NOTHING TO BE WRITTEN IN THIS MARGIN
3.
funcher
They stated that a joint and several guarantee by
could not
the two participant companies cannot be provided.
Gungquently
6.
the Company was informed that E.C.G.D. would
guarantee a loan of 75% of the contract price (ie.
of nearly £10 million) and that while waiving the
requirement
regulation for a joint guarantee would still require
several guarantees from the major shareholders in.
proportion to their holdings.
7. We suggested to the Hong Kong Government that,
in view of their interest, they might take the lead in
an effort to obtain these guarantees. It was pointed
out that if E.C.G.D. were to underwrite this loan
without such guarantees, they would be acting on the
sole security of successful operation and would be
totally unsecured during the three years of construction.
Moreover, E.C.G.D. guarantee would thus be performing
the function of risk capital without any control of the
management of the project, and would be taking on
speculative risks at fixed interest rates well below the
return such risks would justify.
8.
The Hong Kong Government was unable to agree to
their give a guarantee proportionate to its share; and could
not therefore seek to secure the consent of the other
shareholders who were also unwilling to put up a
guarantee.
9.
Costains' tender expired on 28 June but they
agreed to extend it until 31 August on certaih conditions
one of which was that a further £35,000 should be paid
by the Tunnel Company (the Hong Kong Government agreed
*
to reimburse the Company 50% of this payment. In spite
of the troubles, the Company still insist that they
wish the project to proceed, although in July they
informed the Government that the five promoters proposed
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