1
4. The Hong Kong Government have refuned to guarantoo thi
loan. E.C.G.D. have thorofore required that the four major
sharaholders (tho Coverment, the Hong Kong and Shanghei Pari
Butchisons and theolock Harden) jointly and severally guarant
repayment of the loan. This would demonstrate their confidezo
in the enterprise, while leaving the risks inherent in tho
investment with them. The liong Yong Government as such ie not
prepared to stand behind the schome; it would not be reasonable
to argue that H.E.Coverıment should accept the equity risk in
the enterprise which neither the Hong Kong Coverment nor private
intoreats in Hong Kong seen willing to take.
5. The special problem here is the risk of a takeover by China
and repudiation of Beng Kong'o obligations by China.
E.C.C.D. ia
bound to regard it as "hunduly haperdous" in relation to its
normal operations to eccopt this risk of total loss of so large
a Bumbove- such a long period. For this reason E.C.G.D. has
proposed that it should in effect give its guarantee only if the
lean is secured againat asacta hold outside Hong Kong: this is
the effect of the requirement of joint and covoral guaranteço.
6. At the Prime Minister's request, the Parliamentary Secretary
to the Board of Trade saw Colonel Clique on 13th May. He made
three point3.
(1) E.C.G.D.'s offer was limited to £10 million,
bo wanted this increased to £12.5 million.
(11) Eo objected to the requirement of a joint and
several gusrantoj.
(111). 5.C.C.D.'s offer to cover political risk for the
first 5 years could give a mietsken impression da
Hong Kong that this was the limit of H.Z.C.'%
support for the Colony.
17.
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