TNAG-2413-FCO40-3515-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-fina-1992 — Page 46

12

20.

made up

billion

In

this case, project debt, which is assumed to be

primarily of syndicated loans, is maximized at $37

at money of the day prices and Government paid-up

equity is fixed at $16.6 billion. Wardley have advised that

they believe $37 billion to be the maximum amount which

could be supported for this project, having regard to -

(a) the level of debt which can be supported by

the predicted cashflows; and

(b)

to the amount of debt available in the market

in view of the scale of the project and the

fact that lenders are unlikely to accept

repayment periods in excess of twelve years.

21.

the

Wardley have also advised that they consider that

minimum debt service cover ratio* of 1.37,

of 1.37, as derived

in the "base case", will provide lenders with the necessary

assurance that the AA will have sufficient resources at all

times to meet its debt service obligations. With this in

mind, they have advised that it will be feasible to maximize

project debt at $37 billion if certain measures are taken to

enhance the capacity of the AA to service debt. These are

-

* Footnote the debt service cover ratio in any period is Net cashflow before financing + cash balances Principal repayments + interest payments + financing fees due