Wesley R. Brooks Vice President
Morgan Guaranty
Trust Company of New York
Edinburgh Tower 23rd floor
15 Queen's Road Central
Hong Kong
Tel: 841-1317
Telex: 73061 MORGN.HX Fax: 521-7050
HKA 182/7
March 20, 1992
Mr. Richard Allen
In Strick Compasi JPMorgan
Pa
aipat bencricé
Chief Executive Officer
Provisional Airport Authority
Central Plaza, 25th Floor
18 Harbour Road, Wanchai Hong Kong
Dear Richard:
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معدن
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CONFIDENTIAL
back to mi
1014
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iliv
The Provisional Airport Authority (the "Authority") and the Hong Kong Government ("HKG") are at an advanced stage of negotiating the outline of a proposed financial agreement ("Outline") which will set out the business terms upon which the Authority's capitalization and Financial Plan will be based. Key
provisions of the Outline cover HKG undertakings regarding, inter alia,
•
Subscribed equity and callable equity
Revenues from Kai Tak
·
•
Passenger Terminal Charges and Airport Passenger Departure Tax Completion
J.P. Morgan has been requested to provide Authority Management with our interim opinion on the ability of the Authority to raise the amount of debt called for under the Financial Plan (the "Plan") now being developed. The Plan is being prepared by the Authority with advice from McKinsey & Company and J.P. Morgan and in close cooperation with HKG and its advisors, Morgan Stanley and Wardley Capital. Our primary role has been to review the assumptions developed earlier by the Authority and McKinsey on which the current financial forecasts are based and to advise on issues pertaining to credit structure and the market capacity for the debt to be issued by the Authority. Our opinions are summarized below, and we stand ready to discuss them at the Authority's Board Meeting scheduled for March 21.
Summary of Opinions
The question of whether the Authority will be able to raise the amount of debt foreseen in the Plan needs to be taken in two parts: i) will the Authority be creditworthy if it develops as planned, and ii) will financial markets have the capacity to absorb the Authority's debt when it is likely to be issued? In summary, we believe that the Authority will be creditworthy, and, though we are concerned that there is some risk that markets for Hong Kong-related debt may lack adequate capacity to accommodate the Authority's needs, we believe that the Outline represents a reasonable basis on which to approach markets.
A subsidiary of
J.P. Morgan & Co. Incorporated
Incorporated with limited liability in the State of New York, U.S.A.
No comments yet.
Private notes are available after approval.