TNAG-1175-FCO40-1477-Proposed-replacement-airport-for-Hong-Kong-at-Deep-Bay-or-Ch-1982 — Page 119

STAGE 2 OPTIMUM FINANCING PLAN AND EQUITY STRUCTURE

Introduction

This stage of the study overlaps with the previous stage and

itself provides data essential to the completion of the financial

evaluation and sensitivity analysis. Its central purpose, however, is

to design a financing plan to determine the minimum equity

contribution by Government that will allow debt to be amortised by

application of revenues.

The capital costs will be reviewed from an additional

perspective, investigating their timing and nature so that the full

range of financing techniques and sources can be identified and

explored. At the same time consideration will be given to sources of

equity and Government will be consulted as to any policy

considerations affecting the structure of the Airport operating body

and the balance of government/public participation.

A range of possible models will be developed and these will be

tested as part of the overall sensitivity analysis to reach an optimum

choice which can then be refined.

In carrying out the study, consultants should assume that

present arrangements for the administration of the whole of Hong Kong

will continue but, in examining sources of finance and the response of

the markets to the Airport project, they will advise on the likely

attitudes of potential lenders

if the status of Hong Kong post-1997 has not been settled at the

This aspect of the study will be

time finance is being sought.

limited to Government and the consultants who will not seek outside

views or advice.

See 122.26.6

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