CTM shares gain on response to short selling attack

SHARES in embattled Corporate Travel Management (CTM) regained ground as investors apepared to shrug off a renewed attack from short-seller VGI Partners.

Corporate Travel Management managing director Jamie Pherous goes skiing

SHARES in embattled Corporate Travel Management (CTM) regained ground as investors apepared to shrug off a renewed attack from short-seller VGI Partners.

The Brisbane-based travel empire founded by rich lister Jamie Pherous gained 8.45 per cent to $21.70 as of 9.28 am after it came out of its second two-day trading halt in two weeks.

CTM, which helps business staff travel globally, has since last week been under attack by Sydney-based VGI, which makes money off stock prices falling.

VGI raised a series of “red flags” against CTM including that it operated phantom offices, inflated profits and falsely claimed technology patents.

The travel company refuted allegations in the main, while admitting to some errors such as office locations not being updated. “Corporate Travel did not overstate (profit) results and did not mislead the market,” the company said.

But VGI renewed its attack on CTM on Monday night, in a 52-page response to the travel business’s initial rebuttal. The stock has fallen more than 20 per cent since the initial attack.

CTM has hired advisory group EY in an attempt to blunt VGI, which has increased its short postion by 500,000. It now had a short position worth $50 million. Among new issues raised by VGI was CTM statements that a Glasgow office had 73 employees. VGI said it only saw 20 employees there last Friday.

It said even with the company’s London office having 100 staff, it was difficult to see how CTM could stack up its overall numbers of 2750 full-time employees. CTM should split out employee counts for each city worldwide, it said.

In a response filed to the ASX this morning, CTM said VGI has a “fundamental misunderstanding of the corporate travel sector and CTM business model.”

“VGI may continue to make mischievous and misleading claims about issues that CTM believes have no consequence for the financial performance of the business,” it said.

Commenting on specific issues raised by VGI, CTM said there was no need for it to make an impairment of its North American business and its accounting standards were in accordance with those set by the Australian Accounting Standards Board.

In reference to its office network, it said CTM “has a global footprint that includes physical offices and virtual offices.”