TNAG-0955-FCO40-1174-Legislation-for-traffic-on-roads-in-Hong-Kong-1980 — Page 67

CONFIDENTIAL

Reference

35

'I they

are to

puride.

unes

26

XI

Mr William on

Mr Morrice

Mr Clift

20.10

ECGD COVER FOR KMB BUSES

1.

AKK 172

RECEIVED IN REGISTRY NO. 51 0 9 OCT 1980

DESK OFFICER

INDEX

NO

Mr Clift asked for a report on the ECGD of buses to the Kowloon Motor Bus Company.

PA

910

RECISTRY

Action Taken

Awa/10

tion on the export

I rang Mr Parker in ECGD (01 606 6699 Ext 656). He undertook to send us copies of the more important ECGD telexes on the subject.

2.

3.

The present position is that, in order to secure the export of those buses already built by UK firms, the ECGD will provide cover for 50 buses on the existing basis, ie with the Hong Kong Government Scheme of Control as security. Meanwhile ECGD wish to negotiate a new loan agreement, with additional security the next 356 buses.

4.

for

As the KMB order is part of an overall expansion programme, ECGD asked for forecasts of the company's financial future. These forecasts were pessimistic and stressed the large costs KMB would incur in expanding; their depot and maintenance costs and hence their fares would rise considerably. This reinforced ECGD's desire for additional security, as they believe the company's financial base to be insufficient to justify such large loans.

5. The Hong Kong Government regard the financial forecasts as representing a 'worst case situation' and as unnecessarily pessimistic. (BTC NO EXCED 29 of 30 September). The Hong Kong Government points out that any fare increases required under the scheme of control would be less than those forecast by KMB. Hong Kong also stresses the importance of revaluation of assets being carried through by KMB.

HKG expect this revaluation to show that the company's assets are far larger than the balance sheet now shows.

Rand asset possible HK$ 1500

Hong Govt

m

(₤150 in)

she be

good enough.

assurances on scheme of control Revaluatin vital. ? accelerate

6 October 1980

Мы мать

on xl lui is because

$. on r

Land and

for some

years.

M.A. Searle

M A Searle

much of their assets are

probably have not been revalued

Even one year behind would un crew the asset's considerably because of the contimed rapid increase mi land values ii Hong Kory and KMB have 2 large well located river mi Kim Tong and Kwai Chung

mi

Iwikiama

6.10.

CODE 18-77

SS 8/78

CONFIDENTIAL