JITF restructures $10b in corporate debts
JAKARTA (JP): The Jakarta Initiative Task Force (JITF) said on Wednesday that 41 indebted companies under its mediation have finalized the restructuring of US$10.10 billion in debts this month, close to its target of $12 billion for April.
JITF chairman Bacelius Ruru expressed his confidence in finalizing the restructuring of $12 billion in debts by April, as required under the letter of intend (LoI) with the International Monetary Fund (IMF).
"We only need to mediate the restructuring of another $2 billion to meet the target," Ruru said during a joint press meeting with the Jakarta Stock Exchange (JSX) management.
Based on JITF's weekly report for Feb. 23, out of 103 bad debts totaling $18.15 billion, 41 debts worth $10 billion had been finalized, while 62 other debts worth $8.05 billion were still in mediation.
The largest debtors include 27 borrowers in the basic industry and chemicals sector, with $3.54 billion out of $5.07 billion debts restructured.
Second were firms grouped under light industries, with 21 debt cases, of which 6 cases worth $2.25 billion had been worked out.
JITF plays a mediator role between debtors and creditors. It was set up by the government in 1998, to help accelerate the debt restructuring process of the country's private sector.
JITF's target is included in the LoI, which the IMF evaluates before disbursing its loans to Indonesia.
Ruru said he expected more companies to join JITF, after the government had offered them an income tax relief of 30 percent.
Under government regulation No.7/2001, the government provides tax incentives to firms restructuring their debts under JITF.
During the press meeting, Ruru said that companies under JITF could also restructure their debts through the capital market.
JSX president Mas Achmad Daniri said that debtor companies assisted by JITF could float their shares at JSX and use the proceeds for debt payments.
"This is a good opportunity for them (JITF firms) to become publicly listed companies," he said.
Daniri added that only companies with good prospects could hope for a debt restructuring through the capital market.
He said no special measures, other than the exchange's listing requirements, would be imposed on the indebted firms under JITF.
"We do not force investors to buy any of these shares. If they (JITF firms) don't show any prospects, their shares will simply not sell," he explained.
As firms under JITF were in financial difficulties, he continued, they could only expect to be listed on the exchange's secondary board. The main board is reserved for financially sound companies.
The income tax relief should encourage debtors to raise funds from the public, he said.
Daniri said that debtors had been reluctant to tap the capital market for fresh funds, for fear they must pay income tax on the fresh funds raised.
The income tax relief is aimed at allowing debt restructuring schemes such as debt "haircut" or asset transfer without firms having to pay income taxes.
Under the previous law, an indebted company whose debt restructuring process included a debt haircut facility from its creditors must pay income tax, because theoretically it enjoyed some income from the debt reduction.
Separately, the Financial Sector Policy Committee (FSPC) announced its approval of debt restructuring for shoe manufacturer PT Kasogi International, and hotel operator PT Manado Tourist Development Corporation.
Kasogi's total debt of Rp 747 billion (about $77 million) will be restructured using a debt to equity scheme, convertible bonds, and a credit investment scheme, FSPC said in a press statement.
The company would convert 48.93 percent of its total debts into equity, and 46.08 percent into convertible bonds carrying a seven-year maturity period.
The Indonesian Bank Restructuring Agency (IBRA) has the right to convert the remaining bonds into equity after the redemption period ends.
The other 4.99 percent of Kasogi's total debts will be restructured through a five-year credit investment scheme.
FSPC added that Manado Tourist Development Corporation was required to pay Rp 30 billion of its Rp 88.1 billion debts within one year but did not provide further details.
FSPC has the final say on major bank and corporate restructuring programs under IBRA. The committee groups economic ministers, and was formed last year to ensure good corporate governance at the agency. (bkm)