Draft Minute tor
The Prime Minister's Office
For the signature of:
The Private Secretary to
The Farliamentary Secretary
Tons Lone Tunnel
This project was until the events of last year entirely
a private vonture in Hong Kong. Tho Covernment of Hong Kong
at first refused to participate except es a minority shareholder
and its current participation is that of a private phareholder
with a 25% interest in the equity. There is reason to believe
that the Hong Kong Coverment does not regard the project as
having a high priority in the Colony.
2.
E.C.G.D. have to considor the application for a guarantee
of a lean on its merita es an underwriting proposition. Tho
borrower, the Hong Kong Turnol Company, is a private company whoso
capital (when subscribed) will still leave 75% of the contract
valus to be paid from the loan. The Company has throughout sought
to obtain the loan finance with no other cocurity that the proc-
pective earnings from the operation of the turmal. E.C.G.D. has
never been authorised to guarantee investment of this natura.
In accordance with its normal practice in such cases the
Department has sought adequate guaranteos.
3.
It is common practice world-wide for publio corvico projects of this nature to to guaranteel by the govermont of the buying
country. Either this, or in soze countries a Central Dank
guarantee would be required as a condition for taking the entire
rick on a cum of £12 million.
14.
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