By Ayesha de Kretser and Sarah Thompson
Corporate Travel Management will miss its self-imposed end-of-month deadline to return to the ASX because overcharged customers have not agreed to its 18-month payment terms.
The company – which The Australian Financial Review’s Street Talk column revealed entered safe harbour at the end of May – now faces the prospect of being delisted if it does not produce properly audited accounts by August 31.
“Given this company’s record and how the disclosure to investors has been so far, I don’t hold out much hope for good news,” said Wilson Asset Management portfolio manager Oscar Oberg, who added that the “silence had been deafening” since the last update.
In late May, Corporate Travel asked lenders at HSBC, Commonwealth Bank and Westpac to allow it to access debt facilities to make £95 million ($180 million) in repayments to customers, which it planned to release in stages over 18 months. But people briefed on the matter, who requested anonymity given the sensitive nature of the discussions, said Corporate Travel has still not convinced its customers to agree to staggered payments.
Shares in Corporate Travel stopped trading in August after Deloitte – which took over from long-time auditor PwC – uncovered discrepancies in accounts dating back years, delaying the release of financial results.
But Corporate Travel’s woes have progressively worsened – and its cash reserves have been run down – since its shares were first suspended 10 months ago and forensic auditors from KPMG started combing through its European accounts.
In November, Corporate Travel revealed it had overcharged the British government £80 million and would need to repay the money. By April, that ballooned to £128 million, with the board admitting it had known about the overcharging issue for at least four years.
Jamie Pherous, who founded Corporate Travel and led it on to the ASX in 2010 as its chief executive, stepped down in February. At the same time, the company assured investors it would come to an agreement with officials in the United Kingdom and produce signed-off accounts, allowing it to begin the process to resume trading by June.
But when KPMG’s forensic audit concluded, Corporate Travel also admitted it had known about the overcharging issues since 2022, prompting the corporate regulator to launch an investigation into whether directors had breached continuous disclosure obligations.
The Australian Securities and Investments Commission had initially granted Corporate Travel a waiver to lodge its accounts late last August, but the regulator’s chairman, Sarah Court, told a Senate inquiry last month that no further extensions would be granted.
Court also confirmed ASIC was investigating whether Corporate Travel directors breached their duties and disclosure obligations. Under listing rules, the ASX could delist the company if its accounts for the last financial year are not lodged within 12 months of the first deadline, or by August 31.
Before it can ask the ASX to reinstate trading, Corporate Travel needs auditors at Deloitte to sign off its accounts for the last financial year, as well as its restated historical accounts.
Highlighting the interdependency of the steps it must now trace to resume trading, Deloitte cannot sign off those accounts unless it is satisfied that Corporate Travel will remain solvent for 12 months. Its solvency remains dependent on agreement with lenders and customers around maintaining liquidity.
The ASX needs to review the audit process before agreeing to any resumption in trading, a spokesperson for the exchange confirmed.
The company’s largest investors including WAM, Bennelong Funds Management and ECP Asset Management, have largely written down their holdings in Corporate Travel since its shares were suspended at $16.07.
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