November 23 - BIMCO's Documentary Committee has approved a standard term sheet for use in ship financing transactions.
BIMCO says that the "landmark decision" cements its move into the domain of ship financing.
As a specialist in the production of standard contracts and clauses for the maritime industry, BIMCO's president Philippe Louis-Dreyfus said that it is "only natural that its documentary activities also cover ship financing - an issue which has become increasingly important and challenging over the years, not least because of the current financial crisis".
The term sheet has been drafted as a short and simple standard for use in bilateral ship financing transactions concerning term loan facilities. It has been prepared in the well-known BIMCO format and is indicative/non-binding, as this is considered to be the market standard.
BIMCO says that the standard will be an important tool for shipowners, banks and lawyers when they draw up term sheets as part of ship financing transactions. The organisation added that the standard will be particularly useful for small and medium sized companies, who may not have a lot of experience with such transactions.
BIMCO's deputy secretary general Søren Larsen commented: "For decades it has been BIMCO's strategy to provide contracts and clauses covering each niche of the shipping market."
As well as a subcommittee, a sounding board was set up to enable a broader group of stakeholders to comment on the draft. The sounding board consisted of more than 50 representatives of banks, shipowners and lawyers. They received the draft twice during the process and returned a substantial number of comments and drafting proposals, said BIMCO.
The term sheet has been developed by a subcommittee composed of representatives of the following five banks, five shipping companies and three law firms: Citibank; Deutsche Bank; HSBC; Industrial and Commercial Bank of China; INGEPAR; BW Maritime; Compagnie Maritime Belge; Dampskibsselskabet NORDEN; Klaveness Chartering; Louis Dreyfus Armateurs; Hannaford Turner; Linklaters; and Watson Farley & Williams.
The term sheet will be published in early 2017, when the subcommittee has had the opportunity to consider certain issues raised at the meeting and explanatory notes to its individual provisions have been prepared.
BIMCO explained that a series of seminars and a webinar to inform about the new standard will be announced shortly.
The Documentary Committee also approved that a standard term sheet for syndicated loans should be developed. Work to this effect will start in the coming months.