Construction materials specialist James Hardie Industries SE (ASX: JHX) said on Monday that it would appeal a Federal Court decision that ordered the company to pay back taxes of up to $US318 million or $A339 million, owed by its subsidiary RCI Pty Ltd.

The company said that RCI is set to file an appeal to the Full Federal Court of Australia on the September 1 decision by Federal Court Judge Margaret Stone, which upheld an earlier ruling by the Australian Tax Office (ATO) that the James Hardie subsidiary wilfully avoided paying taxes when it transferred ownership of its US subsidiaries offshore in 1998/99.

James Hardie said that while the tax appeal was ongoing, it may be required to record a charge on the back taxes and interests, which could run to as much as $US330.4 million or $A352.3 million had the charge been required by the end of June this year.

Nonetheless, the company maintained that even if the charge should be taken, James Hardie would honour its debt covenants as it noted that ATO is yet to collect any cash from the company, except the RCI quarterly interest due payment of $US168.8 million, until the legal procedures of the tax appeal has been resolved.

James Hardie gave assurance that an update on the matter would be furnished by the company in time with the release of its second quarter results on November 15 and until such time and pending the resolution of the case, the company said that it would have to refrain from issuing comments on the tax appeal.

As of 1118 AEST on Monday, James Hardie shares were trading at $5.57, its stocks retreating by seven cents or 1.24 percent from previous trading sessions.