Over a series of meetings, the drafting committee developing the new BIMCO term sheet for ship sale and leaseback transactions has considered input received from industry experts. The term sheet is now ready to be presented to the Documentary Committee for adoption.
The consultation process on SHIPLEASE, BIMCO’s standard indicative term sheet for ship sale and leaseback transactions currently being developed, has generated keen interest and a significant number of comments from stakeholders in the leasing industry.
“The detailed feedback received from industry experts is extremely useful, and I wish to express my sincere thanks to those who took the time to study the draft and share their expertise,” says Nick Fell, Executive Vice President, Corporate Services and General Counsel of BW Group and chairperson of the drafting committee.
It was expected that the project would attract a lot of interest. Not only have sale and leaseback structures been on the rise in recent years; leasing companies and other stakeholders are increasingly producing self-standing forms of lease. Having a balanced BIMCO standard which can form the basis for the parties’ negotiations therefore seems an obvious project for BIMCO.
The feedback received generally supports the approach taken by the drafting committee, including the format and overall structure of the term sheet. Stakeholders also endorse the decision to develop SHIPLEASE on a similar basis to SHIPTERM and SHIPTERM S, the two existing term sheets for bilateral and syndicated ship financing, except when there is a lease-specific reason to depart from these standards.
The drafting committee considered every comment received from the expert stakeholders and made a number of adjustments to the term sheet prompted by the input received. The term sheet has been principally developed for sale and leaseback transactions involving second-hand ships, which represent the majority of leasing deals currently being negotiated, but it can be readily adapted to fit structures involving new-buildings.
“The drafting committee has expert participation from ship-owning companies, leading leasing companies and law firms. Wider industry input ensures that the term sheet reflects contemporary market practice. I am confident that the new term sheet will be most useful for stakeholders involved in leasing transactions,” Fell adds.
A number of the issues raised by the expert stakeholders were considered too deal-specific for inclusion in a standard term sheet. These issues will be addressed in the explanatory notes accompanying the new form to raise parties’ awareness that they may want to deal with them either at the term sheet or documentation stage.
The drafting committee also consists of Alexandros Laios of Navios Corporation, Catherine Smith of Wah Kwong, Conor Warde of Mayer Brown, Jia Zhang of China Development Bank Leasing, Jay Shi of China Merchants Bank Financial Leasing, Lawrence Chao of Island Navigation, Matt Hannaford of Hannaford Turner LLP, Olga Petrovic of Linklaters LLP, Shen Zhao from CSIC Leasing, and Wilson Wei Liu of Minsheng Financial Leasing.
The term sheet will be put forward for adoption by the Documentary Committee on 21-22 September 2020 and published thereafter along with explanatory notes.
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