Bosnia enters 2 billion dollar debt conversion project

23rd May 2007. XO Limited (www.barter-software.com), the world’s largest developer of systems for the barter exchange and counter-trade industry, today announced that it had signed an agreement to undertake a $2 billion dollar debt for asset conversion project in Bosnia-Herzegovina together with the nation’s credit agency – LRC Credit Bureau.

The deal XO-LRC deal involves launching the regions first counter-trade and barter exchange solution, designed to address the issues of overdue and uncollectible business recievables. The venture will focus on converting the regions billions of dollars of “at risk” debt into goods and services needed by creditor businesses.

The Bosnia-Herzegovina economy represents a unique challenge to the debt collection industry, with over 2 billion US dollars owed by local businesses to other local businesses. Debt collection is often a timely and risky process as many companies are product “rich” but cash “short”. Court and associated enforcement costs are high and many smaller debts are simply written-off.

Under the XO Limited - LRC system business creditors will agree to have overdue recievables converted into already budgeted for commodities. As it is unlikely that their own debtors would have these needed items, LRC will act as the intermediary for product conversion transactions between all creditors and debtors.

Defaulted debtor businesses will be offered the opportunity to pay off their overdue amounts by providing their own goods (instead of cash) to their creditors along with a small handing fee to LRC.

Instead of returning unwanted products to the creditor, LRC will warehouse all collected items and provide creditors with “offset credits” to the value of the debts owed to them.

LRC will then assist the creditors to redeem these offset credits for product in the LRC warehouse.

The benefits here are obvious:
• The Creditor is paid immediately in already budgeted for goods or services
• The Creditor can spend their offset credits on things they would normally spend cash on; thereby recovering the full value of the debt
• A range of goods and services are available to the Creditor through the LRC exchange making the offset credits more useful than direct acceptance of the goods from the Debtor
• Debt collection and interest costs are eliminated
• Creditor and debtor cash reserves are preserved

Taking into account the numbers of overdue or uncollectible cash debts owed by businesses, the debt collecting benefits of the exchange alone look to make this a profitable venture. “We believe that LRC could facilitate at least $500 million dollars worth of debt relief through goods and services exchange alone in its first year” said Daniel Evans, Chief Executive Officer of XO Limited.

In addition to providing consulting services for the project, the XO Limited barter software has been deployed to keep track of stock, undertake transactional accounting, manage brokerage fees and provide participants with trade payment and statement facilities. The system also handles auto-matching of needs and offers, auto-brokering, automated newsletters, buying and selling via an online marketplace, news broadcasts, listings, and management reporting.

A copy of the projects case study can be found at
http://www.barternews.com/XOCaseStudy2-1.pdf