XN000022-1992-04-30 — Page 3

THURSDAY, APRIL 30, 1992

IT HAS BEEN TENTATIVELY ESTIMATED THAT THE COST OF THESE FACILITIES WILL BE $9.5 BILLION, BUT THE ACTUAL COST WILL DEPEND ON THE COMMERCIAL JUDGEMENT OF THE INVESTORS CONCERNED.

MRS CHAN SAID IT WAS INTENDED THAT THE AIRPORT AUTHORITY WOULD INVITE PRIVATE SECTOR INVESTORS TO TENDER FOR THE RIGHT TO DEVELOP AND OPERATE THESE SUPPORT FACILITIES ON AN OPEN AND COMPETITIVE BASIS.

BASED ON CONSERVATIVE PROJECTIONS OF COSTS AND REVENUES AND OTHER ASSUMPTIONS REGARDING INTEREST RATES, ACCEPTABLE DEBT MATURITIES, AND A RE SONABLY FAVOURABLE LENDING ENVIRONMENT, THE GOVERNMENT HAS CONCLUDE THAT THE AIRPORT CAN BE FINANCED EFFECTIVELY WITH $13.6 BILLION OF GOVERNMENT EQUITY, $23.3 BILLION OF INITIAL DEBT, AND $1.29 BILLION OF PRE-COMPLETION LAND REVENUES.

THE TOTAL PROJECT FUNDING OF $38.19 BILLION IS INTENDED TO MEET THE AIRPORT AUTHORITY'S CAPITAL COSTS OF $33.7 BILLION, AND INTEREST PAYMENTS AND ASSOCIATED FINANCING FEES OF ABOUT $4.5 BILLION,

AS ANNOUNCED ON APRIL 2, THE GOVERNMENT PROPOSES TO MAKE AVAILABLE TO THE AIRPORT AUTHORITY ADDITIONAL EQUITY UP TO A TOTAL OF $5.9 BILLION, WHICH COULD BE CALLED UNDER ADVERSE CIRCUMSTANCES.

"I WOULD LIKE TO STRESS THAT THROUGHOUT THE CONSTRUCTION PERIOD THE PROVISIONAL AIRPORT AUTHORITY WILL BE EXPECTED TO ADOPT RIGOROUS COST CONTROL PROCEDURES WHICH WILL BE MONITORED CLOSELY BY THE NEW AIRPORT PROJECTS CO-ORDINATION OFFICE,' MRS CHAN SAID.

"I

THE NEW AIRPORT WILL RECEIVE REVENUES BY INHERITING KAI TAK'S TRAFFIC FLOWS AND STRONG REVENUE STREAMS.

THESE INCLUDE CHARGES LEVIED ON AIRLINES FOR

AS

LANDING AND PARKING, AND REVENUES FROM IN-TERMINAL AND OTHER CONCESSIONS SUCH DUTY FREE LIQUOR SHOPS AND AIR CARGO HANDLING FACILITIES.

THE FINANCIAL PLAN ASSUMES THAT, WHEN THE AIRPORT OPENS IN 1997,

THERE WILL BE A PASSENGER TERMINAL CHARGE (PTC) EQUIVALENT TO BETWEEN $50 AND $100 AT MARCH 1991 PRICES.

IN ORDER TO ENSURE THAT THE COST TO PASSENGERS IS KEPT WITHIN ACCEPTABLE LIMITS, THIS WILL BE OFFSET BY A REDUCTION IN AIR PASSENGER DEPARTURE TAX (APDT) SO THAT THE TOTAL OF BOTH CHARGES DOES NOT EXCEED THE CURRENT APDT LEVEL OF $150.

THE FINANCIAL PLAN ALSO ASSUMES THAT THE AIRPORT AUTHORITY WILL RECEIVE REVENUES FROM REAL ESTATE DEVELOPMENT ON THE AIRPORT ISLAND WHICH WILL BE GRANTED TO THE AIRPORT AUTHORITY BY THE GOVERNMENT.

MRS CHAN SAID CONSULTATIONS WERE UNDER WAY WITH THE GOVERNMENT, THROUGH THE AIRPORT COMMITTEE, UNDER THE TERMS MEMORANDUM OF UNDERSTANDING.

CHINESE OF THE

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