RESTRICTED
074065
MDLIAN 3043
6. COSTAIN ARE UNDERSTANABLY DELIGHTED. THE COMPANY'S PRINCIPAL INVOLVEMENT WILL BE ON THE LAND WORK AND TO PROVIDE EXPERIENCED SENIOR MANAGEMENT STAFF, INCLUDING THE PROJECT DIRECTOR. ROCH BROS (AUSTRALIA) AND YAMAZAKI (JAPAN), TWO OF THE LARGEST COMPANIES IN EARTH MOVING, WILL BE SUB-CONTRACTED TO DO SOME OF THE WORK. ALTHOUGH IT IS IMPOSSIBLE TO SAY HOW MUCH OF THE PLANT AND EQUIPMENT REQUIRED WILL BE SOURCED FROM THE UK, COSTAIN AND BALLAST NEDHAM HAVE A 42 PERCENT INTEREST IN THE OVERALL PROJECT, CONSIDERABLY HIGHER THAN WOULD HAVE BEEN THE CASE HAD THE BALFOUR BEATTY-LED GROUP BEEN SUCCESSFUL (25 PERCENT). BUT IN A CONTRACT OF THIS TYPE THE PERCENTAGE OF EXPORTED UK CONTENT WILL BE QUITE LOW.
CREDIT
7. OVER LUNCH ON 3/8 THE FINANCE DIRECTOR OF THE PAA (JAMES DUNDAS, EX MORGAN GRENFELL) APOLOGISED FOR LAST WEEK'S FLURRY OF CORRESPONDENCE ON CREDIT. THE RESPONSE FROM HMG HAD HOWEVER, BEEN OF GREAT HELP TO THE PAA IN THEIR DIFFICULT DELIBERATIONS AND THEY HAD EXPECTED NO MORE. I REASSURED HIM THAT WE HAD UNDERSTOOD THE PROBLEMS AND WERE PLEASED THE RESPONSE HAD BEEN WELL RECEIVED (EXCED 003 FROM PENTECOST).
8. HE AND ALLEN GO TO WASHINGTON AND NEW YORK IN A FORTNIGHT FOR TALKS WITH EXIMBANK AND OTHERS. THE MAIN DIFFICULTIES LIE WITH THE BELGIAN AND DUTCH CREDIT AGENCIES WHO ARE FINDING IT IMPOSSIBLE TO ACCEPT THE PROPOSAL OF NON-SOVEREIGN GOVERNMENT GUARANTEES. DUNDAS EXPRESSED CONFIDENCE THAT ECGD'S GREATER UNDERSTANDING AND SOPHISTICATION WOULD ENCOURAGE OTHER CREDIT AGENCIES TO FALL EVENTUALLY INTO LINE, BUT HE WILL NOT HAVE A SET OF PROPOSALS TO PUT TO ECGD UNTIL THE PROBLEMS WITH CHINA HAVE BEEN RESOLVED AND THE PAA CAN SEE THE WAY AHEAD. HE IS EVIDENTLY ANXIOUS ABOUT THE PRACTICAL PROBLEMS CAUSED FOR THE FINANCING OF THE AIRPORT BY THE BAR ON THE PAA TALKING DIRECT TO CHINESE SOURCES OF FINANCE.
DAY
YYYY
PAGE
2
RESTRICTED