alilii
Hong Kong Tunnel:
Richard Costain Limited
In 1959 business interests in Hong Kong formed a company to investigate the possibilities of a link between Hong Kong and Kowloon. A study was completed (by Scott, Wilson Kirkpatrick and Freeman, 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 Legislative Council passed a Resolution approving the grant of a 30 year exclusive franchise to the Company for the construction of a four-lane tunnel, on payment of a 12% royalty on gross operating receipts. In addition the Company was to pay for 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 equity capital and the Government had the option of taking up to 25% of any equity capital. The Resolution also laid down an initial fare structure for use of the tunnel.
2.
The Cross Harbour Tunnel Co. Ltd., has an authorised capital of £625,000 which will be increased to £7.5 millions. At present Wheelock Marden & Co. Ltd. and Hutchison International Ltd. hold 47% of the shares each, but the Hong Kong Government is expected to take up a 12% interest and the Hong Kong & Shanghai Bank 10 leaving the two companies each holding 37% (there are some minor shareholders). The two participating companies each have net assets of at least £8 million (each hoads a group of companies operating throughout the Far East).
3.
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 be needed for approach roads and miscellaneous chargos. Contractors would be required to arrange finance for the balance, repayable preferably over a period of eight years from completion.
4. It was stated that no guarantee would be available either from the Hong Kong Government or from any Bank. As security the Company offered a lien on its revenues or a mortgage of its assets or both. Tenderers could assume an average cash flow of the order of £2 million per annum for the first five years of operation.
5.
Such a lion was and is not considered by E.C.G.D. to be sufficiont socurity in itself. Its effect would have been to put the equity risk on the transaction on the suppliers.. Consequently when Costains applied for cover in respect of a loan the Department's offer was made subject to the following conditions:
(a) an irrevocable joint and several guarantee from the main
shareholders in the Cross-Harbour Tunnel Company
(b)
(Whoelock Marden & Co. Ltd. and Hutchison International Ltd.);
an irrevocable lien from the Cross-Harbour Tunnel Company on the total revenue of the tunnel, in favour of the lending Bank;
(c) an irrevocable undertaking by these two shareholders, together
with the Hong Kong Government, the Hong Kong & Shanghai Bank and any other major shareholder, to subscribe additional capital to the Tunnel Company in approved proportions to raise its prosent capital of £625,000 to £7 million.
16.
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