Trombone
1. Rights issues.
A trombone is a feature of a rights issue, commonly seen in contested takeover bids, where the acquirer is financing the acquisition by issuing more of its own shares for cash.
The trombone provides for the total size of the rights issue to be increased, usually on the condition that an acquisition goes ahead as planned.
(The full amount of the rights issue not being justifiable to raise if the acquisition does not proceed.)
The term derives from the slide on a trombone, used to vary the volume of air in - and hence the pitch of - the instrument.
2.
A similar feature in an issue of convertible loan stock.
3.
Similar features in issues made to raise funds for research and development, where the need for the expenditure may be contingent on - for example - receiving clinical approvals for a new drug.
