BTC HONG KONG DESKBY 2400012
HACK173/2.
HK+&D
GRS 80
CONFIDENTIAL
DESKBY 240001Z
INDEX
FM D O T 232060Z JAN 79
TO IMMEDIATE BTC HONG KONG
По
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་ ་ ་ ་
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The willlayon
Muching
Bee 18)
2.PA
TELEGRAM NO CREDA 18 OF 23 JANUARY
FOR MARCH FROM ROYCE
MASS TRANSIT RAILWAY AND KCR CONTRACT
WE ARE WORKING WITH ECGD ON THREE PLOYS WHICH COULD HELP METCAM.
A. ECGD AND TREASURY WOULD AGREE TO MTRC DRAWING £10 MILLION
FROM THE LOAN FOR PHASE 1 OF THE CONTRACT TO REIMBURSE LOCAL COSTS ALREADY PAID TO KEIR. THIS WOULD GIVE MTRC £10 MILLION IN
STERLING AT 8 AND HALF PERCENT REPAYABLE OVER TEN YEARS FROM
JANUARY 1980. DEPENDING ON HONG KONG INTEREST RATES THE VALUE
OF THIS COULD BE AT LEAST £2M TO MTRC,
B. FOR KCR ECGD WOULD BE WILLING TO CONSIDER A PRE-SHIPMENT
FINANCE GUARANTEE. THIS WOULD AVOID NEED FOR PROGRESS PAYMENTS. INTEREST RATES COULD NOT BE SUBSIDISED BUT ON STRENGTH OF ECGD'S
GUARANTEE THE FIRM COULD PROBABLY OBTAIN MONEY AT BASE RATE PLUS
1 AND A HALF PER CENT. THIS COULD PROVIDE CONSIDERABLE BENEFIT
TO BUYER BY ELIMINATING NEED FOR PROGRESS PAYMENTS,
C. WE ARE LOOKING CAREFULLY AT PROPOSAL IN PARAGRAPH 4 OF YOUR INDUS 17. ECGD WILL BE DISCUSSING DETAILS WITH LAZZARDS (WEDNESDAY)
AND WE ARE PRESENTING THE CASE TO TREASURY.
ALL THE CONCESSIONS SUGGESTED ARE DIFFICULT AND WOULD CREATE
AWKWARD PRECEDENTS. WE WOULD WANT TO ENSURE THAT ANY OFFERS
MADE TO MTRC WOULD BE ENTIRELY CONDITIONAL ON METCAM BEING
AWARDED THE PHASE 2 CONTRACT. CLEARLY NO BREATH OF WHAT WE HAVE IN MIND SHOULD REACH THE JAPANESE OR ANY OTHER PARTIES WHO ARE NOT ON OUR SIDE. GRATEFUL FOR ANY COMMENTS, WE EXPECT TO SEND YOU FINAL INSTRUCTIONS BY CLOSE OF PLAY TOMORROW,
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