Singapore’s Temasek doesn’t come off unscathed as it ploughed A$400m into ABC Learning (ASX:ABS), the world’s biggest provider of Child Care Centres, at A$7.30 a share 12 months ago and closed at A$0.69 on 4th Aug 2008 since it executed a debt-funded expansion and its over 1,000 centres in the USA is seeing dwindling enrolment with the global economic crunch.
By Robert Fenner
6th November 2008
(Bloomberg) - ABC Learning Centres Ltd, the world’s largest child care operator, was seized by its lenders after the global credit crisis forced up the cost of servicing its debt, which jumped almost 20 times over a three-year buying spree.
Outside managers from Ferrier Hodgson have been appointed, the Brisbane-based company said in a statement today. Bankers for ABC Learning, including Commonwealth Bank of Australia and Westpac Banking Corp, named McGrathNicol as receiver to 38 divisions of the business.
ABC Learning, which looks after one in three Australian children in day-care through almost 1,100 centres, joins Allco Finance Group as the second Australian company to appoint outside managers this week after being unable to repay debt. Former Chief Executive Officer Eddy Groves, who left the company 30th Sept, borrowed to expand in the US and UK, almost quadrupling the number of centres it operated in 2 1/2 years.
“The board and current management team are disappointed to be in this position despite the efforts of so many staff and the continued support of parents,” Chairman David Ryan said in the statement. “The management team have worked tirelessly over the past few weeks to ensure that families across Australia and New Zealand continue to have access to quality childcare.”
After peaking at A$8.80 in 2006, giving ABC Learning a market value of A$4.8 billion ($3.4 billion), its shares lost 94 percent of their value before being halted from trade in August, when it failed to release earnings.
Debt Balloons
ABC Learning’s total debt at 30th June, 2007 was A$2.2 billion, compared with A$111 million at the end of fiscal 2004. The company hasn’t filed annual results for the 2007/08 financial year.
About 40 percent of ABC Learning’s Australian sales came from government subsidies, while 25 percent came from the US. The Australian government is tipped to spend A$11 billion on childcare services by fiscal 2012. The US government spends about $22 billion on child care subsidies and funding, about 40 percent of all childcare expenditure, ABC Learning said last year.
After starting with 43 centres when it made an initial share sale in 2001, ABC Learning acquired operators in Australia, New Zealand, the US and UK
ABC now has stakes in 2,323 child care centers including 1,000 in the US from its takeover of operators including La Petite Holdings Inc and Children’s Courtyard LLP.
Morgan Stanley
The company sold a 60 percent stake in its US operations to Morgan Stanley in April, and in September Computershare Ltd agreed to buy its UK vouchers business for 90 million pounds ($142 million).
Commonwealth Bank, Australia’s second-biggest lender by assets, said 13th Aug its fiscal 2009 net income will fall about A$100 million after it wrote down the value of listed noted in ABC Learning.
Eddy Groves and his wife Le Neve quit the company in September with Rowan Webb, a former retail clothing executive, appointed as interim CEO.
The Groves’, once the third-largest investors in ABC Learning with a 7.8 percent stake, sold most of their 37 million shares this year as the slumping price prompted margin lenders to demand sales.
By Robert Fenner
6th November 2008
(Bloomberg) - ABC Learning Centres Ltd, the world’s largest child care operator, was seized by its lenders after the global credit crisis forced up the cost of servicing its debt, which jumped almost 20 times over a three-year buying spree.
Outside managers from Ferrier Hodgson have been appointed, the Brisbane-based company said in a statement today. Bankers for ABC Learning, including Commonwealth Bank of Australia and Westpac Banking Corp, named McGrathNicol as receiver to 38 divisions of the business.
ABC Learning, which looks after one in three Australian children in day-care through almost 1,100 centres, joins Allco Finance Group as the second Australian company to appoint outside managers this week after being unable to repay debt. Former Chief Executive Officer Eddy Groves, who left the company 30th Sept, borrowed to expand in the US and UK, almost quadrupling the number of centres it operated in 2 1/2 years.
“The board and current management team are disappointed to be in this position despite the efforts of so many staff and the continued support of parents,” Chairman David Ryan said in the statement. “The management team have worked tirelessly over the past few weeks to ensure that families across Australia and New Zealand continue to have access to quality childcare.”
After peaking at A$8.80 in 2006, giving ABC Learning a market value of A$4.8 billion ($3.4 billion), its shares lost 94 percent of their value before being halted from trade in August, when it failed to release earnings.
Debt Balloons
ABC Learning’s total debt at 30th June, 2007 was A$2.2 billion, compared with A$111 million at the end of fiscal 2004. The company hasn’t filed annual results for the 2007/08 financial year.
About 40 percent of ABC Learning’s Australian sales came from government subsidies, while 25 percent came from the US. The Australian government is tipped to spend A$11 billion on childcare services by fiscal 2012. The US government spends about $22 billion on child care subsidies and funding, about 40 percent of all childcare expenditure, ABC Learning said last year.
After starting with 43 centres when it made an initial share sale in 2001, ABC Learning acquired operators in Australia, New Zealand, the US and UK
ABC now has stakes in 2,323 child care centers including 1,000 in the US from its takeover of operators including La Petite Holdings Inc and Children’s Courtyard LLP.
Morgan Stanley
The company sold a 60 percent stake in its US operations to Morgan Stanley in April, and in September Computershare Ltd agreed to buy its UK vouchers business for 90 million pounds ($142 million).
Commonwealth Bank, Australia’s second-biggest lender by assets, said 13th Aug its fiscal 2009 net income will fall about A$100 million after it wrote down the value of listed noted in ABC Learning.
Eddy Groves and his wife Le Neve quit the company in September with Rowan Webb, a former retail clothing executive, appointed as interim CEO.
The Groves’, once the third-largest investors in ABC Learning with a 7.8 percent stake, sold most of their 37 million shares this year as the slumping price prompted margin lenders to demand sales.
