Troubled online travel agency set for €15.8m refinancing package

TROUBLED online travel agency CNG is preparing a $20 million (€15.8m) refinancing package.

The company, which last month admitted that losses in 2005 had swollen to $23.3m (€18.4m), said it would be looking at using part of the funds on acquisitions in the United States.

Kenmare-based CNG Travel has endured a torrid year starting with the exit of its founder and chief executive Finbarr Power after a boardroom row and culminating in the annual loss.

But CNG yesterday said the refinancing, arranged by US investment bank Merrill Lynch, formed part of a plan to return the company to profits.

The company will retire its existing $10m (€7.9m) in debts and liabilities, while $2m (€1.58m) in working capital will be provided by Merrill Lynch. A further $8m (€6.3m) in financing will be available to fund acquisitions.

“We are delighted to have concluded this refinancing, which now allows us to focus on delivering shareholder value from Tzell Travel Group, our leading US travel company,” chief executive PJ King said in a statement.

“It is gratifying to have our strategic plan for expansion endorsed by a world-class financial institution. We look forward with cautious optimism as we turn a new page in the company’s history.”

Shares in CNG, which plunged nearly 40% on Tuesday, recovered yesterday to finish up 12.5%. But this values the company, whose shares trade on London’s Alternative Investment Market, at just under €10m. It was valued at €96m when it listed in May 2004.

Any acquisition by the company would support Tzell, its last remaining operating business. The company sold off its consumer travel arm to Fexco last year to concentrate on Tzell, which focuses on the corporate travel market. Tzell is expected to make a profit of $8m this year.

An update on current trading is expected at the company’s annual general meeting, which takes place in London tomorrow.