TNAG-0638-FCO40-786-Supplies-of-electricity-for-Hong-Kong-1977 — Page 23

PP BTC HONG KONG

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HKGD Jees

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CONFIDENTIAL

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TO PRIORITY BTC HONG KONG TEL NO EXCED $35 OF 8-DEC,

FOR BIRCH FROM MANN.

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WILLIAMS AND GLYN'S HAVE TOLD US THAT DURING THE COURSE OF A RECENT VISIT TO HONG KONG BY THEIR GRAHAM GODLEY THE LATTER WAS ASKED BY

9R SIDNEY GORDON ABOUT THE POSSIBILITY OF STERLING FINANCING FOR

Q.P

2. ACCORDING TO GODLEY ALL THAT WAS SAID WAS THAT DISCUSSIONS MERE TAKING PLACE ABOUT CHANGES IN THE REFINANCING SYSTEM WHICH

COULD HAVE SOME BEARING ON OFFICIAL ATTITUDES TOWARDS THE USE OF. STERLING. SUBSEQUENTLY GORDON WAS SENT COPIES OF LAST SUNDAY'S SPECULATIVE NEWSPAPER REPORTS ABOUT THE REFINANCING NEGOTIATIONS

AND HAS ASKED TO BE KEPT INFORMED OF DEVELOPMENTS. GODLEY ASSURES US THAT IN NO WAY DID HE HOLD OUT ANY PROMISES OF STERLING FINANCING

(DESPITE AN ALLEGED ASSURANCE HE RECEIVED FROM TRADE COMMISSION THAT STERLING FINANCING WAS NOT RULED OUT) BUT IS OBVIOUSLY WORRIED THAT CLP MAY ARGUE TO YOU THAT THE BANK IS IN FACT PREPARED TO PUT TOGETHER SUCH A LOAN. IF THEY DO ARGUE ON THESE LINES YOU WILL WISH TO REFUTE IT. W AND G DID SAY HOWEVER THAT IF STERLING FINANCING WERE REINTRODUCED THEY WOULD BE HAPPY TO ACT

FOR CLP AND WOULD MAKE AN OFFER DIRECT TO THEM.

3. THERE ARE OF COURSE TWO QUITE SEPARATE SETS OF NEGOTIATIONS IN PROGRESS, FIRST THE DISCUSSIONS WITH THE BANKS THAT THEY DO NOT REFINANCE THE FIRST FIVE YEARS OF THE CREDIT PERIOD, AND SECONDLY WTH WHITEHALL THAT WE CAN OPERATE THE CURRENCY SWITCH MORE FLEXIBLY, THESE NEGOTIATIONS ARE NOT ACTUALLY LINKED THOUGH THE SUNDAY TIMES ASSUMES THEY ARE. NO REASON TO BELIEV CLP NEGOTIATIONS

WILL BE AFFECTED.