GR 500
'DESK BY 28020OZ
689
CYPHER/CAT A
HKK164/+
RECEIVED IN AFRUSTRY NO. 51 30 067 1978
DOI
OFFICER
REGI
FM D T I 27185OZ
INDEX
PA
aken
CONFIDENTIAL
129 HKG)
TREY
мтимуром
DESK BY 28020OZ
See 1290
TO IMMEDIATE BT C HONG KONG TEL NO INDUS 275 OF 27 OCTOBER.
FOR MARCH FROM KESTEN.
E H V LINE.
!
THERE FOLLOWS A RECORD OF LIPPITT'S MEETING TODAY TO DISCUSS
THE TRANSMISSION PACKAGE. PRESENT BESIDES LIPPITT BENJAMIN AND MYSELF
WERE DEWE-MATTHEWS (SCHRODERS), BIRCH AND RANSON (E C G D), GEMMILL AND ROBERTS (LAZARDS).
2. LIPPITT CONGRATULATED DEWE-MATTHEWS ON HIS SUCCESS IN GETTING
CLP TO ACCEPT THEY WOULD HAVE TO BE BORROWER. ONLY TWO ISSUES WERE
SEEN TO BE OUTSTANDING FROM HAVELOCK'S INDUS 162 OF 20 OCTOBER (A COPY TELEX FROM E C G D TO SCHRODERS REPLYING TO 162 FOLLOWS BY BAG) THE TWO POINTS OUTSTANDING WERE:-
(A) LEVEL OF DEBT: EQUITY RATIO: AND
(B) SCOPE OF CL P'S NEGATIVE PLEDGE.
DEBT EQUITY RATIO.
3. BIRCH INDICATED THAT THEY EXPECTED TO BE ABLE TO REACH AGREEMENT ON A RATIO THAT WOULD (HE HOPED) BE LESS THAN 2 TO 1, SUBJECT TO
SEEING DETAILS OF CL P'S FUNDING POSITION. THEY COULD SEE
NO REASON WHY C L P SHOULD WISH TO BORROW BEYOND AMOUNTS NECESSARY
FOR POWER STATION AND TRANSMISSION SYSTEM.
4. DEWE-MATTHEWS EXPLAINED THAT C L P DID NOT INTEND TO BORROW
BUT WANTED FREEDOM TO MAKE RIGHTS ISSUES COINCIDING WITH TARIFF INCREASES (WHICH THEY THINK THE CONSUMERS AND SHAREHOLDERS WILL LIKE BETTER). HE SUGGESTED THAT AN APPROPRIATE RATIO TO WHICH C L P
MIGHT AGREE WOULD BE 1.5 TO 1. E C G D DID NOT INDICATE THAT THIS
WOULD BE UNACCEPTABLE.
NEGATIVE PLEDGE.
5. F C G D BEL LEVE IT WOULD BE WRONG FOR THEM TO ACCEPT. A