Punch Taverns could convert to a Real Estate Investment Trust (Reit) – and retain all of its leased and managed pub operations.
The company announced this afternoon that it believed it, and its advisers, had found a way to adopt the tax-efficient scheme while keeping both its leased arm and Spirit Group.
It was previously thought that the company would have to break itself up in order to take advantage of the Reits regime.
In an announcement to the stock market this afternoon, the company said that following lengthy discussion with its advisers and HM Revenues & Customs (HMRC), it had identified a way of retaining both of its pub divisions.
The company said that it would spend the next 12 months exploring the benefits of conversion to a Reit and said a further announcement would be made in due course.
It said: “The benefit of retaining our managed house business is clear and includes the retention of material operational synergies, the opportunity to capture upside from improving performance and maintaining the strategic flexibility to maximise value in the future.
“Punch is continuing to discuss with its advisers and HMRC the feasibility of this structure in light of its operating and financial arrangements, and intends to submit a clearance application to HMRC in the near future.”
The company said that because of efficient utilisation if brought forward tax losses, it did not anticipate being in a “full tax paying position” until the end of the next financial year “at the earliest”.
The company said that while conversion would yield tax benefits, it would involve significant costs to implement.
In a statement, the company added: “Punch will progress this structure in order to create Reit optionality for its shareholders, so as to enable an assessment of the merits for shareholders of conversion to a Reit relative to the current business structure.
“A further announcement will be made in due course.”
