CONFIDENTIAL
Reference
35
'I they
are to
puride.
unes
26
XI
Mr William on
Mr Morrice
Mr Clift
20.10
ECGD COVER FOR KMB BUSES
1.
AKK 172
RECEIVED IN REGISTRY NO. 51 0 9 OCT 1980
DESK OFFICER
INDEX
NO
Mr Clift asked for a report on the ECGD of buses to the Kowloon Motor Bus Company.
PA
910
RECISTRY
Action Taken
Awa/10
tion on the export
I rang Mr Parker in ECGD (01 606 6699 Ext 656). He undertook to send us copies of the more important ECGD telexes on the subject.
2.
3.
The present position is that, in order to secure the export of those buses already built by UK firms, the ECGD will provide cover for 50 buses on the existing basis, ie with the Hong Kong Government Scheme of Control as security. Meanwhile ECGD wish to negotiate a new loan agreement, with additional security the next 356 buses.
4.
for
As the KMB order is part of an overall expansion programme, ECGD asked for forecasts of the company's financial future. These forecasts were pessimistic and stressed the large costs KMB would incur in expanding; their depot and maintenance costs and hence their fares would rise considerably. This reinforced ECGD's desire for additional security, as they believe the company's financial base to be insufficient to justify such large loans.
5. The Hong Kong Government regard the financial forecasts as representing a 'worst case situation' and as unnecessarily pessimistic. (BTC NO EXCED 29 of 30 September). The Hong Kong Government points out that any fare increases required under the scheme of control would be less than those forecast by KMB. Hong Kong also stresses the importance of revaluation of assets being carried through by KMB.
HKG expect this revaluation to show that the company's assets are far larger than the balance sheet now shows.
Rand asset possible HK$ 1500
Hong Govt
m
(₤150 in)
she be
good enough.
assurances on scheme of control Revaluatin vital. ? accelerate
6 October 1980
Мы мать
on xl lui is because
$. on r
Land and
for some
years.
M.A. Searle
M A Searle
much of their assets are
probably have not been revalued
Even one year behind would un crew the asset's considerably because of the contimed rapid increase mi land values ii Hong Kory and KMB have 2 large well located river mi Kim Tong and Kwai Chung
mi
Iwikiama
6.10.
CODE 18-77
SS 8/78
CONFIDENTIAL