Shipowners' organisation Bimco has drawn up shipping's first standard term sheet for sale-and-leaseback deals.
The Denmark-based body said the transactions are becoming increasingly important as an alternative method of finance and have seen a substantial increase in use in recent years.
The new document, Shiplease, is aimed at making negotiations easier and lowering costs for everyone involved.
It has been adopted by Bimco's documentary committee for secondhand deals, but can be adapted for newbuildings.
"This is a very timely step for Bimco," said Sabrina Chao, president designate of Bimco and chairman of Wah Kwong Shipping.
"In turbulent times, it is important for shipowners to be able to free up capital while maintaining the ability to operate a vessel and trade as owners under a long-term lease. The term sheet sets out a user-friendly basis for negotiating the deal."
Asian committee drew up term sheet
The bulk of sale-and-leaseback transactions originate in Asia and Shiplease was developed by an Asian-based drafting committee that included a Wah Kwong representative.
Nick Fell, executive vice president of corporate services and general counsel at BW Group, chaired the committee.
"Sale-and-leaseback deals have become increasingly prevalent for ship financing," BW Group chairman Andreas Sohmen-Pao said. "Efficient transactions depend on clear term sheets, which provide the foundation for final documentation.
Better starting point
"Shiplease provides a better starting point for the parties to begin their negotiations and to arrive quickly at a result that is fair for everyone."
Bimco said it had consulted widely in the industry before finalising the terms.
"There are quite a number of newcomers in the market and having an industry standard is therefore a useful starting point," said Wilson Liu, senior director at Minsheng Financial Leasing, which has been increasingly active in shipping.
"The term sheet will also facilitate the process for more experienced players."
Shiplease is applicable to both operating and finance leases.
The drafting committee also consisted of Alexandros Laios of Navios Corp, 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, Olga Petrovic of Linklaters and Shen Zhao of CSIC Leasing.
Shiplease will be made available on Bimco's secure contract editing system, SmartCon, in the next few days.
