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offer until it has negotiated a contract with Société Dumez, the French contracting firm. However, it is clear that we have not got very much time if we wish to do anything to forestall this contract going to the French.
3.
You will recall that ECCD's offer to the Tunnel Company to guarantee a loan of £12.5m (being 75% of the contract price) at 51% interest and repayable over seven years after completion of the tunnel was subject to joint and several guarantees by the major shareholders which included the Hong Kong Government; the shareholders refused to give the joint guarantee. The French offer would appear in some respects to be much less favourable; the information at our disposal suggests that it is for a loan of 75% of a comparable contract price at 8% interest and repayable over ten years after contract, subject to the contract being placed with the French firm. We are told, however, by the Senior Trade Commissioner (EXCED No.128) that these terms do not include any guarantee requirement (although since that information was given COFACE have sought and have been provided with ECGD's views on the question of security for the loan).
4. We are, therefore, back where we were in the middle of last year with the question of guarantees once more high- lighted as the stumbling block to obtaining this contract for a British concern. I think we ought to examine again the arguments for and against our reconsidering at this late hour whether we could revise our terms with a view to winning this contract from the French. I set these out below:-
Arguments for reconsideration
(a) For us, the contract would be worth, we understand, some £6m in terms of steel exports alone.
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