TNAG-0639-FCO40-787-Construction-of-underground-railway-system-in-Hong-Kong-(Mas-1978 — Page 15

RR HONG KONG

GRS240

CYPHER CAT A

HKK 173,

CN..

21

FM E C G D 161100Z

LINS.

HNED Jelle TRED

CONFIDENTIAL

TO ROUTINE HONG KONG TEL NO EXCED 31 OF 16 NOVEMBER

FOR MARCH FROM ELLIOTT

YOUR EXCED 29 MTR

NOT REC'D

IN

REG-1.

1. SIMILAR REPORT WAS CARRIED BY FINANCIAL TIMES OF 11 NOVEMBER.

2. WE UNDERSTAND THAT MTR CONSIDERED PROPOSALS FROM FOUR INVITED BRITISH BANKS AND HAVE SELECTED LAZARDS TO BE MANAGER OF PROPOSED ECGD SUPPORTED LOAN TO FINANCE OPTION FOR ADDITIONAL RAILCARS IN EXISTING MET CAMMELL CONTRACT PLUS ANY FURTHER CONTRACTS OBTAINED BY BRITISH SUPPLIERS FOR SECOND PHASE OF MASS TRANSIT PROJECT.

3. NEWSPAPER REPORTS ARE INCORRECT OR AT BEST PREMATURE IN REFERRING

LOAN ON THE BASIS OF REPAYMENT IN HONG KONG DOLLARS. POSITION IS THAT WE HAVE TOLD ALL FOUR BANKS PREOCCUPIED AT PRESENT WITH NEGOTIATION OF LOAN ON HONG KONG DOLLAR BASIS FOR CLP POWER STATION PROJECT. BECAUSE OF WHAT WE UNDERSTAND TO BE THE LIMITED MARKET AVAILABILITY OF HONG KONG DOLLARS FOR LENDING OVER SUCH LONG PERIODS WE ARE NOT AT THIS STAGE ABLE TO CONSIDER SUPPORTING

ANOTHER SUBSTANTIAL LOAN IN HONG KONG DOLLARS WE HAVE SAID THAT WE WILL RECONSIDER ONCE CLP NEGOTIATIONS HAVE BEEN CONCLUDED AND THOMPSON HAS SAID HE IS CONTENT TO WAIT UNTIL SECOND QUARTER OF 1978 FOR RECONSIDERATION TO BE GIVEN. AT PRESENT THEREFORE OUR INTENTION REMAINS TO SUPPORT PROPOSED LOAN ON BASIS OF LENDING IN US DOLLARS AND ONLY RECONSIDER IF IT BECOMES CLEAR THAT AVAILABILITY OF HONG KONG DOLLARS IS SUFFICIENT TO FINANCE

FURTHER PROJECTS.

THIS CABLE HAS BEEN COPIED TO CR AND E 4 HERE.

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