ABS - ABC Learning Centres

[Prospector]

I for one would appreciate it if contributors to this thread could stick to the business of shares and investments. Discussions on marital seperation etc are ridiculous (they have lived in seperate residences for at least 5 years so who cares if it is now official) and nothing but rumour mongering. It seems some on this thread take great delight in sinking the boot in while someone is down. .

Can't agree with you Abyss that this is not relevant. Also, kicking him when he is down - he has brought his shareholders along with him!

Abyss, many of the people in this thread are down themselves, specifically because of how the management team have conducted their business, and because of margin calls on their personal assets, their personal financial arrangements too. When a husband and wife are co-directors of a publically listed company, and are both actively involved in the operations of that company, and they separate which will have impact on the operations of the company, then shareholders have every right to discuss how this will impact on their money.

If you dont want your private life to go public then don't mix the two.

 

[Rainmaker2000]

I agree that it is unfortunate to have such rumour mungering about people's personal lives.......

Whilst it is unfortunate, in this circumstance a falling out or even divorce between these two directors and shareholders may well be something shareholders need to consider....for example, I'm pretty sure when studying bankrupcy law, divorce can be a pretty nice way to segragate assets....I think Bondy may have been acquainted with this....This is just rank speculation of course and we have heard people on this forum testify as to Eddie's diverse asset base so I'm sure everything will be all good

 

[benwex]

"A.B.C. Learning Centres Limited (“ABC”) has entered into a Memorandum of Understanding (“MOU”) with Morgan Stanley Private Equity for the sale of a 60% interest in its US business (“US business”) reflecting a value for 100% of the US business of US$775 million (the “Sale Transaction”). The transaction will result in cash proceeds on completion of approximately A$750 million1, with an additional US$30 million payable shortly after 30 June 2009."

Does this mean ABS is selling 60% of their US operations for a sell price equal to 100% of the total value ( i.e more than what they paid) or a pro rata price based on 100% of the value (break even)???

Good news for ABS IMO..

benwex

 

[mim168]

Anyone dare to predict what might happen tomorrow when trading commence again? I gained $$ last Tuesday,but due to greed brought shares again towards the end of the day....the waiting is torture....

 

[MRC & Co]

Benwex, I gather it means they break-even.

Definately good news for ABS.

Might see a bounce tomorrow (how bigger ballz do the Hedge Funds have?). Will be interesting to find out!

If price moves up on high volume, I might be interested in dipping my fingers in (with a VERY tight stop).

 

[benwex]

If you consider the likes of CNP and AFG, and their pathetic efforts in addressing their growing debt problems (market perception that is) I think ABS management have done very well..

Either that or the underlining business model is good and is attractive because I dont think ABS had a lot of bargaining chips when it came to the negiation table.

The speed and certainty the management have brought to ABS is stunning and E. Groves for all his faults has done a good job IMO..

benwex

PS: holder of course

 

[ROE]

Looks like good news but if I was you I'd look at the 60% that they sold, are they good assets? And the 40%? Are they good stuff or more bad news for ABS down the track?

These private equity guys are very clue and they dont buy crab assets.

 

[michael_selway]

Looks like good news but if I was you I'd look at the 60% that they sold, are they good assets? And the 40%? Are they good stuff or more bad news for ABS down the track?

These private equity guys are very clue and they dont buy crab assets.

Didnt Morgan Stanley gave a lof of Bad Debt Provisions & W/Os?

ABS - Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 36.0 33.2 45.7 54.2
DPS 17.0 17.5 23.0 27.0

Thx MS

Date: 5/3/2008
Author: Fiona Tyndall; James Chessell
Source: The Australian Financial Review --- Page: 61
A deal between ABC Learning Centres and a US private equity house could beannounced as early as 5 March 2008. The listed Australian child care centreoperator is finalising an agreement to offload a stake in its US assets. Theproceeds would be used to repay its debts. There is speculation that US-basedKnowledge Learning or Bright Horizons may be interested in the assets.Meanwhile, Temasek has not commented on claims it has dispatched executives toAustralia to consider the group's 14.7 per cent interest in ABC Learning

Date: 5/3/2008
Author: Vanessa Burrow
Source: The Age --- Page: B3
ABC Learning extended its voluntary suspension on 4 March 2008, claiming moretime is needed to complete negotiations. Founder Eddy Groves is in the US, withadvisors from Goldman Sachs JBWere and Austock, attempting to find a buyer forthe company's 1000 US child-care centres. WeeWunz Corporate Child CareSolutions director, Sheila Ghosh, said companies which offer care through ABCare now beginning to look for alternatives. ABC has corporate child careagreements with groups including Centrelink, Chisholm Institute, CommonwealthBank, ANZ Bank, Holmesglen Institute of TAFE, Singtel Optus, Princess AlexandraHospital, Australia's Department of Defence, Westpac Bank and Tyco

 

[kivvygosh]

Looks like good news but if I was you I'd look at the 60% that they sold, are they good assets? And the 40%? Are they good stuff or more bad news for ABS down the track?

It sounds like they sold 60% of the business which holds all the US assets. Therefore they aren't selling 60% of the individual businesses in their entirely, but are selling a 60% share in every individual business.

 

[investorelse]

Like watching a movie this...
ABS: going about business, hit in the head from behind fell to its knees and had their wallet stolen?
Then given a hand to get back on their feet by an accomplice.

Sorry, Just someone gave me one of those conspiracy movies to watch last night...
just a comment nothing else...

My two cents...Support like this I think it will bounce.

 

[Pimping]

So, I believe that this is a strong company with good fundamentals with strong earnings outlook, I think you could do worse than get some on open today, or should you wait for the profit takers and buy on weakness in the afternoon? decisions decisions?

 

[snabbu]

If you consider the likes of CNP and AFG, and their pathetic efforts in addressing their growing debt problems (market perception that is) I think ABS management have done very well..

<snip>
The speed and certainty the management have brought to ABS is stunning and E. Groves for all his faults has done a good job IMO..

benwex

PS: holder of course

Ah but a good job for who?
Is it a good time to be selling US assets with the Aud high: NO
Is it likely you will get fair value in an emergency asset sale:NO
Given the above why the fire sale: Because they have too can be the only conclusion.
Why do they have to sell the most profitable part of the business?

I suspect the following.
The directors are subject to more margin calls, so to protect themselves they do the following.
(1) Institute a trading halt, stops the margin calls.
(2) Then flog the most profitable part of the business to reduce debts and bolster the share price.
(3) share price rises, margin call risk reduces giving the opportunity to off load shares at a better price.

So in a nut shell what is going on here is the long term profitability of the company and the interests of the general share holders is being white anted to protect the assets of the directors.

I am sure the hedges will figure this out in a New York minute. Perhaps any recovery will be short term. This companies Australian earnings are heavily dependant on government largess I do note the government has recently changed and Swan and Kev are promising lots of pain in the budget.
My fearless footy prediction is that some of that pain may involve child care subsidies.

Regards

Gary

 

[TheAbyss]

Snabbu

In response to your questions,

Ah but a good job for who? For all shareholders given the alternative was a continued downward spiral.
Is it a good time to be selling US assets with the Aud high: NO - Like Eddy had a choice. He had to sell.
Is it likely you will get fair value in an emergency asset sale:Well actually he made a $75 million profit on the 60% he sold so you can hardly call it a fire sale.
Given the above why the fire sale: Because they have too can be the only conclusion. He sold to reduce debt which has been achieved. Whether they can now increase their profit margins is yet to be seen.[/B][/COLOR]
Why do they have to sell the most profitable part of the business? How did you deduce that? The vacancy rates in the US centres are around 62% and 90% for Aus. The australian centres are where the money is the rest is an ego trip.

 

[ROE]

I'm a little confused about this deal...I got to do some digging

Is Morgan Stanley lending ABC the money with the option of converting that money into stocks? So if ABC is not doing too well they said sorry we don't want to covert it into stock, you own us the money.
But if the stock took off, they say well we like to convert it to shares now and share the profit.

 

[Rainmaker2000]

Yeah, ROE, it does not look as if many learned investors have read the finer points of the deal........

As I understand, part of it is a straight sale of 60% but it is also a condition that Morgan signs up for some additional 'convertible notes' which is ABS's form of cheap unsecured debt instead of secured bank debt....I read that the transaction is also subject to some 'guarantees' from ABS which includes that the US centres will perform this year consistenly with company guidance.........since the market was sceptical of company guidance, its hardly a don't worry, be happy scenario.....

 

[Blank1979]

Kohler, Gottliebsen and Bartholomeusz have just released this exslusive interview with Eddy Groves.

It's awesome

http://www.businessspectator.com.au/bs.nsf/Article/KGB-INTERROGATION-Eddy-Groves-CG4L5?OpenDocument

Eddy has a bit of a go at a few people and some big companies on the way too.

 

[ithatheekret]

huge volume today .

I wonder if they'll keep the dividend up . Who knows ( except Eddy ) ?

UK next , then back home for meat and potatoes ?

Back to the drawing board .

 

[nioka]

So in a nut shell what is going on here is the long term profitability of the company and the interests of the general share holders is being white anted to protect the assets of the directors.
Gary

Don't you consider the directors ARE sholders, they are some of the biggest shareholders. Anything they do to protect the assets of the directors is almost certainly in the best interests of other shareholders.

 

[freddy2]

The details of the deal aren't very clear. Deliberately or not the use of 2 different currencies (AUD/USD) obsfucates the overall outcome of the deal (= price paid - price sold). It would be much clearer if the terms of the deal plus what price was originally paid for the assets was done in terms of 1 currency - IMO the currency of whatever debt has been used.

 

[Rainmaker2000]

Eddie makes some pretty solid allegations against Citi.........I'm not sure I've ever heard a story like that one about Citi...another matter for ASIC no doubt..

I actually gathered an ounce of respect for Eddie and at 1.75 at close, may even do some numbers on an ABS investment.......sound like ABS may actually fund some growth with operating cash flows...please talk me out of doing some numbers ROE..surely ABS even has a price..or maybe no...