CODE 18-77
SS 8/78
38
CONFIDENTIAL
Mr Williamson
10
Mr Morrice
2/10.
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COMMERCIAL IN CONFIDENCE
Reference
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HKK 17211
HKK 172/1...
RECEIVED IN REGISTRY NO. 51
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8/10.
Aw 9/10
ECGD MEETING ON KMB BUSES 0 9 OCT 1980
1.
DECK OFFICER
INDEX
PA
I accompanied Mr Clift to eating at the ECGD today to discuss KMB. Those present were Messrs Cotterill, Birch and Brown of ECGD, Mr Cammell of the DOI, and Mise Gingell of DOT.
2. Mr Cotterill accepted Hong Kong's view that KMB's financial forecasts are pessimistic. However, he expressed concern at the Vague terms in the Hong Kong Government's letter of comfort. ECGD were also worried by the effect of the MTR on KMB's turnover.
Mr Clift stated that MTR was relieving the pressure on existing public transport, not undermining it. He stressed that the 'Commonwealth clause' might come under pressure from the Unofficial if ECGD cover is not forthcoming. Mr Cammell said that there is a viable German alternative available.
3.
4.
Mr Cotterill accepted Mr Clift's point that the revaluation of KMB's assets was important. The ECGD would like to know how accessible these assets are to the KMB Co., and whether there are charges on them for the expansion of the company's depots.
5.
ECGD would prefer a bank guarantee as security. However, in view of the political considerations involved, Mr Cotterill will seek Treasury approval for putting the order for the first 400 buses under 'Section 2'. The matter would then be regarded as in the national interest and would not be judged solely on commercial criteria. Subsequent orders could then be discussed in the light of the revaluation of assets.
6.
This requires more concrete information from the Hong Kong Government on the way the scheme of control would operate in practice. ECGD also want more information about the fare structures policy and the capitalisation of KMB.
7. It was agreed to send someone from ECGD for discussions in Hong Kong. Meanwhile, ECGD would continue to correspond with Derek March.
M.A. Searle
M A Searle
7 October 1980
Hong Kong and General Department
CONFIDENTIAL COMMRCIAL IN CONFIDENCE
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