CONFIDENTIAL
VISIT OF MINISTER OF STATE
(LORD SHEPHERD
TO HONG KONG MAY/JUNE 1969
Note No.9
CROSS-HARBOUR TUNNEL
In April representatives of the Cross-Harbour Tunnel Co.
Ltd. came to London for the final stage in the protracted negotiations with ECGD over the provision of loan finance for this project. This note will serve to remind the Minister what
the position is.
2. After the meeting a press notice was issued by agreement between the parties (copy attached). At time of writing the contract negotiations are still in progress.
3. In the course of the negotiations the Tunnel Co. were concerned to ensure that the several guarantees of the share- holders should not apply in the event of a Chinese take-over. ECGD agreed to a waiver to this effect and also conceded a
temporary waiver in the event of "loss of effective de facto control by the Government of the Colony". These waivers are
on record only in the Letter of Intent which the Tunnel Co. will give to Lloyds Bank. To the extent that the loan is not guaranteed by the shareholders (as defined in their Letter of Intent), Lloyds Bank will be covered by the unconditional
guarantee of ECGD. We hope that suitable steps will be taken
in Hong Kong to safeguard the contents of the Letter of Intent; public knowledge and discussion of the nature of these waivers would be most undesirable. The Minister might emphasise this point in any confidential discussion of the project with the
principals of the Tunnel Co.
4. The successful outcome of these negotiations can properly be used to illustrate our confidence in the future of Hong Kong. There may be a tendency in some quarters to maintain that political doubts and uncertainties delayed completion of the arrangements. But the Minister can safely say that the project was judged primarily on its commercial merits, conceding if
CONFIDENTIAL
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