CONFIDENTIAL
188
Anmols
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MR DIPTITT
RECI
FIN
.. 31
16 AUG 1977
DKK 16+11
HONG KONG POWER STATION PROJECT
hapley
Feels
cc: as on attached list.
Lord Kindersley and Mr Gemmill (Lazards), Mr Birch (ECG) and I visited Hong Kong on 7-9 August for discussions on the power station project. This note records the main points which arose during the visit.
The purpose of the visit was twofold:
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to establish with the Hong Kong banking community and the Hong Kong Government whether the proposal to denominate the buyer credit arrangement in Hong Kong dollars was practicable. Our objective was to establish whether a 15 year buyer credit in Hong Kong dollars was possible on the understanding that no "take out" commitment from ECGD would apply. We needed also to obtain the support of the Hong Kong Government, as our proposals involve the immediate drawdown of some HK$1.6 billion and the conversion of the proceeds into sterling.
to maintain contact with China Light and Power/PEPCO executives following Sir Lawrence Kadoorie's recent visit to London,
Our discussions with the Hong Kong and Shanghai Bank started badly, because:
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the Hong Kong Bank had gained the impression that in London Lazards were playing one bank off against another (in fact the London discussions stemmed from Sir Lawrence Kadoorie's initiative);
the Hong Kong Bank had been told by its London director, following a discussion with Sir Lawrence, that our proposals involved a financial requirement for HK 7 billion for a 15 year period.
4 Once these points had been resolved, the discussions became more amicable though they remained difficult as the banks were anxious to establish their position for the commissions which will result from a successful deal. The Hong Kong bank ia in a very strong position and intends to take advantage of it. The Chartered Bank, which has close associations with Sir Lawrence, provided a negative performance and this could presage difficulties
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