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Be prepared to operate effectively in the lucrative field of ship finance
The global industry of ship finance is greatly affected by today’s everchanging economic climate. The technical and complicated issues surrounding it, as well as the many taxation liabilities involved, can make ship finance a potentially expensive minefield. However, despite the risks involved, ship finance can be one of the most profitable ventures that a financial institution can undertake. With the correct finance structure and meticulously prepared loan and insurance documentation, many of these liabilities can be identified and accounted for.
This course, 'Ship Finance' is organised in association with leading specialist ship finance lawyer Sue Wright, aims to provide an understanding of the documentation involved and how this can be used to minimise the inherent risks and liabilities in such activities. You will return to your office equipped with the knowledge and skills required to operate effectively in the potentially lucrative field of ship finance.
Summary of course content
- The ship finance market
- Flags and ship registration
- The basic security
- The security documents
- Insurance covenants
- Trading the ship
- The loan – who is the borrower?
- Due diligence, conditions precedent and closing
- Security – other issues
- The loan agreement
- Other financing structures
As with all courses, this programme uses case studies and practical exercises to ensure that you leave the course, ready to apply your new knowledge.
Day 1 The ship finance market
- What makes ship finance different?
- International nature of the business
- Some hedging options
- Transaction types
Flags & ship registration, security, second hand and newbuilding
- National, offshore and open registers
- Bareboat registration and the lender's perspective
- Basic security for second hand purchases
- Document structure
- Security for newbuilding finance
Loan Agreement Preliminary Issues
We look at the structure of the documentation and how the different provisions interrelate. We will also look at issues related to who should be the borrower and at some key definitions in the documents.
Administrative Provisions Including Due Diligence and Closings ***
The basic security
- Collateral assignments
- Share security
- Pre-enforcement options
- The lenders’ principal remedies
The security documents
- We will look at the common provisions of basic security documents
In this section we will look at the insurance covenants included in the security package and the reasons behind them. Issues covered will include:
- The standard marine risks
- Captive insurance companies and reinsurance
- The role of the letter of undertaking
- Fleet policies
- Mortgagee’s interest insurance
- Brokers and clubs
- The Norwegian insurance market
Trading the ship
- Different types of charter and other employment
- Pool agreements
- Ship managers
- Impact on bank’s security
- Treatment in loan and security documents
The loan – who is the borrower?
- Structural subordination
- Cross security
- Cross default
- Hazards of guarantees and third party security
Due diligence, conditions precedent & closing
- Where should due diligence be conducted?
- What should the legal opinion say?
- What should the conditions precedent be?
- Payment letters and simultaneous closing in different locations
Participants will examine specimen documents produced for a closing and consider their acceptability.
Security and other issues
Security – other issues
- Floating charges
- Perfecting assignments
- Loan transfers
- Other assets - cash, shares, collateral ships
- When can the security be set aside?
The loan agreement
- Mechanical and boilerplate provisions
- Representations and covenants
- Events of default
- Other financing structures
This section will discuss the other common financing structures, including:
- Export credit
- Government guarantee schemes