~3
4(c)(ii d
Cowperthwaite appears to have correctly interpreted these points except for his reference in (ii) to the Hong Kong Government's ability to obtain such special guarantees from other shareholders. As you have commented in a manuscript note alongside, this guarantee is required from the Hong Kong Government as such and not in its role as shareholder in the Tunnel Company. The point at (iii) of Cowperthwaite's note strikes us as very relevant.
4(o)(iii) I have commented on this aspect above. E. C. G. D.'s guarantee
4(e)
requirements are plainly understood. If Cowperthwaite is suggesting that the Hong Kong Government as guarantors should participate in the security of the lien this would appear to be an issue for examination between the Hong Kong Government and the Treasury who might themselves wish to obtain a similar security.
E. C. G.D. will not be covering any amounts outside the loan. As we have said the contractors will certainly wish to satisfy themselves that these monies are available. Treasury's view as I understand it, is that the Hong Kong Government, not as a shareholder, should as far as possible ensure that the Tunnel Company properly performs its contractual obligations. I assume that paragraph 4(e) in Figgures' letter reflects Treasury's proposals at our meeting that as far as possible the Tunnel Company's equity capital should be made available and expended before drawings on the loan were made.
Finally in his paragraph 2 the Financial Secretary by implication asks why it is now assumed that the Hong Kong Government alone would provide the guarantee. It is certainly true that we have accepted the statement in Hong Kong telegram 974 to the Commonwealth Office that the commercial companies were not now prepared to guarantee any part of the loan. We assume that still to be the case. Were it not so however we would not now be prepared to accept their guarantees and would continue to look to the Hong Kong Government as the only party able to provide the security that we require.
I am copying to Hawkins in the Treasury.
ever,
Joun
For hillend
(K. W. Cotterill)