DRAFT
ANNEX B
OUTLINE OF A PROPOSED FINANCIAL AGREEMENT BETWEEN THE HONG KONG GOVERNMENT (BEING THE HONG KONG GOVERNMENT UP TO 30TH JUNE, 1997 AND THE HONG KONG SPECIAL ADMINISTRATIVE REGION GOVERNMENT THEREAFTER) ("GOVERNMENT") AND THE PROVISIONAL AIRPORT AUTHORITY/AIRPORT AUTHORITY ("THE AUTHORITY")
RECITALS
(A)
(B)
(C)
(D)
The Authority is charged with building and operating a new international airport at Chek Lap Kok to replace the existing Hong Kong international airport at Kai Tak.
It is the intention of the Authority to use its best endeavours to ensure that the new airport will be completed and become operational by the date intended therefor (the "Target Date") and within the original budgeted project cost.
It is also the intention of both parties that the Authority should assume management control of Kai Tak airport before the Target Date.
It was agreed between the Governments of the United Kingdom and the People's Republic of China in the Memorandum of Understanding concerning the construction of the new airport in Hong Kong and related questions that the Chinese Government would indicate clearly to interested potential investors in accordance with the principles enshrined in the Memorandum of Understanding that obligations related to the airport projects entered into or guaranteed by the Hong Kong Government would continue to be valid and be recognised and protected by the Hong Kong Special Administrative Region Government from 1 July 1997.
1.
Equity
2.
AGREEMENT
Government will contribute an initial equity of $16.6 billion MOD ($13.6 billion March 1991); to be paid up in part by conversion of the amounts advanced by Government to the Authority, and the balance to be subscribed in cash.
Callable Equity
(A)
Government will also provide callable equity in the form of a standby facility, convertible as provided in paragraph 4, of $8.5 billion MOD ($5.9 billion March 1991) against which the Authority may draw in any of the following events:
(i)
(ii)
an increase in project cost (that is, the cost of construction, operating and financing costs) prior to the date the new airport is completed and is capable of being operated commercially ("the Completion Date");
project delay after the Target Date and only to the extent permitted by paragraphs 2(C) and 2(E) below;
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