2
AA (and,
The main risks for the financial position of the
therefore for potential lenders) will occur before
completion of the airport. During that period, the Airport
Authority is expected to have access to only minor revenues
(from
real estate) and would, therefore, be dependent on the
financial support of
its shareholder, the Government.
proposed that the Government Would
For
this reason, it is
provide up to $8.5 billion at money of the day prices of
callable equity to provide additional support for the
Authority in the event of adverse events occurring before
completion of the project. If the project is completed on
time before July 1997, there will be no contingent liability
on the Government of the Special Administrative Region.
will be
In the event of a delay in project completion
beyond June 1997, it is proposed that the Airport Authority
will receive the surplus flowing from the extended operation
of Kai Tak airport. We have calculated that this surplus
adequate to cover all of the Authority's debt
service obligations and other costs. Therefore, even in the
event of project delay, it is not expected that any
additional support would be required. Nevertheless, since
the possibility exists, in extremely adverse circumstances,
that additional support could be called beyond June 1997, it
could create a contingent liability for the Government of
the Special Administrative Region. I must stress, however,
that the probability is extremely low.