Glencore plc, a Swiss-based commodity trader, and Bunge Ltd., a US agricultural commodities trader, is a recent example of two companies that have signed such an agreement. In May 2017, Glencore undertook an informal approach to buying bears. Shortly thereafter, the parties agreed on a standstill agreement preventing Glencore from accumulating shares or making a formal bunge offer until a later date. A company pressured by an aggressive bidder or activist investor believes that a standstill agreement is useful in weakening the unsolicited approach. The deal gives the target company greater control over the deal process, by imposing on the offeror or investor the ability to buy or sell the company`s shares or launch proxy competitions. During the standstill period, a new agreement is negotiated, which usually changes the initial repayment plan of the loan. This is used as an alternative to bankruptcy or enforcement if the borrower cannot repay the loan. The status quo agreement allows the lender to save a certain value from the loan. In case of enforcement, the lender cannot receive anything. By cooperating with the borrower, the lender can improve its chances of recovering some of the outstanding debt. In the banking world, a status quo agreement between a lender and a borrower terminates the contractual repayment plan of a borrower in difficulty and forces the borrower to take certain steps that the borrower must take. In 2019, video game distributor GameStop signed a standstill agreement with a group of investors who wanted changes in the company`s governance, believing the company had an intrinsic value greater than what the share price reflected. A standstill agreement is a contract that contains provisions governing how a bidder of a company can buy, sell or vote shares of the target company.
A standstill agreement can effectively delay or stop the hostile takeover process if the parties cannot negotiate a friendly agreement. A status quo agreement is a form of anti-opacity measure. The agreement is particularly important because the bidder had access to the confidential financial information of the targeted entity. In other industries, a standstill agreement can be virtually any agreement between the parties, in which both parties agree to discontinue the case for a specified period of time. It can be an agreement to defer planned payments in order to help a company overcome difficult market conditions, agreements, stop production of a product, agreements between governments or many other types of agreements. A status quo agreement may also exist between a lender and a borrower if the lender ceases to require a scheduled payment of interest or principal for a loan, in order to give the borrower time to restructure their debts. . . .