TNAG-0097-FCO40-133-Construction-of-a-Cross-Harbour-Tunnel-1968 — Page 112

CONFIDENTIAL

God Whart

anuram

-3-

· 3 ·

they hold proforential loan stock instead of oquity sharos. There areother ways in which the initial sharcholders' position can be secured by comparison with lator subscribers. (The lien on carnings mentioned in paragraph 5 will socure the same ond after completion);

(a) the Hong Kong Governmont modifies its position on prior

carmand-cuffimient

nd

12/22

hot yet dak.

Right to be dead. Definition of Let earnings

The stage.

to to Costame

charges on the income of the Tunnol Company. The Hong Kong Government is to receive payments under four main hoads:-

(1) charges for land;

(ii) royalties (for land and compensation to the

forry companios);

(iii) ratos; and

(iv) profits tax.

Since the asset will be created by the loan, H.M.G. would

he

profor a prior charge on oemings for ropayment of the loan. They are preparod to accopt an oqual position. In

rocognition of the peculiar difficulties about ratos and taxos, H.M.G. arc proparod to allow those to have first charge, the loan to rank socond for a like amount and then equally with the llong Kong Government on (i) and (ii) above until ono or the other is satisfiod.

(Note: If frosh priority categories are claimed by the

Hong Kong Governmont, wo will consider thon);

(e) the Hong Kong Government undertake to ensure that finance is nado available to complete the contract if costs were to incroaso. This might be by increase in subscribed capital borrowing or otherwise. No incrcase boyond £10 million will bo agroód in any circunstances in the loan guarantood by E.C.G.D. But H.M.G. must be assured that tho project will be completed. E.C.G.D. normally sock sono such assurance unless the borrowor's assets are clearly sufficient for contingencios. The World Bank similarly sock such

assuranco;

(f) the Export Credits Guarantoc Department aro satisfied as

to the contractual details (soo paragraphs 7 and 8 bolow);

(g) in the ovont of tho guarantoc being callod, tho Hong Kong

Government will exercise its best ondoavours to recover paymont from the Tunnol Company and any suns recovered shall bo sharod equally botwoon the Government of Hong Kong and

H.M.G.

CONFIDENTIAL

/7. E.C.G.D.