CONFIDENTIAL
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WITHIN 30 DAYS. BRINGING IN BANK OF CHINA WOULD MAKE IT AN
EVENT OF DEFAULT IF THEY DID NOT SEE THAT PAYMENT WAS MADE
WITHIN 30 DAYS. WE ALL AGREE HERE THAT IT IS COMPLETELY
INAPPROPRIATE FOR BANK OF CHINA TO HAVE ANY RIGHT TO OVERRULE
THE ARBITRATOR.
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ON BALANCE OF PLANT, IF THE SOLE PROBLEM IS COST THEN IT CAN BE SETTLED BY GEC REMOVING THEIR HANDLING CHARGE. BUT IT
HAS BEEN CONFIRMED THAT FRENCH ARE DOING LINE OF CREDIT AND ECGD
IS WILLING TO ALLOW LINE OF CREDIT ALTHOUGH THIS WOULD PUT BIG
OBLIGATION ON MIDLAND BANK WHO WILL WANT TO MAKE THEIR OWN
CHARGE. WE WOULD PROPOSE MINIMUM FIGURE FOR CONTRACTS AND
DIFFICULTY REMAINS OF HOW TO RELATE TO BOP ITEMS WHICH THEN BECOME SEPARATE CONTRACTS. AT PRESENT, THEY GET 8.8 PER CENT
RATE AS PART OF GEC CONTRACT. IF SEPARATE CONTRACTS PLACED OVER 4 YEARS, WE HAVE PROBLEM UNDER CONSENSUS UNLESS A DEPOSIT IS PAID IN RESPECT OF ALL POTENTIAL CONTRACT VALUES. LINE OF
CREDIT COULD ULTIMATELY INCLUDE CIVIL CONTRACTS ALTHOUGH WE ARE
NOT MENTIONING IT AT THIS STAGE. SUBSIDY AND NOTIFICATION
PROCEDURES WOULD NEED TO BE ANALYSED AND DOWN PAYMENT ADDED TO ESCROW. FOR LINE OF CREDIT IT WOULD BE NECESSARY FOR SOMEONE TO BULK ORDERS TO REACH POUNDS 250,000 CONTRACTS THOUGH THIS SHOULD NOT BE A PROBLEM FOR MOST BOP ITEMS. IF YOU AND SHEPHERD THINK A LOWER FIGURE IS APPROPRIATE YOU HAVE DISCRETION TO CHANGE.
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THIS SHOULD REDUCE THE HANDLING COST, GIVE CHINESE LINE OF CREDIT THEY WISH AND MAY HELP A LITTLE WITH LOCAL SUPPORT.
ALTHOUGH LOCALS ARE CALCULATED AS PERCENTAGE OF FIRM GEC UK
PRICE WE WOULD ALLOW SUPPORT OF LOCALS WITHIN BOP CONTRACTS
SUBJECT TO AGREED CEILING. 2.3 ITEMS ARE ACCEPTABLE IF
REIMBURSED THROUGH UK CONTRACTS. APPARENTLY FRENCH HAVE PROBLEM
IN THIS CONTEXT ALSO. FRENCH HAVE CONFIRMED THAT THEY ARE
CHARGING THEIR FULL PREMIUM ON LOCAL COSTS.
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WE UNDERSTAND THAT AS FRENCH HAVE EXPOSURE ON
DOWNPAYMENTS AND OTHER DIRECT PAYMENTS THEY ARE SEEKING GUARANTEE
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CONFIDENTIAL
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