UNCIL FOR
TRADE
~ Hong Kong Dept.
i. Jende litey Fest.
BOARD OF TRADE
1 VICTORIA STREET
LONDON S.W.1
(7)
24
21st February, 1969
1
Dear Derek,
62
HONG KONG TUNNEL
You asked in your letter of 13th February to Roy Croft for an up-to-date report on where this matter stands.
ECGD have notified the Hong Kong Tunnel Company and the Government of Hong Kong in considerable detail of their amended security requirements as described in Santry's letter of 3rd February. The Tunnel Company appear to be impressed by these proposals. The Financial Secretary to the Governor has confirmed that the Hong Kong Government has no objection in principle to proposing to the Executive Council and the Legislative Council that it should take up its share option and be prepared to give its several guarantee in proportion to its share in the equity of the Tunnel Company.
Many details remain to be examined in the context of the various forms of secondary security which might be obtainable but which ECGD regard as negotiable. A representative of the Tunnel Company is visiting London at the end of this week and willd iscuss this further with ECGD.
The French bank who made the original offer to the Tunnel Company are no doubt aware that ECGD have made an amended offer. The bank will not know the terms upon which French official support of their bid will be forthcoming until the meeting in early March referred to in Santry's letter of 3rd February. The bank has had to tighten up its terms, since the French like ourselves are now requiring guarantees although they have so far not asked for those of the Hong Kong Government or the Hong Kong and Shanghai Bank in their capacity as shareholders. As I have said above, however, the Hong Kong Government appear to have no objection to giving their guarantee proportionate to their shareholding.
ECGD have not been able to obtain any information about the Tommills company of Chicago who are alleged to be able to raise a 20 year loan at 6%; enquiries are proceeding. The Hong Kong Tunnel Company do not appear to have very high expectations of this runner coming home or of the possibility of raising Swiss money. In the event that they were able to obtain money from either of these sources however they would still be free to select the contractor from whatever country was likely to do the best job.
....
D. H. Andrews, Esq.
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