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FLAG D
reply is that he will be prepared to propose to his Executive and
Legislative Councils (the agreement of the latter is necessary
both to taking up the Government's share option and to an
extension of time for completion of the tunnel) that the
Government should give an individual guarantee. But he questions
whether the commercial interests will be satisfied on the score
of their protection against the political risks. However, that
was before ECGD explained in greater detail the circumstances in
which they would cease to invoke their guarantees and it may be
that the shareholders will now be satisfied (although Mr. Kadoorie
may need some persuading).
5.
These are circumstances, of course, in which the Company is
well placed to conduct a sort of Dutch Auction amongst the various
sources of finance Moreover, ECGD's information continues to be
that the French will not make up their minds until March so that
if in fact the Company has been made an offer by French commercial
interests in the terms reported to us, those interests are out of
step with their official agency COFACE, with whom ECGD are
maintaining close contact. These are hardly circumstances in
which to press upon ECGD a line of action in which they throw
normal commercial prudence to the winds. We, therefore, think
that we should await developments.
14 February, 1969
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CONFIDENTIAL
(W. 8. Carter)
Hong Kong Department