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LOCAL BANK (BNP) HAS OFFERED CREDIT FACILITIES AT EXTREMELY FAVOURABLE TERMS (DESCRIBED TO ME AS WAY BEYOND NORMAL COMMERCIAL TERMS) FOR FRENCH COMPANIES OBTAINING CONTRACTS.
IV) GERMANY. GERMAN OFFER IS 85% COVER, 10 YEARS FROM MEAN COMMISSIONING OR 20 JANUARY 1980, WHICHEVER IS EARLIER. RATE OF INTEREST VARIABLE, CURRENTLY SEVEN AND HALF PERCENT. NO COVER ON
LOCAL COSTS.
2. BOTH THE GERMANS AND THE FRENCH HAVE OFFERED TO CAPITALIZE INTEREST DURING THE CONSTRUCTION PERIOD, AND THE JAPANESE ARE EXPECTED TO DO SO. THE JAPANESE HAVE ALREADY OFFERED 10 YEARS ON E AND M CONTRACTS AND THE FRENCH HAVE PROPOSED A LOWER MINIMUM CONTRACT VALUE FOR E AND M CONTRACTS TO QUALIFY FOR TEN YEAR TERMS. JAPANESE ARE OFFERING EIGHT PER CENT ON E AND M CONTRACTS. FRENCH MINIMUM SUM TO QUALIFY FOR COVER IS 1 MILLION FRANCS ONLY COMPARED
WITH OUR £2.0 MILLION,
3. IN VIEW OF FRENCH AND GERMAN INTEREST RATES OF SEVEN AND HALF PERCENT, IT SEEMS ESSENTIAL THAT YOU AGREE TO FINAL COMMISSIONING. I HOPE ALSO THAT THOMPSON'S INTERPRETATION OF PARA 8 OF YOUR TELEX TO HIM OF 24 SEPTEMBER IS CORRECT AND THAT YOU CAN KEEP RATE OF INTEREST TO EIGHT PERCENT ON PAYMENT OF COMMITMENT FEE FOR ANY CONTRACT PLACED BEFORE 31 DECEMBER 1975.
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4. EUROPEANS APPEAR TO BE IN LINE ON LOCAL COSTS, BUT AS JAPANESE HAVE OFFERED 15% AND FRENCH HAVE NEGOTIATED EXTREMELY FAVOURABLE COMMERCIAL STANDBY CREDIT, IS THERE ANY CHANCE OF MAKING AN OFFER ON LOCAL COSTS? AGREEMENT TO CAPITALIZE INTEREST DURING CONSTRUCTION PERIOD SEEMS ESSENTIAL ALSO IF WE ARE TO MATCH THE
FRENCH AND THE GERMANS AND POSSIBLY THE JAPANESE.
5. ONE MATTER OUTSTANDING WHICH HAS NOT BEEN MENTIONED IN YOUR RECENT EXCHANGES IF WHETHER YOU WILL STILL INSIST ON SCALE OF TERMS OR WHETHER YOU WILL AGREE ALONG WITH GERMANS, JAPANESE AND AMERICANS TO 10 YEARS IRRESPECTIVE OF AMOUNT OF CONTRACTS PLACED, POSSIBLE KIER CONTRACT HAS EXPORT CONTENT OF £5.0 MILLION. THIS IS NOW LIKELY TO BE SHARED WITH FRENCH CONTRACTOR BOUYGUES,
IT WOULD BE UNFORTUNATE IF KIER'S POSITION WAS PREJUDICED BY INSISTENCE ON SCALE OF TERMS INDICATED IN YOUR LETTER OF 14 APRIL.
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