Resignation sparks 10% drop in CNG

SHARES in CNG Travel dived 10% to new lows yesterday after the Kenmare-based travel reservation group’s chief executive resigned unexpectedly.

CNG shares fell to 30p on London’s Alternative Investment Market (AIM) on the news, more than 70% off the 103p at which the company floated last May.

Chief executive Finbarr Power, who also set up the company and retains a stake of almost 14%, quit yesterday after a disagreement with the rest of the board came to a head last week.

Mr Power told the Irish Examiner he had stepped down to pursue other interests and that he was considering making a bid for the Business-to-Consumer (B2C) division of CNG.

Chief operating officer PJ King steps in to take over from Mr Power for the time being. Mr Power’s resignation came a month after chief financial officer Ronnie Culliton quit.

Speaking after the company’s AGM, which took place in Dublin yesterday, chairman Luke Mooney said the board disagreed with Mr Power’s view of the B2C division and had adopted a strategy of focusing on its Business-to-Business (B2B) interests.

Mr Mooney said the company had failed to achieve the scale necessary to succeed in the B2C sector and that its B2C interests would be sold. The company has already received several expressions of interest in the division.

Mr Power was suspended on Friday after he made it clear he could not remain as chief executive while considering a bid for a substantial portion of CNG’s business. The company delayed making this public until yesterday, after taking legal advice, while discussions over Mr Power’s formal resignation continued.

Neither side disclosed whether Mr Power received a lump sum payment as part of the deal, but Mr Power said he had no immediate plans to sell his CNG shares and that he believed in the viability of the B2C business. “There’s huge value in this business and it has a lot of potential,” he said.

The company has disappointed since it went public and issued a profit warning last week.

Full-year results which were released in March showed pre-tax losses soared last year from €1.25m to €4.54 million. This despite a 15% increase in revenues, which came in at €45.5 million.

The B2C division has suffered from a pick-up in the American economy, which made it easier for hotels and travel operators to sell their offerings directly and without the need for intermediaries like CNG. America accounts for the bulk of CNG’s business.

CNG responded by beefing up its B2B operations. Mr Power maintained yesterday that he hoped to repeat his success in bringing CNG to the market by doing the same with its B2C unit.

He added that CNG was still in a good position and that he was “delighted” to have been involved with the company. “I wish CNG well in every regard, because it’s my baby,” he said.