TNAG-2594-FCO40-3782-Appointment-of-Chris-Patten-as-new-Governor-of-Hong-Kong--Ap-1992 — Page 82

1992-05-07 18:57 G.1.5

P.04/05

WORK

MUST

START UNDER THE TERMS OF THE CONTRACT WITHIN FOUR WEEKS, AND IT IS SCHEDULED FOR COMPLETION AND COMMISSIONING WITHIN FIVE YEARS.

"THE CENTRAL TENDER BOARD IS SATISFIED THAT THE ANGLO-JAPANESE CONSORTIUM, WHICH SUBMITTED THE SECOND LOWEST TENDER LAST DECEMBER, IS BEST PLACED OF THE FOUR CONTESTANTS TO UNDERTAKE THE TSING MA CONTRACT, SAID MR YEUNG.

THE

TE

"IT WILL BRING TO HONG KONG THE INTERNATIONAL CONSTRUCTION EXPERTISE NEEDED AT THE MOST COST-EFFECTIVE PRICE AND WITH THE GREATEST ASSURANCE OF PROJECT COMPLETION ON TIME.

"THE ANGLO-JAPANESE CONSORTIUM HAS EMERGED FROM OUR ASSESSMENT PROCEDURE AS THE CLEAR WINNER OVER THE THIRD LOWEST TENDERER, THE HONG KONG INTERNATIONAL CONSORTIUM, WHOSE TENDER PRICE WAS $7,363 MILLION.

"THE HIGHEST TENDER CAME FROM THE ALL-JAPANESE CROSSING INTERNATIONAL AT $10,960 MILLION."

LANTAU FIXED

MR YEUNG EXPLAINED THAT, IN ADDITION TO HYUNDAI'S FAILURE TO COMPLY WITH WORKING AND EMPLOYED CAPITAL REQUIREMENTS, IT WAS ALSO THE LEAST ACCEPTABLE OF ALL THE TENDERERS WHEN TIMELY COMPLETION OF THE CONTRACT WAS TAKEN INTO ACCOUNT.

"SINCE AUGUST 1991, THE GOVERNMENT HAS BEEN IN CONTACT WITH HYUNDAI ABOUT THE COMPANY'S FINANCIAL POSITION. HYUNDAI WAS PRE- QUALIFIED IN LATE-1990 ON THE BASIS OF ITS 1989 AUDITED ACCOUNTS AND ITS UNAUDITED HALF-YEARLY ACCOUNTS TO JUNE 1990, AS WELL AS ON

TECHNICAL GROUNDS.

"HYUNDAI THEN SUBMITTED FULL 1990 AUDITED ACCOUNTS IN JUNE 1991 WHICH SHOWED A DEFICIENCY IN WORKING AND EMPLOYED CAPITAL.

"FOLLOWING NOTIFICATION IN WRITING TO HYUNDAI DURING AUGUST 1991, A NUMBER OF MEETINGS HAVE TAKEN PLACE WITH REPRESENTATION UP THE HIGHEST OFFICIAL LEVELS ON BOTH SIDES.

"IN MARCH AND IN APRIL THIS YEAR, HYUNDAI WERE AGAIN ADVISED IN WRITING THAT ANY AWARD OF A CONTRACT BY THE GOVERNMENT REQUIRED THE CONTRACTORS CONCERNED TO HAVE AVAILABLE SUFFICIENT EMPLOYED AND WORKING CAPITAL TO COMPLY WITH GOVERNMENT RULES.

"THIS IS NECESSARY TO AVOID THE RISK OF A FAILURE TO COMPLETE THE CONTRACT DUE TO SHORTAGE OF FUNDING.

"CONTRACTORS NEED ADEQUATE WORKING CAPITAL ΤΟ MAINTAIN LIQUIDITY SO THAT THEY CAN FINANCE OUTGOINGS ON THE CONTRACT.

"ADEQUATE EMPLOYED CAPITAL IS NEEDED FOR THE PURCHASE OF FIXED ASSETS SUCH AS CONSTRUCTION PLANT AND OTHER CAPITAL EQUIPMENT.

"MEANS TO MEET OUR REQUIREMENTS WERE POINTED OUT TO HYUNDAI BY WAY OF AN INTER-GROUP GUARANTEE AND AN IRREVOCABLE LETTER OF CREDIT TO COVER THAT PART OF THE EMPLOYED AND WORKING CAPITAL DEFICIENCY THAT HYUNDAI WERE NOT ABLE TO MEET BY OTHER MEANS.

"HYUNDAI HAVE NOT BEEN ABLE TO OFFER US SATISFACTORY ASSURANCES THAT THEIR POSITION WOULD BE CORRECTED," HE SAID.