TNAG-0097-FCO40-133-Construction-of-a-Cross-Harbour-Tunnel-1968 — Page 291

THE CROSS-HARBOUR TUNNEL CO., LTD.

GENERAL MANAGERS &

SECRETARIES : WHEELOCK MARDEN a co., LTD.

12TH FLOOR, UNION HOUSE, HONG KONG CABLE ADDRESS : SEATUNNEL TEL. 221111

- 3.

TLX. HKG 312

香港隧

FINANCE

-

道

限

A

司

The total cost of the project is estimated at £17.5 million. The actual cost of constructing the tunnel is estimated at approximately £13 million and the balance will be required for engineering expenses, purchase of land, constribution towards the road works etc. The Cross-Harbour Tunnel Company will subscribe £7.5 million in equity capital. Contractors were asked to submit with their tenders proposals for payment of as much as possible of the Contract price on a deferred basis.

An attractive tender has been received from a consortium headed by Richard Costain (Civil Engineering) London. Finance was included in this offer and had been arranged by Richard Costains through Lloyds Bank. The offer which we have received from Costains does not, of course, make any reference to the export credit facilities which we may perhaps presume have been made available by a British Government Agency. It is in this area that the attitude of the Board of Trade to this project will be decisive. The Company is aware of the limitation imposed by the Berne Convention, Never- theless, if 75% of the Contract price (i.e. 75% of £13 million) could be arranged on the present suggested basis of payment i.e. over 7 years from the completion of construction, this could swing the balance of overall advantage to the Costain tender, which is the only British tender under consideration. The terms which are at present offered in the Costain tender do not fall far short of this proposal for 75% finance. Nothing further can be added to this at present without breaking confidence with the other contractors who have submitted tenders.

It should be stressed that if this tender can be awarded to a British tenderer the export content is estimated at £8 million which will be a direct contribution to the U.K. "Balance of Payments" problem.

The Costain tender also calls for a joint and several guarantee of all payments by wheelock Marden & Co. Ltd. and Hutchison International Ltd. as the two major participants. This would be quite out of the question, as these public companies could not possibly justify such a guarantee to their shareholders which would mean that they would have to carry responsibility beyond that of the other participants without any corresponding additional benefit. requirement is unacceptable.

This

7th March, 1967.