00 DTC HONG KONG
GRS 460
DESK BY 25010OZ
CONFIDENTIAL
DESKBY 25010OZ
FM D O T 24220OZ JAN 79
TO IMMEDIATE BTC HONG KONG
TELEGRAM NUMBER CREDA 19 OF 24 JANUARY.
TRE?
D
HACK 172/2
AL 20
2
püsöz
18) YOUR TEL NO 36 CREDA: MASS TRANSIT AND KCR.
No
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1. WE NOW HAVE AGREEMENT TO PROPOSAL FOR A DRAW DOWN OF THE WHOLE
LOAN FOR THE RAIL CARS ON THE FIRST DAY A CONTRACT IS AWARDED. WE HAVE PROMISED TREASURY (A) THAT WE WILL SECURE UNDERTAKING FROM
METCAM AND LAZARDS THAT THEY WILL NEITHER DIVULGE ANY INFORMATION
ABOUT THE TECHNIQUE ON ANY SAVE THE MOST ESSENTIAL NEED-TO-KNOW
BASIS NOR CITE THIS AS A PRECEDENT IN ANY FUTURE CASE: (B) THAT
THE GOVERNMENT OF HONG KONG AND THE MANAGEMENT OF MTRC WILL BE
PERSUADED TO BEHAVE IN A SIMILAR WAY AND WILL IN PARTICULAR ENSURE
THAT NO BREATH OF THE TECHNIQUE USED REACHES THE JAPANESE: (C) THAT
NEITHER DEPARTMENT OF TRADE NOR INDUSTRY WILL COME BACK FOR MORE
IF THIS FAILS AND: (D) WILL THEMSELVES REFRAIN FROM CITING THIS AS
A PRECEDENT.
IN THE LIGHT OF THIS LAZARDS ARE SENDING A TELEX TO METROCAM FOR
HANDING TO MTRC THE KEY PASSAGE OF WHICH READS: QUOTE WE HAVE
RESTRUCTURED OUR FINANCIAL PROPOSALS SO AS TO RELIEVE YOU OF ANY INTEREST COSTS (UP TO A MAXIMUM OF US DOLLARS 10M) PAYABLE IN THE
PERIOD TO 31 DECEMBER 1982. THIS NEW PROPOSAL IS BASED ON THE
ASSUMPTION THAT US INTEREST RATES UP TO 4 YEARS STAY ON BROADLY
PRESENT LEVELS BETWEEN NOW AND SIGNATURE OF THE CONTRACT.
FURTHER BENEFIT FROM THIS PROPOSAL IS THE ELIMINATION OF COMMIT-
MENT FEE WHICH RESULTS IN AN ESTIMATED SAVING TO YOU TO US DOLLARS
500,000. UNQUOTE.
IN EXPLANATION OF THE FOREGOING YOU SHOULD TELL METCAM AND TOMPSON
THAT THE NEW PLAN INVOLVES THE DRAW DOWN OF THE LOAN ON DAY 1. ECGD ARE STILL WORKING ON THE DETAILS OF THIS. DRAW DOWN OF THE LOAN IN THIS WAY WILL ENABLE FUNDS TO BE INVESTED UNTIL THEY ARE REQUIRED TO BE PAID TO METCAM AS PROGRESS PAYMENTS. ECGD EXPECT TO STRUCTURE THIS ON A BASIS THAT WILL NOT (NOT) INVOLVE MTRC DOING ANYTHING DIFFERENT TO WHAT THEY WOULD HAVE TO DO UNDER THE BUYER CREDIT ARRANGEMENT DISCUSSED SO FAR WITH THEM (IN PARTICULAR IT WOULD NOT
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