Giant Australian child-care provider collapses under debt

Nov 6, 2008, 4:47 GMT

   Sydney - Australia's cash-strapped ABC Learning Centres Ltd called in the receivers Thursday after banks it owed 1.3 billion Australian dollars (910 million US dollars) called in their loans.

   ABC, founded by South African-born Eddy Groves, was the world's biggest provider of child care before incurring so much debt in a global expansion programme that it was marked out long ago as a likely casualty of the current credit crisis.

   Groves, who last month severed his links with ABC, was forced by margin calls to sell all his holdings. Some of the shares he unloaded were picked up by Singaporean sovereign wealth fund Temasek Holdings, now the biggest investor in the crippled company.

   Temasek's stake stands at 14.6 per cent in a company that has halved in value since May.

   Groves built the business from 25 centres in 2000 to 2,300 spread over Australia, New Zealand, Britain and the United States. Some are in the process of being sold.

   His estranged wife, Le Neve Groves, has also been obliged to sell all her shares and is suing her husband for millions of dollars in compensation. Earlier in the year, the pair held 8 per cent of the Brisbane-based company.

   'Centre staff, parents and children are, and will remain, our priority,' a statement from the company said.

   Receivers McGrathNicol said ABC stock could still be traded despite the company being in voluntary administration.

   'I would like to assure all parens and staff that following our appointment, their local child-care centre will continue to operate as usual,' the receivers said in a statement.