CONFIDENTIAL
Background Note
Cross Harbour Tunnel, Hong Kong
In 1959 business intorosts in Hong Kong formed a company to investigato the possibilitios of a link borwoon Hong Kong and Kowloon. A study was complotod (by Scott, Wilson Kirkpatrick and Froonen, Fox Ltd.) in 1961 which confirmed that such a link was technically and financially feasible. In 1963 tho Hong Kong Government said that it had no objection to the construction of a tunnol (but not a bridge). In 1965 the Hong Kong Logislativo Council passod
a Resolution approving the grant of a 30-year exclusivo franchise to the Company for the construction of a four-lanc tunnel on payment of a 12%
royalty on gross oporating recoipts. In addition the Company was to pay for the way leave rights on and ront for Crown land and to contribute to the cost of connecting roads. Not loss than 25% of the capital cost of the tunnel
was to be in the form of oquity capital and the Government had the option of
taking up to 25% of any oquity capital. The Resolution also laid down an
initial faro structure for use of the tunnel.
2. The authorised capital of the Cross Harbour Tunnel Co., Limited (£625,000)
was to be increased to £7 million to bo hold in the following proportions:-
Whoolock Mardon & Co., Ltd.
Hutchison International Ltd.
Hong Kong Govormont
Hong Kong and Shanghai Bank
3774 37졸업
121%
10%
21%
3.
Minor Shareholders
In inviting tenders to build the tunnel the Tunnel Company stated that its shareholders would provide £7.5 million of which up to £3.75 million would
bo nooded for approach roads and miscellaneous charges. Contractors were to bo required to arrange finance for the balanco, repayablo over a period of cight years from complotion. It was stated that no guarantoo would bo availablo cither from the Hong Kong Governmont or from any Bank. As socurity the Company offered a lion on its revenues or a mortgago of its assots or both. Tenderers could assuno an averago cash flow of the order of £2 million per
annun for the first five years of operation.
4. Costains tondored on the basis of a loan of £8.1 million from Lloyds Bank (ropresonting about 64% of the contract price of £13 million) ropayablo over seven years from complotion for the U.K. element and five years from complotion for the local costs olomont. E.C.G.D. covor in respect of this
loan was offered subject to the following conditions:-
(a) an irrcvocallo joint and several guarantee from the min
shareholders in the Cross-Harbour Tunnel Company (Wheelock Mardon & Co., Ltd. and Hutchison International Ltd.);
CONFIDENTIAL
/(b) an
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