TNAG-0564-FCO40-659-Construction-of-an-underground-railway-system-in-Hong-Kong-1975 — Page 34

CONFIDENTIAL #2

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ANNEX D TO XCC(75)55

Proposed Financial Strategy for

the Corporation

Introduction

This annex draws upon various reports prepared by the

Provisional Authority's financial advisers. It summarises the

projected cash flow situation of the Mass Transit Railway Corporation

and then goes on to suggest what the general strategy for raising

the funds required to finance construction and equipment of the

system should be.

Summary of Conclusions

2.

On the most recent basic assumptions concerning costs,

revenue and terms of finance for the Modified Initial System, the

cash flow picture is similar to that in January. Interim investigation

and action permit considerably greater confidence in these present

assumptions.

3.

Sources of funds sufficient to cover all costs during the

construction period appear likely to be available; no firm commitment

can now be obtained for the re-financing of maturing debt during the

early 1980s and this question will require careful attention later

on (although the lead bank for a proposed U.S. dollar facility has

expressed a general willingness, in principle, to roll the facility

over).

4.

Longer term sources of funds should be actively sought in

offshore markets; they may not be critical to the initial financing

of the Railway but will minimise re-finance problems in the early 1980s.

G.F. 323

CONFIDENTIAL

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