Packaging group Smurfit Kappa is asking its bond investors for permission to stop making financial reports that conform with US accounting rules, part of the company's wider cost-cutting efforts.

Smurfit Kappa is offering bondholders an immediate payment equal to 1% of the face value of their holdings, in return for their permission to file financial reports which conform to European standards.

The request applies to more than €400m worth of Smurfit Kappa bonds issued in March this year and due to mature in 2015.

While bondholders' acceptance would cost the company more than €4.1m in immediate expenses, Smurfit Kappa hopes to save millions of euro in accounting reconciliation costs over the next eight years if the request is approved.

The company joins a growing number of European firms which have calculated that the added expense of delivering dual accounting reports outweighs the benefits of their appeal to US investors.

European companies' accounting and reconciliation costs have risen sharply in the US since 2002, when the Sarbanes-Oxley (Sarbox) Act dramatically increased the scope and depth of information required to be reported to the Securities and Exchange Commission (SEC). Collectively, European companies are estimated to pay as much as €800m annually.

While Smurfit Kappa's bonds are not listed on US exchanges, its covenants with bondholders require it to file accounts to US GAAP standards with the SEC every quarter.

The company has issued $200m worth of dollar-denominated bonds, which trade on the Dublin and London exchanges, many of which are held by American institutional investors.

Smurfit Kappa filed a "solicitation of consents" notice with the US SEC yesterday, offering bondholders €10 for every €1,000 principal amount of bonds held in return for permission to file International Financial Reporting Standards semi-annual and annual reports.

Such reports are already prepared by the company to meet Irish and London stock exchange requirements.

The solicitation, if successful, would also relieve the company of the costs of filing its reports with the SEC; instead, such notices would be delivered directly to the bondholders' trustees. Smurfit Kappa's offer is scheduled to expire on October 26th, but can be extended at the company's discretion.