BIMCO is setting up a sounding board with the aim to engage a broad group of stakeholders in the process of drafting a sale and leaseback term sheet, as the sale and leaseback market continues to expand.
BIMCO is reacting to the booming ship sale and leaseback market by developing a standard term sheet for use by shipowners, leasing companies and lawyers. A second meeting of the drafting committee developing the new standard took place on 13-14 January at the offices of BW Group in Singapore.
“It is extremely important for us to get input from experts in the market to make sure that the term sheet BIMCO publishes reflects practice and is acknowledged as a fair and balanced starting point for the parties’ negotiations,” says Nick Fell, Executive Vice President, Corporate Services and General Counsel of BW Group and chairperson of the drafting committee in charge of the work.
“There has been a steep increase in sale and leaseback transactions over the past decade. Still, this is an area where stakeholders approach certain elements of sale and leaseback transactions quite differently. It is therefore vital that BIMCO develops a standard which is representative of how stakeholders manage these transactions,” Fell adds.
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.
Drafting work is carried out on the basis of BIMCO’s two term sheets for bilateral and syndicated ship financing, SHIPTERM and SHIPTERM S, which are being adapted to fit sale and leaseback transactions. The new term sheet will cater for both financing and operating leases and will cover the sale and purchase of the ship and the bareboat charter of the ship.
Work will continue when the drafting committee meets again at Wah Kwong’s offices in Hong Kong on 17-18 March. Once the draft is ready, it will be distributed for wider industry consultation.