19.
20.
21.
Mr Hadden-Cave mentioned that he could not demonstrate foreign competition for the business was on better terms though on capitalisation of interest one consortium had said "no" two had said "maybe" and one had said "yes". What was the consortium's position now?
Mr Fell said that the main purpose of the discussions was to establish whether a consortium approach would be acceptable to Government; the terms put forward presumed a consortium approach and if any other approach were to be adopted then the terms previously indicated would need reconsideration. He considered that Government had been able to see that the project could be financed on a consortium approach and had therefore decided it should go ahead; there was a grave danger that in changing the approach the whole question of ability to finance the project was reopened so that
He Government would need to review their previous decisions. suggested that matters such as capitalisation of interest were for detailed negotiation when Government had decided on the consortium approach. At the proper time Government would find the consortium willing to listen to Government's views and problems and to negotiate points; he felt sure that Government would not find the consortium inflexible in their attitude and remarked that a consortium approach would make for greater flexibility in negotiation than would any other.
Mr Hadden-Cave accented the position and expressed as his h interpretation that interest capitalisation was not entirely ruled out in later negotiations if the cash flow appears to demand
it.
OTHER FINANCE
22.
Mr Hadden-Cave queried the charges payable for Euro dollar or Eurobond finance. Mr Kindersley said there was no room for manoeuvre on the charges for Eurobond finance but the negotiation and management charges proposed for arranging Eurodollars were open to negotiation.
CAP ITALISATION OF MASS TRANS IT RAILWAY CORPORATION
23.
24.
Mr Hadden-Cave referred to the announced decision for the equity participation of MTRC. Government would provide HK $1,000m of the total of HK $1500m, HK $200m of Government contribution being in the shape of crown land transferred to MTRC and in preliminary expenses already incurred, and HK $800m being in cash. The balance of HK $500m would be found from private interest at a later stage.
Government contribution will not carry interest, but Mr Hadden- Cave mentioned that "some form of coupon" might be attached to yield an eventual return to Government.
DESIGN & CONSTRUCTION PROGRAMME
23.
Mr Wilkins reported on PWD and FF activity over recent months.
•
On soil studies field work on a scale of 1 in 200 was virtually complete. A large number of bore holes had been dug and more were in progress. A soil surveys contract (which entailed about 800 bore holes) was on the point of being let, as was a contract for pilot tunnelling (which involves
4 trial tunnels, 1 on the island 3 in Kowloon). All necessary soils information was expected to be available January 1974.
3.