TNAG-1648-FCO40-2295-Financial-insurance-and-investment-companies-in-Hong-Kong-In-1987 — Page 7

JUN. 11 '87 10:46 IMF WASH DC RAPICOM6300 477-7491

P.008

FOR OFFICIAL USE ONLY

HONG KONG

JE CHINA INVESTMENT COMPANY LTD.

AND

JF CHINA MANAGEMENT COMPANY LTD.

SUMMARY

INVESTMENT:

Subordinated Loan Stock:

Equity:

PROJECT DESCRIPTION:

(1) US$3.0 million, repayable out of profits, zero

interest rate, subordinated to principal and interest payments on senior debt.

(2) US$30,000 to purchase 12% of the common shares

of JF China Investment Company Ltd. (CIC)

(3) Up to US$7,500 to purchase 10%1/ of the common

shares of JF China Management Company Ltd. (CMC)

Project promotion and investment company with an initial capital of US $20,000,000.

OWNERSHIP & MANAGEMENT: CIC will be owned by:l/ Jardine Fleming Holdings

RISKS:

Ltd. of Hong Kong (1); Kuwait Investment Authority (20%); IFC (12%); CMC (20%); and Others (36%). CMC will be owned by: Jardine Fleming Holdings Ltd. (75%), Kuwait Investment Authority (10%); IFC (10%) and CMC's Managing Director (5%).

The new Company must successfully identify and invest in a sufficient number of attractive projects in China to meet its costs and generate an adequate return to its lenderafshareholders,

Financial

RATE OF RETURN:

Economic Equity

19.22 N.A.

(the debt and equity are considered

as ons in this investment)

1/ As noted in the body of the report, the Sponsor's original intention was

to establish a company with an initial capital of approximately US$ 20 million. However, a large number of prospective investors have indicated an interest to participate in the Company. If all of these confirm their desire to participate, the total capital would be increased to a maximum of approximately $30 million. In the case of IFC's investments in CIC (item (1) and (2) above) the absolute amount of the investments would be fixed (US$3 million for Subordinated Loan Stock and US$30,000 for shares in CIC). IFC's investment in CMC (Item (3) above) would be 10% of that company's share capital. Therefore, if CIC's total capital is approximately US$20 million then IFC's investment in CMC would be US$5,000. If the total CIC capital is raised to approximately US$30 million, then IFC's investment in CIC would be US$7,500. The ownership percentages in CIC referred to above assume that the total capitalization of CIC is approximately US$20 million.

This document has a restricted distribution and may

used by recipients only in the performance of their official duties. Its contents may not otherwise lis disclosed without IFC authorization.