CONFIDENTIAL
нив 182 /
CONFIDENTIAL
FM HONG KONG
TO IMMEDIATE F C O
TELNO 2804
OF 09104OZ SEPTEMBER 91
INFO PRIORITY PEKING, UKREP JLG HONG KONG
25
077726
MDHIAN 1904
TOP COPY Q DIST?
PADS: FINANCING ARRANGEMENTS FOR THE LANTAU FIXED CROSSING
AN INVITATION TO TENDER FOR CONSTRUCTION OF THE TSING MA BRIDGE SECTION OF THE LANTAU FIXED CROSSING (LFC) WAS ISSUED ON 31 JULY TO FIVE PRE-QUALIFIED CONSORTIA. THE LFC IS A FULLY
GOVERNMENT-FUNDED PROJECT.
2. WE ARE ISSUING ON 18 SEPTEMBER, AS AN ADDENDUM TO THE TENDER DOCUMENT, AN INVITATION TO SUBMIT FINANCING PROPOSALS. OUR AIM IS TO PRE-ARRANGE A DEBT FINANCE PACKAGE WHICH WOULD BE AVAILABLE TO THE PRIVATE SECTOR WHEN TENDERS ARE INVITED FOR THE FRANCHISE TO OPERATE THE LFC IN ABOUT 1996. IF WE DO NOT USE THE LEVERAGE AVAILABLE NOW THROUGH THE TENDER EXERCISE, IT MIGHT BE DIFFICULT TO ARRANGE A SUITABLE DEBT FINANCE PACKAGE LATER, BEARING IN MIND THE VERY SUBSTANTIAL SUMS LIKELY TO BE INVOLVED.
3.
THE ADDENDUM WILL INVITE BIDDERS TO OFFER US THREE OPTIONS. OPTION A INVOLVES SHORT TERM LENDING UP TO 1997 TO THE GOVERNMENT CREDIT, WITH AN OPTION TO EXTEND TO LONG-TERM GOVERNMENT CREDIT, EXERCISABLE (FOLLOWING AGREEMENT WITH THE PRC) BEFORE 1997. OPTION B COMPRISES SHORT-TERM LENDING UP TO 1997, WITH AN OPTION TO EXTEND TO LONG-TERM CREDIT OF THE FRANCHISEE, WITH FULL GOVERNMENT GUARANTEE (FOLLOWING AGREEMENT OF THE PRC) EXERCISED BEFORE 1997. OPTION C IS SHORT-TERM LENDING CONVERTIBLE TO LONG- TERM LIMITED-RECOURSE DEBT SECURED AGAINST REVENUES FROM THE FRANCHISE, WITH NO GOVERNMENT GUARANTEE.
4. THE ADDENDUM HAS BEEN PUT TOGETHER IN CONSULTATION WITH UKREP JLG. EXERCISE OF THE CONVERSION OPTION AT A LATER STAGE WOULD INVOLVE ASSUMING OBLIGATIONS ON BEHALF OF THE SARG. HOWEVER, THERE IS NO QUESTION OF ASSUMING SUCH OBLIGATIONS AT THIS STAGE AND WE WOULD ONLY DO THIS AFTER SECURING CHINESE AGREEMENT.
5.
IN ORDER TO AVOID ANY DIFFICULTY DUE TO MISUNDERSTANDINGS BY THE CHINESE SIDE, UKREP JLG (WEARING HIS AIRPORT COMMITTEE
1
PAGE CONFIDENTIAL