magellanpetroleumcorporation.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of report (Date
of earliest event reported): September 5, 2007 (August 31, 2007)
Magellan
Petroleum Corporation
(Exact
Name of Registrant as Specified in Its Charter)
(State
or
Other Jurisdiction of Incorporation)
(Commission
File
Number) IRS
Employer Identification No.)
10
Columbus
Boulevard, Hartford,
CT 06106
(Address
of
Principal Executive
Offices) (Zip
Code)
(Registrant’s
Telephone Number, Including Area Code)
(Former
Name or Former Address, if Changed Since Last Report)
Check
the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation
of
the registrant under any of the following provisions (see General
Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
8.01 Other
Events
On
August 31, 2007, Magellan Petroleum
Australia Limited (“MPAL”), the wholly-owned subsidiary of Magellan Petroleum
Corporation (the “Company”) received tax position papers from the Australian Tax
Authority (“ATO”). As previously disclosed, the ATO has
conducted an audit of the Australian income tax returns of MPAL and its
wholly-owned subsidiaries for the years 1997- 2005. The audit focused on certain
income tax deductions claimed by Paroo Petroleum Pty. Ltd. (“PPPL”), a
wholly-owned finance subsidiary of MPAL, related to the write-off of outstanding
loans made by PPPL to other entities within the MPAL group of
companies.
A
copy of
the Company’s press release related to MPAL’s receipt of the ATO position papers
is filed herewith as Exhibit 99.1 and is hereby incorporated herein
by reference.
The
following document is filed
herewith:
(c) Exhibits
|
|
99.1
|
|
Company
press release related to receipt of ATO position papers, dated September
5, 2007.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
MAGELLAN
PETROLEUM CORPORATION
By: /s/
Daniel J.
Samela
Name:
Daniel J. Samela
Title:
President, Chief
Financial Officer
and Treasurer
Dated:
September 5, 2007
EXHIBIT
INDEX
Exhibit
No. Description Page
No.
|
99.1
|
Company
press release related to receipt of ATO position papers, dated September
5, 2007.
|
5
|
Exhibit
99.1
Magellan
Petroleum Announces
Receipt
of Australian Tax Office Position Paper
Hartford,
Conn., September 5, 2007 – Magellan Petroleum Corporation (NCM: MPET; ASX:
MGN) (“Magellan”)
announced that its 100% owned subsidiary, Magellan Petroleum Australia Limited
(“MPAL”), has received tax position papers from The Australian Tax Authority
(“ATO”).
As
previously disclosed, the ATO has conducted an audit of the Australian income
tax returns of MPAL and its wholly-owned subsidiaries for the years 1997- 2005.
The audit focused on certain income tax deductions claimed by Paroo Petroleum
Pty. Ltd. (“PPPL”), a wholly-owned finance subsidiary of MPAL, related to the
write-off of outstanding loans made by PPPL to other entities within
the MPAL group of companies. As a result of this audit, the ATO has issued
"position papers" which set forth its opinions that these previous deductions
should be disallowed, resulting in additional income taxes being payable by
MPAL
and its subsidiaries. In the position papers, the ATO sets out the
legal basis for its conclusions. It is important to note that the
position papers are not assessments of additional taxes.
In
a
comprehensive audit conducted by the ATO in the period 1992-94, the ATO
concluded that PPPL was carrying on business as a money lender and accordingly,
should, for taxation purposes, account for its interest income on an accruals
basis rather than a cash basis. MPAL accepted this conclusion and
from that point has been determining its annual Australian taxation liability
on
this basis (including claiming deductions for bad debts as a money
lender).
Recently,
the ATO appears to have taken a more aggressive approach with respect to its
views regarding income tax deductions attributable to in-house finance
companies. Since this change in approach, the ATO has commenced audits of
a number of companies involving, among other issues, the appropriate treatment
of bad debt deductions taken by in-house finance companies. Magellan understands
that, at this time, while there have been negotiated settlements in relation
to
some of these audits, none of them has reached final resolution in
court.
With
issuance of the position papers, MPAL now has until October 12, 2007, subject
to
possible extension, to respond to the ATO's positions and to state its legal
positions. MPAL has retained the services of experienced Australian
tax counsel, and will also be represented by its Australian tax advisors, Ernst
and Young.
MPAL
intends to respond to the ATO position papers within the required time frame
and
refute the positions taken by the ATO. The ATO will consider MPAL's
response and normally respond within a month. It could then agree with MPAL
that
no tax is due or issue formal assessments for some amount of taxes, interest
and
penalties. MPAL would then have an opportunity to formally object to any
assessments and the ATO would determine its response to MPAL’s objections, which
it could accept or reject, in whole or in part. MPAL then would have
an opportunity to appeal (against any assessment) to the Administrative Appeals
Tribunal or to the Australian Courts. In the period when any such
appeal is being determined, interest will continue to accrue on any outstanding
amounts. However, MPAL may be able to limit the accrual of further
interest by payment of an agreed sum to the ATO (which would be deposited into
an escrow account) until the parties either reach a negotiated agreement or
the
income tax dispute is settled in the Australian Courts.
The
ATO
has indicated in the position papers that the increase in taxes arising from
its
proposed positions would be (Aus.) $13,392,460, plus possible interest and
penalties, which could be substantial and exceed the amount of the increased
taxes asserted by the ATO. If assessments of this amount are issued
by the ATO, and upheld by the Australian courts, such assessments would have
a
material adverse impact on the Company’s financial condition, results of
operations and cash flows.
Forward
Looking Statements
Statements
in this release which are not historical in nature are intended to be, and
are
hereby identified as, forward-looking statements for purposes of the Private
Securities Litigation Reform Act of 1995. These statements about Magellan and
MPAL may relate to their business properties and prospects, revenues, expenses,
operating cash flows, and other matters that involve a number of uncertainties
that may cause actual results to differ materially from expectations. Among
these risks and uncertainties are the ultimate outcome of the MPAL tax audit
by
the ATO, the extent of the recoverable reserves at Magellan/MPAL properties
and
the risk that any wells drilled may fail to encounter hydrocarbons in
commercially recoverable quantities. Any forward-looking information provided
in
this release should be considered with these factors in mind. Magellan assumes
no obligation to update any forward-looking statements contained in this
release, whether as a result of new information, future events or
otherwise.
For
further information, please contact Daniel Samela at (860)
293-2006.