Recently, Lippo Malls Indonesia Retail Trust (LMIR Trust) announced that they have obtained up to S$350 Million term loan facilities with a Green Shoe option of up to S$70 million. The proceeds will be used to fund acquisitions and refinance existing debt. The term “Green Shoe Option” caught my eye. Initially, I thought it was the name of a new mall Lippo is planning to acquire, however upon further reading into the announcement, it doesn’t seem so.

What is a Green Shoe Option?

The following was found after I googled for the term “Green Shoe Option”.

A greenshoe is a clause contained in the underwriting agreement of an initial public offering (IPO) that allows underwriters to buy up to an additional 15% of company shares at the offering price. The investment banks and brokerage agencies (the underwriters) that take part in the greenshoe process have the ability to exercise this ...

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