company is unable to sell all its shares to the public, then the underwriter provides a backstop provision. Under the provision, the underwriter will buy the remaining shares that were not bought by the public.
What is a backstop in a SPAC?
To compete with private equity bidders’ access to cash, SPACs can enter into arrangements with third-party investors or the SPAC’s sponsors to “backstop” a specified amount of potential redemptions by public stockholders at the same price per share as the redemption price per share.
What is a backstop deal?
Backstopped-deal meaning A type of underwriting deal in which the underwriter offers a firm commitment to purchase the company’s securities, thereby assuming the risk if the deal is poorly received by the market. Also called firm-commitment underwriting or bought deal.
How does a backstop work?
Backstop purchasers are a form of standby underwriting, where one or more investment banks enter into an accord with a company and agree to publicly sell any of its unsubscribed shares for a price generally no less than the subscription price associated with the rights offering.
What is a backstop credit facility?
A term used in the financial industry to mean credit support or backup funds for a financial instrument or transaction. This backstop facility supports the commercial paper’s credit rating and fosters investor confidence since it provides a secondary source of repayment for the commercial paper. …
What is backstop synonym?
Synonyms: backstop. Definition: a precaution in case of an emergency. Usage: he acted as a backstop in case anything went wrong. Similar words: safeguard, precaution, guard.
What does backstop mean in business?
A term used in the financial industry to mean credit support or backup funds for a financial instrument or transaction. For example, bank revolving credit loans are often obtained to backstop commercial paper in the event that the commercial paper issuer defaults on its payments.
What does backstop mean?
Definition of backstop (Entry 1 of 2) 1 : something at the back serving as a stop: such as. a : a screen or fence for keeping a ball from leaving the field of play. b : a stop (such as a pawl) that prevents a backward movement (as of a wheel)
Is there another word for backstop?
Find another word for backstop. In this page you can discover 9 synonyms, antonyms, idiomatic expressions, and related words for backstop, like: screen, net, barrier, fence, catcher, milldam, handhold, back-stop and fall back.
What is the purpose of a revolving credit facility?
What is the Revolving Credit Facility? Revolving Credit Facility is one of the forms of business finance in which flexibility is provided to the companies to borrow and use the funds of the financial institution according to their cash flow needs by paying a commitment fee as agreed in the agreement with the financial institution.
What do you mean by backstop in finance?
What is a Backstop? A backstop is a financial arrangement that creates a secondary source of funds in case the primary source is not enough to meet current needs. It can also be thought of as an insurance policy that covers the inadequacy of a source of funds. The backstop can take various forms in different contexts.
Which is the best definition of a backstop facility?
Backstop Facility means any Indebtedness Incurred following the date hereof and on or prior to the FundingRelease Date under a Backstop Agreement. Sample 1 Sample 2 Sample 3
How does a backstop work in private equity?
A private equity backstop, also known as the full equity backstop, is an arrangement in which a private equity firm agrees to buy the target company by contributing equity up to 100% in case it fails to raise the required debt to fund the purchase.