TNAG-1617-FCO40-2225-Executive-Council-of-Hong-Kong-memoranda-and-minutes-of-meet-1987 — Page 2

substantially better than the Government's estimate of the present market value of the Queen's Gardens site before it could be recommended to the Executive Council. He indicated that Government would not wish to settle for less than $400 million in exchange for the Queen's Gardens site, and that it would want part of this

part

in in cash, rather than in the form of flats at Tregunter.. Hong Kong Land then wrote on 24 August proposing that Hong Kong Land acquire the Queen's Gardens site

site for a payment of $40 million on settlement, and ten further annual payments of $36 million each,

interest free.

Assessment of the offers

4

The Government made two valuations, one on the basis that it wins the appeal and

and the other on the basis

the basis that it loses as a guide to assessment of the offers. The valuations were as

as at 31 December 1986):

(a)

If Government wins

(i)

83 Tregunter flats

(ii) Mesne Profits plus de 100.

interest

(iii) Premium plus interest

13

(b) If Government loses

$335

million

$ 82 million

$154.8 million

$571.8 million

Value of Queen's Garden site

$310 million

These amounts may vary slightly when legal costs and interest are finally calculated. The terms of any settlement would clearly have to be worth more than the Government's valuation of the Queen's Gardens site of $310 million. The present cash value of Hong Kong Land's second tentative offer is about $276 million. The offer has therefore also been rejected.

5

Members are invited to note the contents of this

Memorandum.

11 November 1986 (L/M (2) LW (CR) 21/13)