Wed, 04 Jun 2003

JITF upbeat about debt rescheduling target

Dadan Wijaksana, The Jakarta Post, Jakarta

The Jakarta Initiative Task Force (JITF) said on Tuesday it had restructured some US$20.3 billion in corporate debts as of May, and was optimistic that it could help restructure at least half of the remaining debts by year-end when its term expires.

"We've completed the debt workouts for most of the companies. There are only 27 cases left to work on. We're optimistic we can settle more than half of them within the next seven months," JITF chief operating officer Samuel Tobing told The Jakarta Post.

Samuel said that the 27 unfinished cases covered debts worth about $9.4 billion.

He said that the rupiah's recent strong performance would in part be helpful in speeding up the restructuring process as companies, or debtors, would seek the least possible price in their debt settlement.

Established in 1998 upon the request of the International Monetary Fund (IMF), JITF was tasked to restructure huge dollar- denominated debts owed by the corporate sector to creditors, mostly foreigners, which were on the receiving end of the banking crisis in the late 1990s.

Hundreds of companies turned to the agency after the rupiah plunged in value against the dollar. Successful debt restructuring allows companies to seek new loans to strengthen their working capital.

JITF is not the only restructuring medium in the country as the Indonesian Bank Restructuring Agency (IBRA) is also tackling bad loans taken over from the banking sector.

Outside both agencies, there are also companies that seek debt settlements on their own.

Samuel said 94 debt restructuring workouts had been completed, almost half of which used a rescheduling mechanism that makes the maturity profile of the debts longer.

Other schemes that were also popular were debt-to-equity and debt-to-bond swaps, as well as a scheme that allows debtors to buy back their debts at discounted prices.

"And there are some that also use a combination of these. It's a matter of striking a balance between the interests of debtors and creditors," Samuel said.

The agency was initially scheduled to be closed at the end of 2002, but it was extended for another year, although companies will no longer enjoy a 30 percent tax discount facility as they did before.