Eurotunnel, the company which operates cross-channel train services via the Channel Tunnel, has announced that it has received the go ahead from the French government to have tax losses treated equally in both the UK and France.
The announcement came after the French Ministry for Economy, Finance and Industry confirmed that the Eurotunnel SA group tax losses for the periods 2000 to 2002 may be carried forward for an indefinite period for an amount of EUR890 million.
The company said the news would be a major boost for shareholders as it significantly enhances the success of the near-bankrupt company's restructuring plan.
Following agreements in principle with the UK and France on these arrangements, Eurotunnel said that it should receive formal agreement from the UK tax authorities around the middle of May.
On the basis that the current Exchange Tender Offer is successful, the first use for these tax losses after the implementation of Eurotunnel's 'Safeguard Plan' would enable the generation of savings equal to the amount of the tax charge on the fiscal profits expected in the 2007 accounts, the company stated.
Jacques Gounon, Chairman and Chief Executive of Eurotunnel commented: “All the shareholders who despaired of the states ever taking an interest in Eurotunnel’s situation can now be satisfied. With these carried forward tax losses Eurotunnel will benefit from a significant improvement in its fiscal environment, a clear means of creating added value if the ETO succeeds.”
The Eurotunnel group is currently under the protection of the Paris Commercial Court pending the outcome of its planned share swap which is designed to merge the French and UK incorporated companies, Eurotunnel SA and Eurotunnel Plc, into a new holding company, Groupe Eurotunnel (GET SA).
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