TNAG-0945-FCO40-1164-Future-of-Hong-Kong-1980 — Page 103

SECRET

наконо

British Embassy

1 FEKING

16 October 1980

124 A

IC Orr Est

Assistant Folitical Adviser

Hong Kong

Dear hin

TIN SHUI WAI

112

I have seen with intereat David Wilson's letter of 29 September to Dick Clift, and your earlier correspondence on Chine Resources! involvement at Tin Shui Wai. I agree that we should keep a close eye on this, and 1 should like to be a little clearer on the back- ground.

2. The position, as I understand it, is that China Resources had acquired a controlling interest in the company which already owned the land, and that that company has now been bought by Beehive Enterprises Ltd, 51% of which is owned by China Resources. But I or not clear where tids takes us on the question of leases, and in particular on the messages from Lir Wu of Trafalgar Holdings recorded

Day11 Wilson a letter of 5 June to Dick Clift. Must a new lease be issued upon change of ownership? If so, has the already been done? Has there been any further suggestion, from China Resources or

hrough an intermediary, that the 1997 clause might be omitted? Is here any occasion in the future on which the lease might be amended or revised in this sense? All this is of course very relevant to the wider problems which we are considering.

The financing of the deal could also provide some clues. It will be helpful to know whether there is anything significant in arrangements for the payment of the $600 million or whether there have been any renewed proposals for deferred payment of the lend development premium.

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