International shipping association BIMCO’s Documentary Committee approved a standard term sheet for use in ship financing transactions on November 17, 2016.
BIMCO said that the term sheet has been drafted as “a short and simple” standard for use in bilateral ship financing transactions concerning term loan facilities.
“A BIMCO standard will be an important tool for shipowners, banks and lawyers when they draw up term sheets as part of ship financing transactions,” the shipping association said.
The standard is said to be particularly useful for small and medium sized companies, who may not have a lot of experience with such transactions.
The term sheet has been developed by a subcommittee composed of representatives of five banks including Citibank, Deutsche Bank, HSBC, Industrial and Commercial Bank of China and INGEPAR.
In addition, five shipping companies including BW Maritime, Compagnie Maritime Belge, Dampskibsselskabet NORDEN, Klaveness Chartering and Louis Dreyfus Armateurs and three law firms including Hannaford Turner, Linklaters and Watson Farley & Williams, which are also part of the subcommittee, developed the term sheet.
“As with the Documentary Committee itself, an important basis for the subcommittee’s work has been to ensure respect for the fundamental principle that BIMCO should provide balanced and clearly worded contracts and clauses that are market and business cycle neutral,” Francis Sarre, Chairman of the Documentary Committee, said.
As well as the subcommittee, a sounding board was set up to enable a broader group of stakeholders to comment on the draft, according to BIMCO. The sounding board consisted of more than 50 representatives of banks, shipowners and lawyers and they received the draft twice during the process and returned a substantial number of comments and drafting proposals.
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.
The Documentary Committee also approved that a standard term sheet for syndicated loans should be developed and the work to this effect will start in the coming months, BIMCO said.