TNAG-2141-FCO40-3060-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-1990 — Page 100

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consortium's bid. Although Kumagai (President Designate of Mitsui) and Ikada, (Executive Vice President of Mitsui) told Mr Ridley and Sir G Manzie on two separate occasions last month that Mitsui were making progress in securing support from Japanese companies, Mistui have so far been unable to give any firm assurance that they

will be able to bring in the four main Japanese players

(Nipon Steel, IHI, NKK and MHI).

ii)

While agreeing that a combined British/Japanese bid

has a better chance of convincing the Hong Kong

Government than a purely Japanese bid, the Japanese companies involved remain to be convinced that we have

the political clout to influence the Hong Kong

Government over procurement. If the idea of a pre-emptive bid falls through (eg because the Hong Kong Government insists on an open tender) the Japanese companies may therefore decide to put in their own bid.

iii) Difficult discussions are also in progress about work sharing. The three parties Trafalgar House, Costains and Mitsui currently have an equal one third shareholding in the consortium. But separate considerations apply to the question of work share. According to Trafalgar House, Mitsui have been pressing for a work share that would give Japanese companies

lions's share of the work won by the consortium an 80:20 split has even been mooted. The DTI have made clear to the British firms involved that a share which

gave the UK less than half the work won by the

consortium would be unacceptable to HMG.

the

iv) Trafalgar House are also concerned about the cautious attitude being taken by British banks towards putting up funds for the project. Barclays are reported to be refusing to lend beyond 1997. The attitude of

MARAFN

CONFIDENTIAL