CONFIDENTIAL
Background Noto
Cross Harbour Tunnol, Hong Kong
In 1959 business intorcsts 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 Frooman, Fox Ltd.) in 1961 which confirmed that such a link was technically and financially feasible. In 1963
the Hong Kong Government said that it had no objection to the construction of a tunnel (but not a bridge). In 1965 the Hong Kong Logislative Council passed
a Rosolution approving the grant of a 30-year oxclusivo franchise to tho Company for the construction of a four-lano tunnel on paynont of a 12%
royalty on gross oporating roccipts. In addition tho Company was to pay for
the way leave rights on and rent for Crown land and to contribute to the cost of connecting roads. Not less 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 equity 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.
Ilutchison Intornational Ltd.
Hong Kong Govornuont
Hong Kong and Shanghai Bank
3729
372%
12%
10%
21%
3.
Minor Shareholders
In inviting tenders to build the tunnel the Tunnol Company stated that
its sharoholders would provido £7.5 million of which up to £3.75 million would
bo nooded for approach roads and miscellaneous charges. Contractors wore to bo
requirod to arrango financo for the balanco, ropayablo over a period of
oight yoars from complotion. It was stated that no guarantoo would be
availablo cither from tho Hong Kong Govornont or from any Bank. As socurity
the Company offored a lion on its rovonuos or a mortgago of its assots or both.
Tendorers could assume an averago cash flow of the order of £2 million por
annum for the first five years of oporation.
4.
Costains tondored on the basis of a loan of £8.1 million from Lloyds Bank (representing about 64% of the contract price of £13 million) repayable
over seven years from completion for the U.K. olomont and five years from
complotion for the local costs clonont. E.C.G.D. covor in respect of this
loan was offered subject to the following conditions:-
(a) an irrcvocallo joint and several guarantoc from the min
shareholders in the Cross-Harbour Tunnel Company (Whoolock Mardon & Co., Ltd. and Hutchison International Ltd.)
CONFIDENTIAL
/(b) an
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