POINTS TO CONSIDER • The lender would usually have the right to inspect, at any time, the construction progress to verify whether the value of the superyacht has diminished as this would impact on the security value it represents. • The borrower will need the lender’s prior consent before being able to agree to any amendment or variation to the shipbuilding contract. • Is the flag jurisdiction acceptable to the lender? If applicable, is the superyacht Red Ensign Group Yacht Code compliant? Is the superyacht compliant with the statutory requirements of the flag state? • Is the Classification Society acceptable? The lender will be sensitive to the reputation of the same Classification Society in different countries. Country “A” may be absolutely fine, but Country “B” may be questionable.
POST-DRAWDOWN • The lender would usually have the right to conduct a maintenance check and inspect the superyacht upon reasonable request to check its condition does not materially diminish during the lifetime of the loan. • The borrower should not make any alterations to the superyacht without the lender’s prior consent. • The borrower should operate the superyacht only in the territorial limits of the insurance cover. • The borrower will need the lender’s prior consent before agreeing to sell the superyacht and the lender will require that the whole loan is repaid in full upon a sale.
Insurance and liability
The lender will want to ensure that the superyacht is properly insured during the build process and after delivery and that the benefits under the relevant insurance policies are properly assigned to the lender as security. The lender may also request that you cover the cost of any mortgagee’s interest insurance.
Covenants
The borrower will give many covenants including financial, operational and insurance undertakings, representations and warranties. If you fail to comply with any covenants then the lender can call the loan in.
• The lender may place restrictions on the length of any charter.
The bank’s powers are generally wide reaching where there is a borrower’s default and the bank can usually enforce any of the security in any order.
79
Made with FlippingBook - professional solution for displaying marketing and sales documents online