E
HONG KONG
EXTRACT.
MINUTE (KEMP. C. 309) ECGD VISITS
19th FEBRUARY TO A MARCH This was not programmed as part of the tour as such, but we had to spend a Saturday night there en route from Kuala Lumpur to Seoul, and took the opportunity to discuss with local representatives of the bank and supplying company interested in the forthcoming purchase of
This was
generating equipment by the China Light & Power Co. previously raised with Sir Peter Carey during his visit. It is particularly attractive in that it offers some hope of a negotiated contract. Apart from suggestions that we might be willing to provide credit on extending terms linked to the level of earnings of the company, which were not really treated seriously by any of the people we saw and which we rejected as completely out of the question, the main interest of the case centres on underwriting the buyer. Although this is a public utility service, it is provided by a private sector company. Requests for a guarantee of payment from the Government or a bank are likely to be strongly resisted, Tho visit was useful in enabling us to obtain a good dual of useful background information at an early stage. The company operates under articles of control laid down by the Government, which provide a right to a certain rute of return on capital. There is at least an i
There is at least an implied undertaking on the part of the Government to permit prices to be raised to a level that would produce the required rate of return; in the past, the Government had acted in accordance with this obligation, taking one year with anothor. New articles of control ure due to be introduced in the near future. It was accepted that little could be done until the content of these was known, but assuming they reinforce the present basis of operation, there would appear to be scope for setting up a credit based on an assessment of operating and profitability figures, backed by some system of covenants from the company and some form of comfort letter from the Government. This would require a good deal of detailed work, and it might be desirable to send an Underwriter to Hong Kong for a short visit for this purpose. There is an alternative proposition, involving the supply of surplus equipment from Ireland, which might radically alter the basis of any proposition put to us.
SOUTH KOREA
HKK. 164/1
No comments yet.
Private notes are available after approval.