The Japanese might be able to accept these. We almost
certainly would not. We would thus defeat ourselves.
4. I understand that since your letter was written,
the new Anglo/Italian group have agreed on an approach
which they are ready to submit to Hong Kong. The idea of
a preliminary warning shot has thus to some extent been
overtaken. More seriously, from the version of the new
group's proposals which we have seen, they seem to be much
less successful even than the Japanese, in meeting
Hong Kong's fundamental conditions. They do not quote any
price and they demand an escalation clause for local costs.
Thus they do not even accept the concept of a ceiling price.
As you know Hong Kong have laid great stress on the
importance of their HK$ 5,000m ceiling.
5.
We may therefore have real difficulty in getting the
Hong Kong Steering Group to "validate" our bid. I understand
that Lazard's, as the consortium's financial advisers, share
these doubts of their proposal's viability in Hong Kong terms,
and are considering possible modifications.
We may also be
able to explain to the Governor some of the underlying
consortium thinking which is not reflected in the formal bid.
For example, I understand that the group are thinking of a
basic price (disregarding escalation), which is well within
CONFIDENTIAL
/Hong Kong's
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