Enterprise confident of Reit conversion
Enterprise Inns expects to get the go-ahead to convert to tax-efficient Real Estate Investment Trust (Reit) status.
Britain's second biggest tenanted pubco said that as it did not operate any managed houses, it believed there was scope to convert to a Reit without demerging.
The conversion would involve the setting up of a new operating company, which would take an intermediate lease over the freehold pub estate from Unique Pub Properties.
To convert to the lower taxes of Reit status, 75% of revenue must come from rent with most of the profit being distributed to investors.
Enterprise's tax advisors, Ernst & Young and KPMG, have been in ongoing discussions with HM Revenue & Customs (HMRC) regarding a potential Reit conversion.
A statement said: "In August 2007 we submitted to HMRC a detailed briefing paper outlining a restructuring of the entire Group based on the Unique refinancing proposals.
"Following a meeting with HMRC in September we made a formal Code of Practice 10 submission to HMRC on 18th October 2007 requesting confirmation of our analysis of the Group's eligibility to join the REIT regime.
"Our tax advisors and lawyers, CMS Cameron McKenna, are all of the opinion that the restructuring we are proposing should enable Enterprise Inns plc to elect into the REIT regime if the Board decides to recommend this."
Since October, Enterprise has provided HMRC with additional information and HMRC is seeking legal advice concerning the grant of the intermediate lease.
"Once they have received this advice, we hope that HMRC will be able to provide a swift response to the Code of Practice 10 submission.
"A further announcement will be made in due course."
Enterprise said it would not push ahead with plans to raise £750m of additional debt it outlined in May last year due to the "current volatile and uncertain conditions in the debt markets" but it will pursue this course if the market improves.
