TNAG-1175-FCO40-1477-Proposed-replacement-airport-for-Hong-Kong-at-Deep-Bay-or-Ch-1982 — Page 124

Task 7.

Preparation of preliminary financing models

7.1

7.2

7.3

7.4

Since

The examination of the capital costs and revenue stream of

the project and investigation of the market along the

above lines will be directed in the first instance to

achieving "pro forma" finance models each with a

characteristic profile of drawing and repayment.

the debt service requirements of each model will depend

upon anticipated prevailing interest rates, consultants.

will assume a range of rate variations with which to test

the project's cash flow.

At the same time consultants will develop an equity model,

and will discuss with Government the operating structure

for the Airport and the minimum level of Government's

participation necessary to attract outside finance.

The above process will be advanced to the stage where a

number of alternative possible models has been produced

each showing a different "mix" of debt and equity and each

potentially capable of encompassing the capital costs.

The alternative finance and equity models will be

expressed in the form of schedules of loan drawings,

phased equity injections and loan repayments covering, on

a year-on-year basis, the full construction period and

anticipated loan amortisation term. Pro forma financial

statements in the form of balance sheets, income

statements and cash flows for each alternative will be

prepared and, at this stage (as described under Task 4

above) a full and detailed sensitivity analysis will be

conducted which will reflect all the basic assumptions in

respect of variables which have been identified during the

consultancy to date.

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