TNAG-0097-FCO40-133-Construction-of-a-Cross-Harbour-Tunnel-1968 — Page 280

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If all those parties agreed, we should be prepared to accept their sever al guarantees of the loan, so that each was liable only proportionally to h.'s shareholding. This in E.C.G.D.'s view is the minimum acceptable position for a commercially based transaction.

14.

Recommendations

E.C.G.D. recommends that

(i) its guarantee in respect of a loan to the Tunnel Company be

increased to 70% of the value of the contract price;

(ii) Costains should be informed that the Department is prepared

to accept several guarantees from the major shareholders proportionate to their holdings; with a lien on revenues as offered as secondary security;

(iii) Departments support these as the minimum acceptable conditions,

and that C.R.O. be invited to notify the Hong Kong Government accordingly.

15. It may be argued that there are strong political reasons why this contract should come to the U.K. It is not for E. C. G.D. to comment on this although the somewhat lukewarm attitude of the Hong Kong Government in committing itself to the project would hardly seem to support this view. If, however, the Departments concerned consider that it is in H.M. G. 's wider interest to support the winning of this contract for a British company they may wish to consider the possibility of H.N.G. financing the balance of the funds required as an expression of H.M.G. Colonial lending or aid policy. The arguments set out above relate only to consideration of this project as a commercial proposition.