Corporate Travel Management goodwill under fire as VGI steps up attack

Corporate Travel Management goodwill under fire as VGI steps up attack

“After carefully considering the company’s response, we have increased our short position,” VGI told its investors on Monday.

“With the company’s response not adequately addressing many of our questions, every one of the 20 red flags in our previous presentation continues to concern us.”

VGI said it was now short 2,501,286 shares, worth about $50 million at CTM’s closing price on Monday, and had “significant capacity to increase our short position in the future”.

Short selling is a way of betting that a company’s shares will fall below a certain price. VGI has not revealed the price it has pegged CTM’s shares to fall below.

CTM requested a trading halt early on Tuesday, to remain in place until Thursday, so it could “review and respond to a further report issued by VGI Partners”.

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“It is CTD’s initial view that VGI Partners’ further report raises no substantive new issues,” CTM said in a statement to the stock exchange.

VGI’s latest missive homes in on how CTM used steeply reduced discount rates to test whether a write-down to the level of goodwill on its balance sheet was necessary in 2018.

Quizzed by analysts last week, CTM said the issue was explained by “risk premium and asset betas”, with its cost of equity sourced from an independent third party, which it later said was an unnamed professor from New York University.

VGI said CTM should disclose new cost of equity and the identity of the professor, which it speculated was Professor Aswath Damodaran, a well-known valuation expert who publishes information online on topics including country risk premiums and sector betas.


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VGI said it had contacted Professor Damodaran and he said had “never heard of Corporate Travel Management”.

“Corporate Travel owes the market an explanation of exactly what has gone on here,” VGI said.

The fund also said CTM’s response to its claims that its global footprint had been overstated, uncovering a string of “ghost” and barely staffed offices, was “further misleading investors” and called on it to provide a detailed breakdown of how many of its more than 2750 employees worked in each city it operates in.

CTM said last week it would stop erroneously calling its booking technology “patented”, after VGI raised questions about it.

But VGI said CTM’s statement that it let some patents “expire” when it believed CTM never held any patents in the first place was “not good enough for an ASX200 company, knowing that its credibility is in question”.

The Australian Securities and Investments Commission is understood to be monitoring both CTM and VGI’s behaviour.

CTM’s shares have fallen from $27.64 last Friday to $20 at market close on Monday.

Reporter for The Age

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