TNAG-0769-FCO40-973-Supplies-of-electrical-power-for-Hong-Kong-Castle-Peak-power-1978 — Page 115

GR 500

'DESK BY 28020OZ

689

CYPHER/CAT A

HKK164/+

RECEIVED IN AFRUSTRY NO. 51 30 067 1978

DOI

OFFICER

REGI

FM D T I 27185OZ

INDEX

PA

aken

CONFIDENTIAL

129 HKG)

TREY

мтимуром

DESK BY 28020OZ

See 1290

TO IMMEDIATE BT C HONG KONG TEL NO INDUS 275 OF 27 OCTOBER.

FOR MARCH FROM KESTEN.

E H V LINE.

!

THERE FOLLOWS A RECORD OF LIPPITT'S MEETING TODAY TO DISCUSS

THE TRANSMISSION PACKAGE. PRESENT BESIDES LIPPITT BENJAMIN AND MYSELF

WERE DEWE-MATTHEWS (SCHRODERS), BIRCH AND RANSON (E C G D), GEMMILL AND ROBERTS (LAZARDS).

2. LIPPITT CONGRATULATED DEWE-MATTHEWS ON HIS SUCCESS IN GETTING

CLP TO ACCEPT THEY WOULD HAVE TO BE BORROWER. ONLY TWO ISSUES WERE

SEEN TO BE OUTSTANDING FROM HAVELOCK'S INDUS 162 OF 20 OCTOBER (A COPY TELEX FROM E C G D TO SCHRODERS REPLYING TO 162 FOLLOWS BY BAG) THE TWO POINTS OUTSTANDING WERE:-

(A) LEVEL OF DEBT: EQUITY RATIO: AND

(B) SCOPE OF CL P'S NEGATIVE PLEDGE.

DEBT EQUITY RATIO.

3. BIRCH INDICATED THAT THEY EXPECTED TO BE ABLE TO REACH AGREEMENT ON A RATIO THAT WOULD (HE HOPED) BE LESS THAN 2 TO 1, SUBJECT TO

SEEING DETAILS OF CL P'S FUNDING POSITION. THEY COULD SEE

NO REASON WHY C L P SHOULD WISH TO BORROW BEYOND AMOUNTS NECESSARY

FOR POWER STATION AND TRANSMISSION SYSTEM.

4. DEWE-MATTHEWS EXPLAINED THAT C L P DID NOT INTEND TO BORROW

BUT WANTED FREEDOM TO MAKE RIGHTS ISSUES COINCIDING WITH TARIFF INCREASES (WHICH THEY THINK THE CONSUMERS AND SHAREHOLDERS WILL LIKE BETTER). HE SUGGESTED THAT AN APPROPRIATE RATIO TO WHICH C L P

MIGHT AGREE WOULD BE 1.5 TO 1. E C G D DID NOT INDICATE THAT THIS

WOULD BE UNACCEPTABLE.

NEGATIVE PLEDGE.

5. F C G D BEL LEVE IT WOULD BE WRONG FOR THEM TO ACCEPT. A