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.