TELEPHONE MESSAGE FROM E.C.G.D.
10.7.67.
38
If Hong Kong Government and Hong Kong and
Shanghai Bank acquired a controlling interest in the
Tunnel Company the situation would be materially altered.
The equity capital of Company would not be substantially
increased and remains in our view inadequate to finance
the whole scheme.
Loan element at favourable fixed interest rate
would come from British Banks guaranteed by E.C.G.D.
Equity shareholders would share risk and expected profits.
E.C.G.D. will take no share in risk of operation of
tunnel. Since Tunnel Company, apart from operation of
tunnel, is in no position to ensure loan repayment,
E.C.G.D. have always sought guarantors of loan repayment,
irrespective of operation of tunnel. In view of
official majority shareholding and reported withdrawal
of commercial shareholders now from guarantee position
E.C.G.D. will now require 100% guarantee from Hong Kong
Government.
First security would remain lien on net proceeds of
Guarantee would meet any short fall
tunnel operations.
in this. In event of political situation frustrating tunnel
operation E.C.G.D, would expect to see Government guarantee
put into effect from Hong Kong Government funds held in
London.