TNAG-0097-FCO40-133-Construction-of-a-Cross-Harbour-Tunnel-1968 — Page 69

CONFIDENTIAL

(iv) E.C.G.D. are satisfied as to the details of the loan

agreement and the supply contract;

(v) in the event of the guarantee being called the Hong Kong

Government will exercise its best endeavours to recover payment from the Tunnel Company and any sums recovered shall be shared equally between the Hong Kong Government and H.M.G.

2. It is understood that Tunnel Company shareholders will receive no interest on their investment during the, period of construction (they will, however, receive stock worth $120 million for their $110 million outlay on completion of the construction). It is understood that the Hong Kong Government would authorise the royalties payable by the Tunnel to be reduced from the 12% presently envisaged to 72% if this were necessary to enable the Tunnel Company to meet its obligations in respect of the loan and interest.

3. This saving despatch outlines the provisions in general terms. Details, including the form in which the Hong Kong Government's guarantee will be executed, will be the subject of further consultation.

4. We should be grateful to learn whether these terms are acceptable to the Hong Kong Government. If they are, a Statement in Parliament will have to be made to enable H.M.G.'s liability to be assumed, and until Parliamentary approval is obtained there should be no voluntary publicity. If publicity is unavoidable we would hope that it could be kept to a minimum and the fact that the offer is conditional upon the agreement of Parliament made clear.

aci

Copies of the sansungs abath have hein sent to Hawking in Toy and Collvell in ECGD 1711

Iwo copies to

JE Somers

Room 309

вот

Vie St. Su 1.

27/11/67

कर

•

CONFIDENTIAL