News

2020 June 16 12:13

BIMCO develops a term sheet for ship sale and leaseback transactions, SHIPLEASE

BIMCO is developing a term sheet for ship sale and leaseback transactions, SHIPLEASE, and is seeking input from industry experts on the new standard, the company said in its release.

SHIPLEASE has been developed on a similar basis to SHIPTERM and SHIPTERM S, the term sheets for bilateral and syndicated ship financing, and will complete the suite of three term sheets available for financiers, lessors, shipowners and their advisors.

“Sale and leaseback transactions and structures have been booming in recent years and are now an essential tool for financing the shipping industry. We are keen to hear from experts in the industry whether the new standard meets their needs,” says Nick Fell, Executive Vice President, Corporate Services and General Counsel of BW Group and chairperson of the term sheet drafting group.

The term sheet has been drafted as a standard setting out indicative terms and conditions for a sale and leaseback transaction consisting of a sale of the vessel and a subsequent charter of the vessel. As with other BIMCO standards, parties have the flexibility to adjust the term sheet to fit their individual transaction.

Part I of SHIPLEASE maintains the familiar and popular box layout used in other BIMCO documents, including SHIPTERM and SHIPTERM S. The box layout enables the parties to enter essential details relating to the sale and leaseback transaction. As opposed to the term sheets for term loan facilities, SHIPLEASE contains signature boxes.

Part II provides an overview of the transaction, followed by specific sections dealing with the sale of the vessel, the charter of the vessel, and other transaction terms. The term sheet includes five annexes, enabling the parties to provide a list of vessels, the hire schedule, amounts to be paid in case of termination, and more detailed provisions on change of control and financial covenants.