CONFIDENTIAL
Note on
Background Note
Cross Harbour Tunnel, Hong Kong
In 1959 business interests in Hong Kong formed a company to investigate
the possibilitios of a link borween Hong Kong and Kowloon. A study was completed (by Scott, Wilson Kirkpatrick and Froonan, Fox Ltd.) in 1961 which
confirmed that such a link was technically and financially feasible. In 1963
the Hong Kong Government said that it had no objection to the construction of a tunnol (but not a bridge). In 1965 the Hong Kong Logislativo Council passod
a Resolution approving the grant of a 30-year exclusivo franchiso to the
Company for the construction of a four-lano tunnel on payment of a 12%
royalty on gross oporating receipts. In addition tho Company was to pay for the way leave rights on and rent for Crown land and to contributo to the cost
of connecting roads. Not less than 25% of the capital cost of the tunnel
was to be in the form of equity capital and the Governmont had the option of taking up to 25% of any equity capital. The Rosolution also laid down an
initial faro structure for use of the tunnol.
2. The authorised capital of the Cross Harbour Tunnel Co., Limited (£625,000) was to be increased to £74 million to be held in the following proportions:-
Whoolock Mardon & Co., Ltd.
Hutchison International Ltd.
Hong Kong Government
Hong Kong and Shanghai Bank
3749
373%
121%
10%
22%
3.
Minor Shareholders
In inviting tenders to build the tunnel the Tunnel Company stated that
its shareholders would provido £7.5 million of which up to £3.75 million would
be needed for approach roads and miscellaneous chargos. Contractors were to bo
required to arrango finence for the balance, repayablo over a period of
cight years from completion. It was stated that no guarantoo would bo availablo cither from the Hong Kong Government or from any Bank. As socurity
the Company offored a lion on its rovonuos or a mortgage of its assets or both. Tendorers could assume an average cash flow of the order of £2 million por
annum for the first five years of operation.
4. Costains tondored on the basis of a loan of £8.1 million from Lloyds Bank (ropresenting about 64% of the contract price of £13 million) repayable over seven years from complotion for the U.K. cloment and five years from
complotion for the local costs clomont. E.C.G.D. covor in respect of this
loan was offered subject to the following conditions:-
(a) an irrevocallo joint and sovoral guarantee from the min
shareholders in the Cross-Harbour Tunnel Company (Whoolock Mardon & Co., Ltd. and Hutchison International Ltd.);
CONFIDENTIAL
/(b) an