JITF total debt deal hits $17.4b

JITF total debt deal hits $17.4b

The Jakarta Post, Jakarta

The Jakarta Initiative Task Force (JITF) said it has helped
mediate a total of US$17.4 billion in debt restructuring talks,
or $3.4 billion over the past nine months, out of the total $29
billion in private debts it must help restructure.

JITF aimed at settling $18 billion to $20 billion in debts
this year, said its chairman Bacilius Ruru on Thursday.

"Our target is another $3 billion to $4 billion," he told
reporters.

The JITF mediates debt restructuring talks between indebted
companies and their creditors.

It was set up in 1998 by the government to help accelerate the
debt restructuring of the country's private sector. Dozens of
companies with U.S. dollar denominated debts turned to the agency
after the 1997 economic crisis smashed the rupiah.

Restructuring these debts allows the companies tap new loans
to raise capital for new investments. Banks, deprived of earnings
under piles of non performing loans, could also start seeing
interest payments again.

Bacilius said JITF's debt portfolio amounted to $29 billion as
of Oct. That constitute a $7 billion increase of debts which
companies want the JITF help restructure.

With the additional workload, the government had extended the
agency's mandate by another year until the end of 2003.

However JITF's offer for incentives is valid only until this
year. These cover a 30 percent tax discount facility on debts
reduction deals. The tax law considers a reduction on debts as
revenue to the debtor that is subject to income tax.

Another incentive exempts heavily indebted publicly listed
companies under the JITF from being delisted by the Jakarta Stock
Exchange (JSX).

JITF was helping debts talks of 51 publicly listed companies
worth $16.78 billions, Bacilius said. Of that amount, he said,
$11.4 billion or 67 percent had been finalized.

He added that more than half of debt restructuring deals were
reached through rescheduling schemes but companies now favored to
buy back their debts through the secondary market. These should
be mainly bonds, promissory notes and other debt papers.