File No.: HKK 21/4
NOTE
4/25
Cross Harbour Tunnel Hong Kong
The ECGD requirement that the shareholders in this project
(including the Hong Kong Government) should give joint as well
as several guarantees for a British loan having been found
unacceptable, the commercial shareholders have been in search of
alternative contractor finance, and we heard on 20 December 1968
that the French Finance House (Societe Generale) had agreed to
finance a loan to the company on terms which did not envisage
any Government or other guarantee. We subsequently learned that
the French offer was a loan of 75% of the contract price at 8%
interest, repayable over 10 years after contract subject to the
contract going to the French firm of Dumez. These terms compared
with ECGD's 51% repayable over 7 years after completion of the tunnel.
Meanwhile COFACE (the French ECGD) have asked the opinion of the
Board of Trade about the proposition, and in particular about security.
Conceivably this means that the first report that they would
not require any guarantee was not correct. However we have heard
that Societe Generale are meeting COFACE today (10 January) to
for a credit guarantee
an
initial the finial agreement, and a public announcement is said
to be contemplated for 13 January.
2.
In the Colony no actual negotiations between Dumez and the
company have begun, but if French finance were successfully
negotiated the company would certainly proceed however genuine their
expressed preference for an arrangement with Costain and the Hong
Kong Government we know would still be bound by their agreement in
/principle