TNAG-0955-FCO40-1174-Legislation-for-traffic-on-roads-in-Hong-Kong-1980 — Page 123

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3. ALTHOUGH THEY REGARD IT AT THIS STAGE AS CONFIDENTAIL INFORMATION, KMB WANTED YOU TO KNOW - IN CASE YOU PLACED TOO MUCH EMPHASIS ON THE ACCOUNTS IN THEIR ANNUAL REPORT

THAT THEY HAVE ASKED WARDLEY TO ADVISE THEM ON CAPITAL

RESTRUCTURE OF THE COMPANY AND REVALUATION OF THEIR ASSETS.* LAWRENCE LOUEY SAID THAT THE HONG KONG DOLLARS 82 MILLION LAND ASSET IN THEIR ANNUAL REPORT WAS BASED ON HISTORICAL

VALUE AND WAS MORE LIKELY HONG KONG DOLLARS 1500 MILLION AT

CURRENT MARKET VALUE. THE NEED FOR CAPITAL RESTRUCTURE FOLLOWS

A GOVERNMENT CALL ON KMG TO DEVELOP NEW DEPOT (GARAGING AND SERVICING) FACILITIES. KMB HAVE APPARENTLY SUBMITTED TWO SCHEMES TO THE GOVERNMENT. SCHEME ''A'' WOULD'

REQUIRE EXPENDITURE OF OVER HONG KONG DOLLARS 1000 MILLION (600 THOUSAND ON LAND PURCHASE AND 500 THOUSAND ON MULTI-STOREY BUILDING). SCHEME **B** WHICH KMB PREFER BUT

WHICH GOVERNMENT WAS SAID NOT TO FAVOUR, CALLED FOR THE PROVISION OF LAND ON LEASE WITH NO REQUIREMENT TO BUILD, I E OPEN-AIR PARKING.

4. WHILE KMB CONSIDERED THAT HONG KONG GOVERNMENT SHOULD

PROVIDE A GUARANTEE FOR YOUR PURPOSES, (FOR THE TENUOUS REASON THAT THE EXPENSIVE IMPROVEMENTS TO KMB'S SERVICES WERE A

GOVERNMENT REQUIREMENT) MORRISON DISABUSED THEM OF THE VALIDITY OF THIS LINE (SEE PARAGRAPH 5) AND FURSUED WITH THE

LOUEYS THE REQUIREMENT FOR A BANK GUARANTEE. HE WAS

SHOWN A LETTER FROM THE HONGKONG AND SHANGHAI BANKING

CORPORATION OFFERING TO ISSUE A GUARANTEE AT A FLAT RATE

OF ONE HALF OF ONE PER CENT PER ANNUM. THE LOUEYS DID NOT

SEEM TO MIND THE CHARGE FOR THE GUARANTEE BUT WERE CONCERNED

ABOUT THE BANK'S REQUIREMENT FOR COLLATERAL. THEY CLAIMED

IGNORANCE OF WHAT THE BANK HAD IN MIND BUT MORRISON HAS SINCE

LEARNED FROM THE BANK THAT FOLLOWING THEIR REJECTION OF THE

BANK'S REQUEST FOR A DEBENTURE OVER ASSETS OF THE COMPANY

KMB WERE TRYING TO ARRANGE A COUNTER-INDEMNITY FROM THE

HONG KONG GOVERNMENT. NEEDLESS TO SAY IF THE COVERNMENT

WERE PREPARED TO INDEMNIFY THE BANK THERE WOULD BE LITTLE

PEASON FOR WITHOLDING A GUARANTEE DIRECT TO ECGD.

5. THE SECRETARY FOR THE ENVIRONMENT AND COMMISSIONER FOR

TRANSPORT ARE BOTH AWAY FROM HONG KONG AT PRESENT. MORRISON SAW JEAFFRESON, SECRETARY FOR ECONOMIC SERVICES, VERY BRIEFLY ON TUESDAY TO INFORM HIM OF YOUR NEW REQUIREMENTS, JEAFFRESON WAS DISAPPOINTED THAT YOU COULD NOT CONINUE TO ACCEPT THE SCHEME OF CONTROL AND LETTER OF COMFORT AS SUFFICIENT SECURITY AND FEARED AS A RESULT THAT KMB MIGHT