UK: BIMCO SHIPTERM: BIMCO Ventures Into Ship Finance

On 9 January 2017, BIMCO published its first ship finance related form – "SHIPTERM".  BIMCO describes SHIPTERM as a simple, short form, non-binding, bi-lateral term sheet which is intended to be used for secured term loan ship financing transactions.

BIMCO's stated aim in publishing SHIPTERM is to provide an important tool for shipowners, banks, lawyers and other players in the industry involved in ship financing transactions.

BIMCO presents SHIPTERM as being most useful to small and medium sized shipowners and banks with limited experience of negotiating ship financing facilities.  BIMCO expects that all parties involved will save time and money by using SHIPTERM. 

SHIPTERM is designed for use with simple bi-lateral secured ship financing facilities.  Whilst it would be to possible to adapt the form for use by multiple borrowers with multi-ship financings, many consequential amendments would be required and SHIPTERM is unlikely to be the best starting point for such financings.   As this is BIMCO's first form in the ship financing space, BIMCO decided to start with a simple document.  However, BIMCO has indicated that it will embark shortly on preparing a BIMCO term sheet for syndicated facilities. 

The terms and conditions of SHIPTERM are expressed to be indicative only and will not constitute a legally binding agreement to provide the financing referred to in the term sheet. This is why the form does not include any signature boxes. The provision of the term loan facility referred to in SHIPTERM will be subject to credit committee approval of the lender and to the finalisation of loan and security documentation satisfactory to the lender.     

How does SHIPTERM work?

Part I

BIMCO has used its box format in Part I of the form, which is designed to record, in a simple user-friendly manner, the "essential details" of the term sheet including: the fundamental commercial terms of the loan (such as the maximum amount, the interest rate, the maturity date, security over earnings accounts and shares in the borrower(s));  the fundamental details relating to the ship  (such as the name, flag, class, commercial and technical managers, major casualty amount); and important legal terms (such as the choice of governing law and jurisdiction).  It is worth noting that some clauses will only be effective if the applicable box is completed – for example the security maintenance covenant will only be applicable if box 15 is duly completed. 

When it is not clear how a box should be completed, a brief explanation has been provided together with, where relevant, a cross-reference to the applicable clause or clauses in Part II. BIMCO has made it clear that the explanatory notes do not form part of the SHIPTERM document, but are for guidance only.

Some boxes will require further detail to be inserted, which may be best set out in detail within the body of the term sheet, or within an additional annex.  For example, where the term loan is to be drawn in multiple tranches it would be sensible for the tranche mechanics to be set out in an annex to SHIPTERM, rather than in box 14 of Part I. 

Part II

Part II contains the bare bones of the loan structure and the legal framework of the term loan facility, based on the essential terms set out in Part I.  BIMCO has stated that it did not intend to create a "mini-loan", hence the pared back approach to this term sheet. 

Part II sets out how questions such as mandatory and voluntary repayment and prepayment will be regulated, the security package to be provided by the borrower(s), the ship insurance requirements and the financial covenants.  SHIPTERM provides for the facility agreement and security documents (with the exception of the mortgage, which will be governed by the law of the ship's flag) to be made subject to the governing law and jurisdiction chosen by the parties and specified in boxes 30 and 31 of Part I. These issues may require further consideration, for example, where bank accounts located in other jurisdictions are to be charged or pledged to the lender by way of security for repayment of the loan.

SHIPTERM does not provide any detailed provisions in respect of terms which typically are heavily negotiated, such as detailed cash flow matters to address dry-docking retention amounts, blocked operating and earnings accounts, dividend restrictions, events of default and conditions precedent. 

SHIPTERM has 4 annexes for the parties to complete to address multi-ship financings, repayment profile, change of control provisions, and detailed information and financial covenants.  

Does SHIPTERM deliver?

Whilst we can see some potential appeal of SHIPTERM to small and medium sized shipowners, the form does leave much detail to be worked out and agreed between the parties.

This and the fact that most lenders typically prefer to use their own term sheets suggest that, if it manages to achieve market penetration,  SHIPTERM is more likely to be used as a generic checklist by shipowners seeking to save costs by not involving experienced legal counsel than as the "go to" template for documenting ship financing term sheets.  

BIMCO has explained that its intention is not to override the Loan Market Association form term sheet: instead, SHIPTERM seeks to provide a shipping specific document.  This is highlighted by the differing  approaches applied to clause 11 (representations and warranties) – which tends to be a fairly standard clause, with no industry specific references required – and clause 12 (covenants), which focuses on shipping industry specific matters, such as ship covenants and shipping industry specific information covenants.  This is where SHIPTERM seeks to add value for the shipping industry.

While there is much to be said for standardising legal documentation in the ship financing space, there is a sense that in promulgating a term sheet for simple ship financing transactions BIMCO may be striving to create and satisfy a demand that does not yet exist.

It will be interesting to see if SHIPTERM is taken up by the parties for whom it is designed, and also to see if the form eventually fulfils the stated aims of becoming an important tool that saves time and money for all involved in simple ship financing transactions.   

But in the current market conditions, the continuing challenges associated with raising finance stem from the drying up of traditional sources of ship loans rather than a lack of standardization in financing documentation.

BIMCO SHIPTERM: BIMCO Ventures Into Ship Finance

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.