39
Maun 293.
EXPORT
CREDITS
ARANT DEPARTME
EXPORT CREDITS GUARANTEE DEPARTMENT
P.O. BOX NO. 272, BARRINGTON HOUSE, 59-67 GRESHAM STREET, LONDON EC2
Telephone: 01-606 6699 Telex: 21821
Our reference
B.C.F. 24126/35
30th January, 1969.
Your reference
Jean Corter,
29
Hong Kong Tunnel
We have discussed the most recent developments in respect of this on several occasions on the telephone but you might care to have a note bringing the position up to date. The last statement of the position is contained in Lord Brown's letter of 17th January to Lord Shepherd. Since then we have considered further the minimum security which will be acceptable to us in respect of a loan for the Tunnel Company. We have now decided that we would be prepared to accept several guarantees from all the shareholders in the Tunnel Company. We would also propose that certain other requirements designed to safeguard access by the lender to the net income of the operation of the tunnel. This might be done by means of a trust fund; we would also expect certain limi- tations on the payment of dividends by the Tunnel Company while the debt remained outstanding. We would require that the capital of the Tunnel Company be paid up as a condition of the Loan. We might also, following the French, seek assurances from the Government that the toll charges for the use of the tunnel shall be maintained at a level which make its operations viable during the 10 year period or so that the loan was outstanding. The several guarantee requirement is an absolute minimum. The other aspects referred to above are negotiable in detail provided that the objectives that we are after are achieved.
2.
We told the French that these would be our requirements and we suggested that we should discuss further with them with a view to their adopting similar limit requirements. Our objective in doing this has throughout been to avoid putting the Tunnel Company in a position to play off the French and ourselves against each other, thus seeking to obtain the least secured loan offered to them from whichever country. In the event the French are apparently not able to come to such an agreement with us at the present time. They told us yesterday that they had indeed moved to a point where they would require several guarantees from all shareholders except the Hong Kong Government but that the question of requiring the Government's guarantee would have to be dealt with, along with other questions outstanding, when their committee which vets all applications met to consider this matter. This meeting will not take place until early March. In the meantime the
RECEIVED IN ARCHIVES No.31
W. S. Carter, Esq.,
Head of the Hong Kong Department, Foreign & Commonwealth Office, Whitehall,
London, S.W.1.
30 FEB 1969
BRANCH OFFICES: BELFAST BIRMINGHAM BRADFORD BRISTOL CARDIFF EDINBURGII GLASGOW LETO
LONDON (CITY, WEST, NORTH & SOUTH) MANCHESTER NEWCASTLE NOTTINGHAM SHE FIELD: & NEW YORK
/French
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