Procedures / Process

Procedures

What are the Procedures for obtaining a Credit Facility or Bank Guarantee under Collateral Transfer?

Firstly, in order to progress a facility, we will need to receive a completed Client Information Profile (or CIP form). This can be done by completing a CIP form or online at CIP Form. Once we receive your information it will be immediately acknowledged. As we are required by law to undertake due diligence and identification verification, our compliance department will carry forward your application to offer our financiers the initial acceptance of the application.

After initial approval, our financiers will seek a suitable provider willing to offer the facility to the applicant (subject to contract) and obtain their best Indicative Terms. Indicative Terms are an outline of what may be achieved and provide the applicant with the basic illustration and an offering in principal including pricing and the maximum amount of the Bank Guarantee available to the applicant.

If these Indicative Terms are acceptable, we then begin to acquire the formal and detailed terms which are then presented in Term Sheet contract to the applicant. The Term Sheet is a formal offering which details all elements of the Bank Guarantee including the amount, term, the Provider, the issuing bank, the recipient bank, pricing, costs, terms and procedures and of course a draft wording of the Guarantee itself. The Term Sheet is a binding offer to provide the facility. If the Terms provided are acceptable, the applicant formally accepts the Terms by signing and returning the Term Sheet within the period of validity (usually 14 days). The applicant is under no obligation to accept the formal Term Sheet. Upon accepting the Terms, the Booking Fee should be paid to OceanCapital. Once executed the Term Sheet is a binding agreement between the parties.

Once the Term Sheet is received, OceanCapital start the process of allocation of the collateral with the Provider and the Provider then issues their formal Collateral Offer to the applicant who now becomes the Beneficiary, binding each of the parties to the issue and receipt of the Bank Guarantee. Typically, the Provider will request the applicant to meet with them at their offices to present the formal Collateral Offer. If a meeting is not possible for the applicant, our financiers can attend and represent the applicant to receive the Offer documents, of course, our financiers are on hand to accompany our clients at each and every stage.

The Collateral Offer is a formal contract binding the parties (the Provider and the Beneficiary) to issue and receive the Guarantee and enter into the Collateral Transfer Agreement. This is generally expected to be executed by both parties within a period of 7 to 10 days of its presentation.

If necessary and if requested by the Provider, the Beneficiary will be required at this stage to make the refundable Security Deposit payable directly to the Provider or to a suitable escrow arrangement established for the transaction, as will be noted within the Collateral Offer document.

Once any required deposit has been lodged, the Provider will instruct the Issuing Bank to make contact with the Beneficiaries Bank and will issue the executed Collateral Transfer Agreement (CTA). The CTA governs the transaction throughout the term of the Guarantee. Typically, at this stage the Issuing Bank will issue a SWIFT advice to the recipient bank (the bank receiving the Bank Guarantee) confirming and verifying the pending transaction.

The Beneficiary will be expected to instruct his receiving bank to respond to the SWIFT advice offering their agreement to receive the Guarantee and to provide any other account verifications required, prior to the issue of the Bank Guarantee (MT760) to the Beneficiary’s account.

At this juncture, the Beneficiary will need to show proof that they have the ability to settle any outstanding Contract Fees and our Completion Fee due. If OceanCapital are assisting the Beneficiary with credit facilities, the Lender can step-in to show the Provider such proof and can settle the balance of the Contract Fees and Completion Fees directly from the loan. However, if the Beneficiary is not using OceanCapital to raise credit facilities, they will need to demonstrate their ability to pay.

At the end of the contracted term, the Beneficiary will be expected to clear any encumbrances over the Guarantee 5 days prior to its expiry. It is recommended that a period of between 8 to 12 weeks is allowed for completion of the above transactional procedures. It is possible to achieve faster completion times with the full cooperation of all parties, however an absolute minimum of 4 weeks should be allowed. We welcome any enquiries or questions. We feel it is necessary for our clients to fully understand all elements of a facility before applying.