Sale and leasebacks in the spotlight of new BIMCO project

Overview

On 24 October, at a meeting in Shanghai, BIMCO started work to develop a new standard term sheet for ship sale and leaseback transactions.

The new standard will complement the existing BIMCO term sheets for bilateral and syndicated ship financing, SHIPTERM and SHIPTERM S, which were published in 2017 and 2018, respectively, and will complete the suite of three term sheets available for financiers, lessors, shipowners and their advisors. 

“This is a very timely project to embark on, and we have made good progress at this first meeting,” says Nick Fell, Executive Vice President, Corporate Services and General Counsel of BW Group and chairperson of the drafting group in charge of the work. Mr Fell was also member of the drafting group in charge of developing SHIPTERM and SHIPTERM S. He adds: “Sale and leasebacks are now an essential and expanding feature of the shipping industry, and BIMCO can facilitate such transactions by developing a balanced starting point for use by the parties.” 

The drafting group 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, and Wilson Wei Liu of Minsheng Financial Leasing. 

At the first meeting, which was hosted by China Merchants Bank Financial Leasing, it was agreed to develop the ship leasing standard on a similar basis to SHIPTERM and SHIPTERM S. The standard will therefore contain the well-known BIMCO box layout as Part I and a clauses section as Part II. The plan is to adapt the existing term sheets to fit sale and leaseback transactions reflecting both the sale and purchase of the ship and the charter of the ship. Both financing and operating leases will be catered for. 

Drafting will continue on 13-14 January at BW Group’s headquarters in Singapore. The target date for adoption of the sale and leaseback term sheet is November 2020.
 
Christian Hoppe
in Copenhagen, DK

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