AIB, Rabobank and Royal Bank of Scotland, are believed to have sought meetings to discuss events The dispute is potentially hugely damaging for Payzone, writes Ciarán Hancock, Business Affairs Correspondent

At 8.30pm on Tuesday evening, Payzone chief executive John Nagle received an e-mail on his Blackberry informing him that he was being dismissed from his €400,000 a year job with immediate effect.

He was offered 12 months' pay as compensation. The e-mail also stated the Payzone's board members, with the exception of chief financial officer John Williamson, had unanimously agreed to the dismissal.

Williamson was also removed from his post. Within six weeks of beginning work together, Nagle and Williamson had fallen out with their chairman Bob Thian, who has a reputation as a heavy-hitting corporate troubleshooter in the UK, in the most spectacular fashion imaginable.

Payzone was formed by the merger of Irish electronic payments group Alphyra, which Nagle founded and was privately owned, with UK ATM operator Cardpoint, a listed company that Thian had led since 2006.

It was effectively a reverse takeover. The business was to be based in Dublin with Alphyra having day-to-day control of the business.

The company would be listed in London with Cardpoint holding a majority of positions on the board. The deal was originally viewed as an exit mechanism for Alphyra shareholders, particular its largest backer, Balderton Capital. Formerly known as Benchmark and led by Irishman Barry Maloney, Balderton had wanted to cash in its chips for some time.

It was five years since the company was taken off the stock market and while Alphyra's business was performing well, relations between Nagle and Maloney were strained.

The merger was designed to give Balderton, Nagle and others an opportunity to take some money off the table.

Unfortunately for them, stock markets globally collapsed. Payzone's listing was caught in the swell created by the US sub-prime crisis. Buyers for the stock were thin on the ground and plans by Balderton and Nagle to offload shares were put on ice.

In an affidavit before the High Court in Dublin, Nagle describes his dismissal by e-mail on Tuesday night last as "bizarre" and "extraordinary".

Nagle said it became clear to him earlier this week that there was "a conspiracy underfoot" under which his dismissal would be announced as "a fait accompli" with maximum damage to his reputation.

In a statement to the stock exchange on Wednesday morning, Payzone chairman Thian said: "John Nagle and John Williamson have created a strong platform for growth at Payzone but the company has now reached a stage of its development where a different set of skills is required.

"There are a number of excellent managers at Payzone and I look forward to working with them to realise the great potential of this business."

This statement hardly seems credible given the effusive praise heaped on both Nagle and Williamson in the admission document sent to shareholders in mid-October.

Representatives for the company told the High Court yesterday that it would defend the claims being made by Nagle and Williamson.

In his affidavit, Nagle, claims Thian is pursuing "a personal agenda" to deflect attention from the underperformance of Cardpoint and to "transfer blame" to Williamson and Nagle.

In a letter sent to Thian, Nagle referred to how he was accused last week of being "a bully boy ceo" and was told that a board meeting would "put manners on me".

Nagle said he "utterly rejected" that the company has any "real or serious" concerns about his management of Payzone's affairs.

In his affidavit, Nagle said he had personally spearheaded Alphyra's growth from 1997 to becoming Europe's largest cash acceptance network. Its machines are found in most retail shops in Ireland where chip and pin payments are made at the counter. His own shareholding in Payzone was valued at £15 million.

Nagle said it had become increasingly clear from last September that Cardpoint was not going to meet its projected earnings. Those earnings fell in October and November, while Alphyra's budgeted earnings remained unaltered.

Nagle wrote to Thian on January 14th concerning a dispute of that date between himself and the board about the shortfall.

He explained his refusal to take part in an investor "road show" for potential institutional investors on the grounds that it would be misleading given the shortfall in earnings of Payzone.

Thian sought to characterise his concerns as an attempt to "sweep away" the non-executive directors and much of the Cardpoint organisation, he said.

Five of the seven directors of Payzone are non-executives based in the UK.

Four were nominated by Cardpoint and one by Balderton, which has supported the decision to remove Nagle and Williamson.

Nagle told Thian he was not interested in "raking over" past matters and wanted to focus on the best interests of Payzone going forward. The next day, he received the e-mail telling him his employment had been terminated.

He e-mailed Thian stating that he had not been validly dismissed but received no response.

Nagle and Williamson argue that the board meeting to consider their removal was not properly convened and the terms of their contracts have not been honoured.

The dispute is potentially hugely damaging for Payzone. Some of its lenders, who include AIB, Rabobank and Royal Bank of Scotland, are believed to have sought meetings to discuss the chain of events.

Payzone has debts of about €300 million.

Thian flew in from the UK to assume the reins at Payzone, arriving at the group's Sandyford head office in a taxi to a cool reception from staff.

Nagle owns about 10 per cent of the business and Williamson has about 2.5 per cent.

Nagle has been with Alphyra since day one, while Williamson was part of the management buyout in 2003.

They are not going to give up their posts without a fight. That said, it is clear that Balderton and other shareholders, and a majority of the board want shot of the pair.

It's a case of who blinks first.