!
!
3
(a)
we should at this stage offer to explore the possibility of financing in Hong Kong dollars, even if this proves not to be practicable.
Lazards' strongly held view is that the arrangement set out in the attached note is no more than one of a great range of possible approaches (it would be simpler, for instance, if ABC could take a shareholding in CLP or PEPCO). It is more important to demonstrate a positive attitude in principle than to become enmeshed at this stage in detail: that is to say, we should put challenging proposals on the table which can be pursued in discussion. It is Lazards view that the best approach would be for a team - comprising the main contractor or contractors; ECGD; a merchant bank; and Department of Industry - then to go to Hong Kong to pursue the negotiations.
4 The other points made by Iazards in the course of our discussion were:
(a)
Although Lazards have acted for Balfour Beatty on several occasions, and have a high regard for the company, they urged us to be confident that the company was sufficiently anxious to obtain the business as main contractor that it would not become discouraged during difficult negotiations;
(b) If there was any question of a direct investment
by British interests in Hong Kong, it was essential that a feasibility study be made. This might not be welcome to CLP but it would be necessary. One possibility would be for ABC to do this: another would be for the CEGB and appropriate bankers jointly to carry out this task;
(c)
Lazards said that they had been brought into this project by GEC and their first loyalty at this stage must be towards GEC. However, if the company were prepared for the bank to act for another company or to provide advice to the Department, they would be pleased to do so. Against the latter contingency, we are discussing appropriate fee arrangements with OPG and E divisions.
AJ Harimau
A J MACDONALD
IC2
Room 610 V/S
215-5015
26 May 1977