is Hồng Kng registered whilst the tw majër share-holders, via Wheelook Marden and the Futchins`n Group, also Hong Kong registered have diversified throughout the world). It is ̧r bable that if the worst happened it would not be possible to pursue recoveries in Hong Kong. In exchange for taking the political risk out of our third party guarantee requirement we would stipulate that a Fad must be set up out of net revenues, to be held in trust, outside (X Hồng Kɔng, as roperty of the Tunnel Company. The fund should, at an early date, bear a relationship to the "mnel Company's outstanding commitments under the loan.
The third subject Mr. Cotterill dealt with was the possibility of acheiving a 100% guarantee of payments and said that we had hoped that the Hong Kong Government and the Hong Kong & han at Bank might be persuaded to give their several guarantees of 121% and 10% respectively.
Kr. Marden then replied and said that the present major shareholders of the Company accepted that the guarantees of payment should be for 100%. It was likely that there would now be a third major-share-holder. The Rọng Lưng and Ymmati Ferry Co. Ltd., might join the Tmnel Company on terms pari passou with "hellock Marden and the Hutchison Group. The present board of the company were quite prepared to bring in a 100% Chinese company, if ɔnly because a Chinese participation in the cʊmpany and operation of the tunnel would be useful defence in politically inspired disturbances as were currently occurring La Hong Kong. Such move mould also please the Hong Kong Government. The effect of the intr duation of a third majər party on the capital structure would be a proportionate reductim of the present two major holdings; the Government and Bank holdings would not be affected.
Replying to various questioners, Ir. Cotterill said that the Quarante- Fund would be geared t ́ net cash flow, at a rate or proportion to be decided. It was pr.bable that guarantees of syment muld be acceptable from minor share-holders such as Kr. Kadocrie (13) or Kr. 2.C. Lee (9%) or even a bank registered and operating in Hong Kʊng. ·
5.
It was är. Birtwistles' opini ́m that the meeting could, at this stage, reduce to a more manageable size to discuss the details of the Guarantee Fund. The suggestion was agreed, and Xosers. Cotterill, Marden, Culverwell and Williams left the meeting.
PARS II Quarantes 7und
ir. Lowton confirmed earlier remarks that having sccepted the principle if the existence of a Guarantee Fund, no mathematical details had yet been wonload out. Present thinking was that at the time of completion, after direct payments, there should be an amount of between 80.75 millions and £1 millions of unused s.are capital. Having calculated projection of net revenues (net revenue meaning balanne after payment of 121% royalty to Hồng Kông Government, tax payments at 2 years after comencement of operati n, maintenance cɔsts, and repayment of £.C.Q.D. loun) n Minimum traffic raten, the result was deficit for each of the first four years, The cumulative deficit would be sufficient to pre-empt the lover assessment of the surţius share capital. A projection on Probable Traffic flow resulted in a net
in the first two or three years of modest proportions.
Having been ;ressed to state what proportion of the net revenues would be required t, be transferred to the fim!, är. Lorton said that it was envisaged that these would be a varistión ɗ the mte of flow throughout the repayment period, but, in the early years viz let and 2nd, it was likely to be more than half of mur;lus earned.
2.
Mr. Birtwistle, at first suggested that the rate of repayments of the loan should be nocelerated, SKY, ver 5 years inst ad of 7 years? It was pointed out that such an arrangement ɔnly & gravated the deficit problem. Accepting this positi a, Mr. Birtwistle then passi:nately dememoed the suggestion of a 50/50 slit of net revenues, Tasly unfair. In the course of his speech
he
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