BIMCO President Philippe Louis-Dreyfus said:
I am particularly pleased to see BIMCO taking this important step. BIMCO is the world leader in the production of standard contracts and clauses for the maritime industry. 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.
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 standard will be particularly useful for small and medium sized companies, who may not have a lot of experience with such transactions, but it is expected that all parties involved will save time and money.
Deputy Secretary General of BIMCO Søren Larsen said:
For decades it has been BIMCO’s strategy to provide contracts and clauses covering each niche of the shipping market. We have shown once again that we live up to this strategy.
As well as the 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.
The chairman of the Documentary Committee Francis Sarre, who is also chairperson of the subcommittee which developed the term sheet, said:
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.
The term sheet has been developed by a subcommittee composed of representatives of the following five banks, five shipping companies and three law firms:
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. 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.
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