Back stop
Wednesday, October 10th, 2007You may have heard of a Back stop, you may have not. This term refers to the giving of much needed support in an offering of securities, specifically for the portion of the shares that are still unsubscribed. A company would usually attempt to bring in the capital through an issuance and then guarantee the amount by means of the issue. The company will then acquire a back stop through either a major shareholder or through an underwriter so that they can buy the unsubscribed shares.