C
*
IN
3rd April, 1969.
Hong Kong Tunnel
As I told you on the phone we shall be re-opening negotiations on Tuesday next with representatives of the Tunnel Company. The Tunnel Company have loan on the following basisı- written to us proposing that we guarantee
2.
(a)
(b)
(c)
they accept our requirement of the several guarantees of all the shareholders (including the Government and the Hong Kong and Shanghai Banking Corporation) in proportion to their shareholdings; provided that these guaranteos would not apply if due to political intervention they could not be enforced in Hong Kong;
they will set up a trust fund in the U.K. into which a part of the net profits of the Company would be paid, and which could be used to reduce our loss if default occurred;
they will provide a lien on the tunnel revenues. We reg: rd this as satisfactory so far as it goes./
The contract value has now gone up to a maximum of £17 millions, and may also be asked to cover engineering fees of up to £1 million. The maximum loan would therefore be £13 million (75%). You agreed that we could proceed on this basis. Payment terms will remain unchanged, i.e. 7 years from estimated completion date for U.K. goods and services and 5 years for locals. The business is as you know being underwritten under Section 2.
3.
I am copying this letter to Carter (F.C.0.), Davies & Toms (Board of Trade), and Ryan, (Bank of England).
C. C. Lucas, Esq.,
H. H. Treasury, Great George Street, London, S.W.1.
(K. W. Cotterill)
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