Plus SMS shares plunge after boardroom blood-letting

Shares in text messaging company Plus SMS plunged 77 per cent today after the company came out of a two-day trading halt with an announcement of resignations of key executives and board members.

The company's shares went through a dramatic rise over 2004 and last year from 4c in October 2004 to 80c by November 2005 but the plunge has been almost as spectacular.

The stock started to fall sharply in March, and the company received a "please explain" from the stock exchange in May, but today's plunge was more precipitous down 26 cents to 8 cents. The company announced a trading halt on Wednesday.

Today the company said the board changes were "part of a strategic review and restructuring".

Garry Donoghue had resigned as an executive and member of the board and had agreed to give back all of the shares beneficially held by him in the company.

The statement said Mr Donoghue the company had not achieved its goals and objectives, "and he believes it is in the best interests of the shareholders for him to resign and return the shares to the company".

Former chairman Jim Bracknell had resigned "to pursue other interests".

George Brooks of GCG Consulting had been appointed chairman and said: "The company has made what in hindsight appear to be a number of unrealistic statements."

He said the company had no prospect of revenues this year.

Jock Irvine and Christopher Tiensch remain as directors.

After his appointment in June as chief executive Mr Tiensch instigated a strategic review which had identified a number of issues with contracts negotiated and previously announced by the company.

Mr Brooks said the contracts would be reviewed individually and examined in light of the company's growing knowledge and newly assembled expertise in the field, and re-negotiated where necessary.

He said the board was taking a number of pro-active steps to secure the company's future, including: identifying opportunities to diversify revenue streams; appointing a new management team, led by Mr Tiensch.

The establishment of an operations centre based in the UK to support the international exchange of messaging and content services was a priority, Mr Brooks said.

Mr Tiensch said that in addition to pursuing the current business plan, Plus SMS was investigating a range of alternative revenue streams which can be implemented over the next year.

Mr Tiensch said he was positive about the commercialisation potential of the Plus SMS concept and the company would continue to pursue its ambition to list on the AIM Market of the London Stock Exchange.

"We've secured the ongoing commitment and support of cornerstone shareholder Hewon Capital Limited to support our future growth and we have the benefit of a world-class global advisory board.

"The directors, advisory board, and our partners remain optimistic about the potential of this business concept, but we are realistic about the challenges and difficulties of realising its potential, and the time it will take to do that."

Plus SMS shares began to fall earlier this year after news filtered out that high-profile investor Craig Heatley had drastically cut his stake.

In May, Plus SMS announced it had secured financial backing from Jersey-based investment company Hewon Capital with a $5m up front cash injection of 10 million shares at 50c per share.

It has the option to a further 70 million shares at 50c each, with exercise periods ranging between 10 and 20 months.

The Isle of Man-based company joined the stock exchange's alternative market, the NZAX, in July last year, in a back-door listing using the shell of failed Christchurch retail management group RetailX.

Its business is based on enabling companies to run global text message campaigns and competitions using single codes.

At one stage Plus SMS was capitalised at over $276 million.

Its market value was regarded with some scepticism among professional investors, especially since it recorded no revenue and made a $4.8m loss in the last financial year.

- NZPA