TNAG-0098-FCO40-134-Construction-of-a-Cross-Harbour-Tunnel-1968 — Page 113

IN CONFIDENCE

For the attention of E

Mullingaux

Dear Sirs,

118/€

SL/C# 24126/35

8th May, 1968.

Hong Kong Harbour Tunnel

I refer to the discussion here on Friday, 3rd May, which you attended together with representatives of the Cross Harbour Tunnel Co. Ltd., and of the two firms of consultants concerned with the project, and at which the Financial Secretary to the Government of Hong Kong was also present for part of the time. I undertook at the meeting to write and let you know the conditions on which the Department might currently be willing to support the financing of the proposed tunnel project.

2. It will not be possible to determine finally our attitude to the proposed contract until you have provided us with details of the revised cost of the contract consequent upon the several adjustments which have recently been made in the composition of the contrast price. Our attitude will also depend on the view we are able finally to form of the capital structure and composition of the Cross Harbour Tunnel Company, when this is eventually settled. Meanwhile, I can confirm that, subject to re-examination when these details become available, we remain in principle willing to consider support for a loan up to £10 million. The principal conditions on which we would consider support for such a loan would include the followings-

(a) the loan would be for an amount fixed at the outset

without possibility of subsequent increase;

(b) the loan must be secured by the joint and several

guarantees of repayment of the Tunnel Company's intending shareholders; the guarantees wuld

represent a contingent liability against the assets

of the guarantors whereever those sasets may be located;

Costain (Civil Engineering) Limited,

111 Westminster Bridge Road,

London, S.E. 1.

/(0)

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