CONFIDENTIAL
Background Noto
Cross Harbour Tunnel, Hong Kong
In 1959 business intorcsts in Hong Kong formed a company to investigato the possibilitios of a link borwoon Hong Kong and Kowloon. A study was completed (by Scott, Wilson Kirkpatrick and Frooman, Fox Ltd.) in 1961 which confirmed that such a link was technically and financially feasiblo. In 1963
the Hong Kong Government said that it had no objection to the construction of a tunnel (but not a bridge). In 1965 the Hong Kong Logislative Council passed a Rosolution approving the grant of a 30-year exclusivo franchise to the Company for the construction of a four-lano tunnel on paymont of a 121%
royalty on gross oporating receipts. In addition the Company was to pay for
the way loavo rights on and ront for Crown land and to contributo to the cost of connecting roads. Not less than 25% of the capital cost of the tunnel
was to be in the form of oquity capital and the Government had the option of taking up to 25% of any equity capital. The Rosolution also laid down an
initial faro structure for use of the tunnel.
2.
The authorised capital of the Cross Harbour Tunnel Co., Limited (2625,000)
was to be increased to £7 million to bo hold in the following proportions:
Whoolock Mardon & Co., Ltd.
Hutchison International Ltd.
Hong Kong Governont
Hong Kong and Shanghai Bank
Minor Shareholders
377
371%
12%
10%
21%
3.
In inviting tondors to build the tunnel the Tunnel Company stated that
its shareholders would provide £7.5 million of which up to £3.75 million would
bo nocded for approach roads and niscellaneous charges. Contractors wore to bo
requirod to arrange financo for the balance, repayable over a period of
oight years from complotion. It was stated that no guarantoo would bo availablo cither from the Hong Kong Government or from any Bank. As socurity the Company offered a lion on its revenues or a mortgage of its assots or both. Tendorers could assuno an averago cash flow of the order of £2 million por
annun for the first five years of operation.
4. Costains tondorod on the basis of a loan of £8.1 million from Lloyds Bank (roprosenting about 64% of the contract price of £13 million) ropayablo over seven years from complotion for the U.K. olomont and five years from
complotion for the local costs clement. E.C.G.D. covor in rospect of this
loan was offered subject to the following conditions:-
(a) an irrevocablo joint and several guarantee from the min
shareholders in the Cross-Harbour Tunnel Company (Whoolock Marden & Co., Ltd. and Hutchison International Ltd.);
CONFIDENTIAL
/(b) an
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