Sir J Coles
HKA 233/1
CONFIDENTIAL
File.
Hmocs
FROM:
N J Cox
Hong Kong Department
DATE:
15 May 1992
Cc:
Mr Burns
Mr Ricketts
HONG KONG DEVELOPMENTS: 11-15 MAY 1992
Hong Kong Airport
1. Sir Percy Cradock's visit to Peking was dominated by the airport but did not unblock the impasse. It exposed a possible Chinese bottom-line: that any callable equity outstanding in 1997 should be met by further set-aside of reserves by HKG: the amount to be settled in June 1997. Sir P Cradock and Sir R McLaren now believe that the Chinese will not accept the present financing plans; Lord Wilson thinks that they may be staking out a maximalist position but that they will not back off completely. Hong Kong are now considering how to respond. They see a possibility of meeting the demand by agreeing to liquidate any callable equity in 1997. Our current priority is to prevent the Airport Committee meeting on 20 May, as the Chinese have proposed, and instead to continue private discussions. A meeting which resulted in public failure would be very damaging both politically and for the project. We have instructed Sir R McLaren accordingly.
HSBC bid for Midland
2.
Matters are coming to a head. The Mergers Panel is meeting today to consider the Lloyds bid. The general view is that there is no case for the HSBC bid to be recalled
MAXALV/1
CONFIDENTIAL
325
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