CTM shares plummet

SHARES in Corporate Travel Management slumped more than 27% when the ASX opened this morning, as investors reacted to the negative report by hedge fund VGI Partners (TD Mon).

Trading opened at $20.01, down $7.63 on the closing price last Fri, but buyers emerged after a conference call with analysts where CEO Jamie Pherous insisted it was “business as usual”.

However after a bounce back up to more than $24, as TD went to press today the price had dropped again to $21.45 - equating to a paper loss for Pherous of $127 million.

CTM shares had been in a trading halt since Mon, pending a response from the company to the damning VGI report which made allegations of accounting irregularities and “ghost offices”.

Pherous stressed that VGI had a significant “short” position in CTM stock, meaning it was set to benefit from a slump in the company’s share price.

The CTM response (TD breaking news) acknowledged that the company needed to keep its website updated with office locations, but Pherous also explained that in some cases small offices in various countries enabled the company to access VAT benefits for clients as well as utilise local fares.

The company also said it would no longer use the term “patented” in relation to its proprietary technology, but on the more substantive accounting issues raised by VGI, CTM comprehensively rejected claims it had misstated figures in relation to revenues, receivables and cash.

Pherous reiterated previous guidance which forecasts underlying EBITDA of $150 million for the current financial year.

Speaking at the CTM Annual General Meeting today Chairman Tony Bellas said the report “does not take into account the company’s excellent performance record and continued successful execution of strategy.

The company also confirmed Bellas, who had been set to retire, would remain as acting Chair in light of the “need to maintain stability”.