The managing director and editor-in-chief of the Sunday Tribune, Mr Jim Farrelly, has resigned from the company to pursue other business interests.

The newspaper's largest shareholder, Independent News and Media (IN&M), declined to comment last night, but the paper's chairman, Mr Gordon Colleary, said Mr Farrelly had offered his resignation yesterday. Staff will be informed officially today.

A senior executive from IN&M, Mr Michael Roche, has been offered the job as managing director, while Mr Paddy Murray will be responsible for editorial matters.

Mr Colleary said he was "very surprised" to hear Mr Farrelly's decision yesterday but he had to accept it. He denied there was any other reason for the resignation.

When asked about staff suggestions that a disagreement over financial matters was behind the departure, Mr Colleary denied this. "I can categorically say that is not the case.

"The paper is in good shape and advertising is far ahead of our projections," he said. "There is no embarrassment in this. Mr Farrelly is going to pursue his own business plans."

In a statement last night, Mr Farrelly said he would be setting up a media consultancy that would serve several clients, including IN&M.

He thanked everyone he had worked with at the Sunday Tribune over the years for their help and support.

Staff were surprised to hear the news and fearful about its possible implications.

"We have not been officially informed about anything yet, but people are nervous about the whole thing," a senior staff member said last night. "The paper has been doing well, but there is always concern on the financial side."

Mr Farrelly was appointed editor-in-chief more than two years ago after Mr Matt Cooper departed from the paper. He already held the position of managing director.

Mr Colleary said last night that Mr Farrelly had "a lot on his plate" in filling the two roles.

"With a limited number of staff, it was difficult doing those two jobs, particularly in this high-pressure industry," he said.

The paper, while loss-making for most of its existence, has been making some circulation gains in recent years. Its last ABC circulation figure in the six months to the end of June last year was 87,026, up from 80,095 in the comparable period in 2003.

Despite circulation gains, the paper has continued to perform poorly in financial terms. In its last set of accounts, for the year to the end of June 2003, the paper posted a pre-tax loss of more than €2 million and accumulated losses of more than €30 million.

Turnover in the year fell from €12 million to €10.9 million.

IN&M, which holds a 29.9 per cent shareholding, also provided the paper with loans of €2.2 million during the period.

The loans were secured against the title, trademark and other intellectual property of the paper. In effect, it means that IN&M provided more than €180,000 a month in financial support to the newspaper.