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1 . Policy for settling long-term debts owned by JNR
(1) Long-term debts owned by JNR and its succession : 25.5 trillion yen of
debts have been absorbed by the Settlement Corporation
The total amount of long-term debts and other liabilities of JNR that had
to be settled at the start of the reform stood at 37.1 trillion yen. The new
companies received 11.6 trillion yen (or 14.5 trillion yen in practice because
JR East, JR West and JR Tokai also took over other long-term debts and liabilities
in the form of lease fees for Shinkansen). The Settlement Corporation took over
the remaining 25.5 trillion yen of debts and liabilities
(Fig. 11).
(2) Policy for settling long-term debts and other liabilities of the Settlement
Corporation : after" repaying a part of such debts with profits gained by selling
its assets, the government will take over the remaining debts
The Cabinet decided on January 26, 1988 that the remaining part of the debts
after the Settlement Corporation has made every effort to repay them will be
borne by the people.
The sources of revenue the Settlement Corporation has 'for repayment of
its long-term and other debts include land and stocks of the seven JR companies,
estimated at 11.8 trillion yen in total at the beginning of fiscal 1987. The
remaining' amount supposed to be settled by the government was calculated at
13.8 trillion yen then (Fig. 12).
2. Disposal of assets owned by the Settlement Corporation
(1) Land
(A) Succession of land from JNR : 8,808ha of land not used for railway services
The Settlement Corporation received land excluding minimum pieces of land
needed for future businesses from the now-defunct JNR so that the corporation
use the revenue from selling the land to cover its long-term debts and other
liabilities.
(B) Temporary freeze of land sales : against the backdrop of rising land
prices
Against the backdrop of skyrocketing land prices, the Cabinet decided on
Guideline of Emergency Measures for Land Problems in October 1987. Under the
guideline, sales of the land by bidding was virtually frozen in areas where
land prices were rising at an abnormal rate. The guideline also noted the necessity
to come tip with land-disposal measures not to affect land prices.
(C) Formulation of specific policies on disposal of assets concerning repayment
of debts : aiming to finish the substantial disposal by fiscal 1997
To establish policies on disposal of assets and to speed up the full-scale
settlement of debts, the Cabinet decided in December 1989 that substantial disposal
should be completed by fiscal 1997 as far as the land is concerned.
(D) Promotion of land assets disposal : expansion of public competitive
bidding, relaxation of requirements for private contracts, and utilization of
various disposal methods
In the light of the tough situation concerning land disposal against the
backdrop of the sluggish market conditions of real estate, a number of actions
have been taken. "Central Council for Promoting Disposal of Land Owned by the
Japanese National Railways Settlement Corporation" was set up within the Ministry
of Transport in January 1992, establishing a supporting system. In 1993, 1994
and 1996, the Ministry of transport, in collaboration with the Settlement Corporation,
drew up "Action Program for Promoting Disposal and Utilization of Land Owned
by the Japanese National Railways Settlement Corporation" to accelerate land
disposal (Table 3).
(E) Record of land disposal : selling 5,800ha for 4.6 trillion yen by 1995
The Settlement Corporation sold about 5,800ha of land between 1987 and 1995,
earning 4.6 trillion yen. Most of the land was sold to public organizations
through private contracts (Fig.
13).
(F) Measures to be taken : promotion of early disposal of large-scale land/buildings
of Shiodome and Shinagawa stations
Because the Settlement Corporation is supposed to complete the substantial
disposal of its land, the corporation and the Ministry of Transport will make
utmost efforts to strengthen sales activities and promote sales of large-scale
land/buildings for early disposal of land.
(2) Stocks
(A) Transfer of stocks of the Teito Rapid Transit Authority : stocks valued
at about \0.9 trillion yen to the government
To repay loans extended by the government, the Settlement Corporation transferred
stock of the Teito Rapid Transit Authority to the government at an appropriate
price (the corporation repaid 39.3 billion yen by 1989). Then in exchange for
receiving stocks of the Authority in bulk, the government took over debts (with
interest) of the corporation extended by the Trust Fund Bureau that were equivalent
to the estimated value of the stocks (\937.2 billion) in FY1990.
(B) Disposal of JR stocks : promoting early sales starting with JR East
and JR West
As has been decided, the Settlement Corporation, came to own stocks of the
JR companies to repay debts (9.19 million stocks, or the face value of about
0.5trillion yen). Then the "Round table on Exami nation of Basic Problems of
JR Stocks" was held to establish a guideline for their disposal. In May 1991,
the Round-table submitted to the Ministry of Transport"Opinions on Sales of
JR Stocks", which recommended effective sales of stocks as soon as possible.
The Ministry of Transport intended to sell stocks of JR East in 1992 based
on the decision in August of the same year but stopped short of doing so due
to the Comprehensive Economic Measures formulated by the Minister Conference
for Economic Countermeasures. In FY1993, the stocks of JR East were sold and
the company was listed on the stock market. As a result, 2.5 million stocks
were sold, earning 1.1 trillion yen.
Then JR West was chosen as the next company to sell stocks based on the
report submitted by the Council on Asset Disposal in June 1994. JR West was
preparing for plans to sell stocks and to be listed on the stock market by the
end of FY1994 but decided not to go ahead with the plans within 1994 or 1995
because of the unfavorable situation of the stock market and the Great Hanshin/Awaji
Earthquake. Later, it was decided that JR West would invite bids and sell stocks
at the same time. Finally JR West was listed on the stock market on October
8, 1996. As a result, 1,366 thousand stocks were sold, earning 0.5 trillion
yen. .
The Ministry of Transport and the Settlement Corporation plan to consider
and prepare for : selling of stocks of JR Tokai and making the company listed
on the stock market ; and selling of the remaining stocks of JR East and JR
West. On the other hand, it seems difficult for JR Hokkaido, JR Shikoku and
JR Kyushu to follow such examples at the moment due to the tough managerial
environment.The Ministry of Transport and the Settlement Corporation are now
considering how to strengthen the management foundation of the three companies.
3. Examples of settlements of debts incurred by JR's counterparts abroad
(1) Germany
In January 1994, the two national railways of former West and East Germany
were integrated into Deutsche Bahn Aktien Gesellschaft. It has two distinctive
sections ; one dealing with holding and administration of railway facilities
and the other in charge of passenger/freight transport. Each section plans to
become a separate and independent company in the future. All the debts totaling
some 66 billion mark (about 4.9 trillion yen) of debts were succeed by Bundeseisenbahnvermogen
(Federal Railway Property) (BEV), a newly-established administrative institution.
DBEV received none of the debts. Financial sources for repaying the debts include
revenues from selling real estates of BEV as well as general fiscal spending
but no loans. The ultimate responsibility for the settlement of the debts belongs
to the federal government, which is supposed to take unlimited responsibility
for the debts BEV took over.
(2) United Kingdom
Debts of the British Rail(BR) amounted to some L 3.2 billion (about 544
billion yen), relatively low compared with the debts of Japanese or German counterparts.
Since 1974, operating losses of BR have been basically compensated by the government.
After the reform in April 1994, the former BR was privatized split into
two entities : one dealing with holding and administration of railway facilities
(Railtrack) and the other in charge of operations of trains British Railways
Board which owns 25 passenger companies across the country and four freight
companies split according to the field of activities as its subsidiaries). With
regard to the settlement of debts, the British Rail Management Company (which
received L 1.27 billion or about 215.9 billion yen of debts) is supposed to
use revenues from selling stocks of its subsidiaries, and Railtrack (which received
some L 1.97 billion or about 334.9 billion yen of debts) will use revenues from
royalty for railroad lines.
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