CONFIDENTIAL
5.
(c) an irrevocable undertaking by those two
shareholders; together with the Hong Kong
Government, the Hong Kong and Shanghai Bank and
any other major shareholder, to subscribe
additional capital to the Tunnel Company in
approved proportions to raise its present
capital of £625,000 to £71⁄2 million.
In acknowledging Costains' offer the Tunnel Company
referred to these three conditions. They suggested that
if the loan could be increased to 75% of the contract
value "this would give your tender an added financial
advantage which could be decisive". They stated further
that a joint and several guarantee by the two participant
companies could not be provided.
6.
Consequently the Company was informed that E.C.G.D.
would guarantee a loan of 75% of the contract price (i.e.
of nearly £10 million) and that, while waiving the
requirement for a joint guarantee would still require
several guarantees from the major shareholders of the
full indebtedness of the Tunnel Company in proportion
to their own holdings in respect of the overall
ten years of construction and repayment during which
E.C.G.D. would be at risk.
7.
We suggested to the Hong Kong Government that,
in view of their interest, they might take the lead in
an effort to obtain those guarantees. It was pointed
out that if E.C.G.D. were to underwrite this loan
without such guarantees, they would be acting on the sole
CONFIDENTIAL
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