TNAG-0955-FCO40-1174-Legislation-for-traffic-on-roads-in-Hong-Kong-1980 — Page 51

CS

√16/10 A 210/10

Mr

Treasury Chambers

Parliament Street London SW1P3AG

Telex 262405

CC Birch Esq

Inician

16.10

стру надо

Hery Kery BTC. M. B

Telephone Direct Line 01-233 8789

Switchboard 01-233 3000

HKRIZ?!!

Export Credits Guarantee Department

Aldermanbury House

Aldermanbury

LONDON

EC2P 2EL

INDEX

17 OCT 1980

M. JM.

Willaim for 17.10

Mr. Scarle

Tak

AW

161

Your reference

Our reference

AEF3 17/68/01

*Date

e4 October 1980

B.

NOTED

Anzolio

3weeks

MS17.10

We need to watch this as it

progresses

15/10

pa.

43

We shit

heep open the option (expressed in Dinh's litter Ir out) mar

furtis

COMP

SECTION 2 COVER: KOWLOON MOTOR BUS COMPANY LIMITED (KMB) HONG KONG

Guamenties

You wrote to me on 7 October seeking our agreement to cover being provided under Section 2 for an order for 356 buses, valued at £18 million, for the Kowloon Motor Bus Company Limited (KMB), Hong Kong. Cover has previously been provided under Section 1, the loan security resting on a comfort letter from the Hong Kong my Government. On commercial underwriting grounds you judge that such

if he

ย

H&G

a comfort letter is not sufficient if this new loan were to be added to existing loans already outstanding and ordinarily you would seek a third party guarantee. The Hong Kong and Shanghai Banking, Corporation (HKSBC) are willing to give such a guarantee but KMB themselves have argued against paying the guarantee fee or to accept the need for a charge to be given on their assets,or to relinguish control of their financial arrangements to the Bank. The Hong Kong Government have protested that their comfort letter gives sufficient security.

KMB Comments have been received from the Departments of Trade and

ere

sah's Jacky

Pl. keep

Industry, the Foreign and Commonwealth Office, and the Bank of England.

would be very

coy difficult now to withdraw anyway.

The strength of the industry case to provide cover is acknowledged. Normally this should not cloud the underwriting judgment but it seems ta me that the manufacturers themselves are so far along the road in supplying components in anticipation of the follow-on order that it

This very much weakens your negotiating position. Therefore, given the relatively uh short horizon of risk, I agree that you should support a loan under

Section 2 for 85% of £18 million, over 5 years, secured against the comfort letter.

RCAD

YEL

Whether we