Security Package & Loan Documentation
Facility Agreements for Shipping Loans
Summary
A facility agreement sets the debt terms, borrower undertakings, conditions, representations, repayment and remedies of a maritime loan.
Why this matters in ship finance
It is the central contract linking economics to credit-risk controls and security rights.
The concept
Common sections address purpose, availability, utilisation, interest, repayment, prepayment, covenants, representations, events of default, tax and agency provisions. Forms often follow market drafting conventions but remain negotiable and jurisdiction-specific.
How it is used in practice
Compare agreed terms against the credit memo, shipbuilding or acquisition contract, security documents and expected repayment profile.
Practical issues
Never infer rights from standard-form headings alone. Mandatory local law, sanctions and registration requirements can override or constrain contractual provisions.
How ShipFinance.ai uses this concept
Extract a structured term sheet, obligation calendar and machine-readable covenant dictionary.
Key takeaways
- Facility and security documents must align
- Defined terms govern calculations
- Standard drafting is not mandatory law
Primary legal, rule and scholarly sources
- Schinas, Grau & Johns (eds.), The HSBA Handbook on Ship Finance (Springer, 2015) - scholarly reference, not legislation
- Schinas & Kewitsch (2015), Loans and Risk Management Considerations, in BK3 - scholarly chapter
- Loan Market Association - contractual loan documentation practice; not law
- Regulation (EC) No 593/2008 (Rome I) - law applicable to contractual obligations in scope