ABS - ABC Learning Centres

hangseng said:

Well done, great to see and I couldn't agree more.

Australia needs more Eddy Groves, willing to quite simply have a go and to back themselves doing so.

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I also agree. I had a heated discussion with my wife in the car this morning. She described him as a "sleazy ba****d who makes money off of kids" but I think he simply took the opportunity that was there - if the government weren't going to provide more child care facilities then they would have to come from private enterprise. I'm sure Eddy Groves is not going to be destitute any time soon though and I'm sure he'll be doing something else in the near future.

buffettologist said:

You still have to credit eddy groves for starting up a business from scratch and building it into an empire. Although his finance skills may not be top notch he's still regarded as a top business manager in Australia. I'd hate to see him leave and start up another child care centre.

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Top business manager in Australia !! You are not insulting the real top managers - i hope. In what parameters of top business manager? What was the life cycle of his business ? What is the difference between a gambler and him then who did not have any plan b for him or his share holders ? If he is top then what is the definition of incompetency ?

If you really see his investment pattern and postings in this forum - there was never a consistency in his buying own shares for long time. Condolences for him but sorry in business sentiment and kindness are always rolled over by realities. Eddie has lost the confidence of his share holders excepting few top persons like himself.

Sorry but let us not protect failures who by their action have ruined thousands of families in street.

Miner said:

Top business manager in Australia !! You are not insulting the real top managers - i hope. In what parameters of top business manager? What was the life cycle of his business ? What is the difference between a gambler and him then who did not have any plan b for him or his share holders ? If he is top then what is the definition of incompetency ?

If you really see his investment pattern and postings in this forum - there was never a consistency in his buying own shares for long time. Condolences for him but sorry in business sentiment and kindness are always rolled over by realities. Eddie has lost the confidence of his share holders excepting few top persons like himself.

Sorry but let us not protect failures who by their action have ruined thousands of families in street.

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You are targetting the wrong person. Eddy bought shares in ABC in good faith and a belief in the company he founded. He wasn't the one that decided to target the shares and short the crap out of them....the hedge funds have "ruined thousands of families in street" not Eddy Groves.

A man of good faith does not go massively into the dark night of margin loans

He had a rash belief in the company he founded making him mega wealthy fast as possible, that is clearly his modus operandi buying millions of shares in various parcels last year on borrowed money. Why otherwise would he do that?

He was the one who put his shares, the company and its investors at perilous risk by leveraging their purchase on such a scale in a market heading downwards and when the credit crunch had already been triggered. He should have known better.

Eddy Groves is the responsible party here. No use passing the buck.

hangseng said:

You are targetting the wrong person. Eddy bought shares in ABC in good faith and a belief in the company he founded. He wasn't the one that decided to target the shares and short the crap out of them....the hedge funds have "ruined thousands of families in street" not Eddy Groves.

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hangseng said:

You are targetting the wrong person. Eddy bought shares in ABC in good faith and a belief in the company he founded. He wasn't the one that decided to target the shares and short the crap out of them....the hedge funds have "ruined thousands of families in street" not Eddy Groves.

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I do not see how going short really pushes the price down?

No different to how going long does not push the price up.

It was a margin call which forced a huge amount of stock to be dumped on market, which THEN forced the price down.

ABC boss says centres will not close
SMH
March 9, 2008 - 11:16AM


ABC Learning Centres Ltd founder Eddy Groves has sold his entire stake in the childcare empire, but says the business is solid despite its financial crisis.

On Thursday, Mr Groves offloaded almost all of his shares - 12 million at $2.14 apiece - after margin calls were made on his holdings.

He was left with only 3,186 ordinary shares, worth $4,683.42, in the company he had built up from a single childcare centre in Brisbane 20 years ago.

Mr Groves returned to Australia on Friday after selling 60 per cent of the company's US assets.

He today attended the annual conference of Australian and New Zealand directors in Brisbane, where he was expected to reassure staff their centres would not close.

Prior to the conference, Mr Groves told reporters he had sold all of his shares.

"My stake as of right now is I have no shares in ABC," he said.

"Unfortunately, you know, that's what's happened in amongst this process."

But Mr Groves said staff and parents with children in the centres should not link the company's financial crisis to its day-to-day running.

"I think there's a lot of interesting things that are happening out in the share market today, and I don't know if they have too much relationship to what a business is actually doing," he said.

"At the end of the day this is very solid business, we've been here for 20 years, I think we'll be here for a lot longer than that, and really I don't think there's too much link between the share price and the strength of the operating business."

Mr Groves said Australian centres would "absolutely not" close.

"When you have fear and frenzy in a market place it can do amazing things, and I've seen amazing momentum and a negative sentiment gathered in the last two weeks, and I think that's something that's, you know, a bit sad," he said.

"At the end of the day, there's 16,000 people in Australia and New Zealand that rely upon us doing a good job and we have done a good job."

Mr Groves also denied reports that he was trying to sell his basketball team, the Brisbane Bullets.

The Sunday Mail newspaper reported Mr Groves tried to sell the club last week, but the deal fell through.

Mr Groves said he received offers for the team at the end of every season, and had not considered them.


This was in SMH this AM, how would Groves leaving the company affect the shares/company?

mim168 said:

ABC boss says centres will not close
SMH
March 9, 2008 - 11:16AM


<snip>

This was in SMH this AM, how would Groves leaving the company affect the shares/company?

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The price will go up provided they appoint someone good. I guess it's up to the Singaporeans what happens next.

Cheers

Gary

vida said:

A man of good faith does not go massively into the dark night of margin loans

He had a rash belief in the company he founded making him mega wealthy fast as possible, that is clearly his modus operandi buying millions of shares in various parcels last year on borrowed money. Why otherwise would he do that?

He was the one who put his shares, the company and its investors at perilous risk by leveraging their purchase on such a scale in a market heading downwards and when the credit crunch had already been triggered. He should have known better.

Eddy Groves is the responsible party here. No use passing the buck.

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Can you state you name:
ED: Eddy Groves

Can you state your title:
ED: CEO/MD

Can you explain what CEO and MD stand for:
ED: Chief Executive Office/Managing Director

Chief Executive Office, there is no other higher person
running the company so I can safely assume the buck stop
with you?

ED: Yes

Enough said.

ALL STOOD UP IN A HOPE THAT THERE WILL A SHARE SURGE ON MONDAY( SADLY DJ FALLING INDEX ON FRIDAY WILL PROBABLY POUR WATER ON HOT WISHES)

Nevertheless there are very few CEO who have the gutts to get such a standing ovation like Eddie (I am not condoning his action on my personal capacity however).


Groves gets standing ovation at meeting
Posted 4 hours 50 minutes ago
Updated 4 hours 37 minutes ago


Personal toll: Eddy Groves arriving for the meeting today (AAP)

Map: Brisbane 4000
Embattled businessman Eddy Groves has received a standing ovation from directors and staff of ABC Learning at a company meeting in Brisbane.

The group's founder also reassured them that the firm was safe and would be around for another 20 years despite the recent financial turmoil that led to the sale of 60 per cent of its US assets.

Heading into the meeting at the Brisbane Convention and Exhibition Centre, Mr Groves said he had paid a heavy personal toll to get the childcare empire back on track.

"My stake as of right now is I have no shares in ABC [Learning]," he said.

"It's disappointing but at the end of the day my focus is always going to be ... on this company and the children and the families and the people in that room and the staff that work for us."

Despite claiming he no longer owns ABC Learning stock a company spokesman says Mr Groves still has about 3,000 shares.

Fundamentally there's nothing wrong with the business, mums and dads will continue to send their love ones to child care centres and ABC will continue to make money, the share price will eventually reflect this.... one year from now people who bought in now will be those who didn't will

Great to see a diversity of views even at this late stage......people still even rooting for Eddie as a 'top manager' and man in good faith.....that's what's so good about the internet...

Quite simply, ABC is game over as an investment if what people suspect about the terms of the convertible notes are true........game over.....period...of course ABC centres will keep making money but what will that have to do with shareholder returns...

Untill there is full disclosure of regarding these notes, ABS can not even be seen as a speculative investment, as there is absolutely no certainty over issued capital

Summary of this thread ...
JP morgan does not know what a good investetment is and buys 750 Mill of crap.
A solid business means nothing unless shareholders like it...
LOL
This event is a result of those who have the power to manipulate the makert regardless of the shareholders
so what if the market does not like debt ATM it was the market that drove the price not eddie.
oneday the market will like the debt just not today...

vida said:

A man of good faith does not go massively into the dark night of margin loans

He had a rash belief in the company he founded making him mega wealthy fast as possible, that is clearly his modus operandi buying millions of shares in various parcels last year on borrowed money. Why otherwise would he do that?

He was the one who put his shares, the company and its investors at perilous risk by leveraging their purchase on such a scale in a market heading downwards and when the credit crunch had already been triggered. He should have known better.

Eddy Groves is the responsible party here. No use passing the buck.

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I agree. Eddy Groves probably could have gotten very rich slowly but instead risked going bust to try and get rich fast. If he actually enjoyed what he did, like many business owners do, the first option is a no brainer. Quite simply greed, arrogance and no understanding of finance/risk caused this disaster. The investments banks love it when guys with these traits show up, easy pickings.

prawn_86 said:

I do not see how going short really pushes the price down?

No different to how going long does not push the price up.

It was a margin call which forced a huge amount of stock to be dumped on market, which THEN forced the price down.

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So then why did the hedge funds bother to short unrepentently, literally forcing a margin position which in turn supported their short position?

The shorting was occurring in a big way before the margin call, tripping stop losses on the way and providing further downward momentum and panic in a market made for shorters.

'Free' and not so open market at work. But it makes the market function so we are all happy, right? What I would like to know is how did they know his margin position? I would be a cynic to think the same lender or one of it's traders let this information slip now wouldn't I?

hangseng said:

So then why did the hedge funds bother to short unrepentently, literally forcing a margin position which in turn supported their short position?

The shorting was occurring in a big way before the margin call, tripping stop losses on the way and providing further downward momentum and panic in a market made for shorters.

'Free' and not so open market at work. But it makes the market function so we are all happy, right? What I would like to know is how did they know his margin position? I would be a cynic to think the same lender or one of it's traders let this information slip now wouldn't I?

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Yeh, I think you got this one wrong prawn.

Any buying (long) is going to push price up. Vice-versa, selling (shorting, i.e. selling borrowed stocks) is going to push the price down. Supply and demand.

Hangseng, I heard Eddy came out before all the shorting, saying he had a margin loan and said the hedge funds will never "get him". Arrogance? Sounds like it! Leant a BIG lesson, NEVER challenge the hedge funds, especially with a margin loan and a shaky, high debt company. Its like a pack of vultures seeing a weak lamb stuck in the mud. They are going to eat him alive!

Assuming the $600 million tranche of exploding convertible notes is true and it dilutes the earnings per share at a worse case scenario say 50%, ABS is still trading at a forcasted 2008 earnings yield of 10% and 2009 earnings yield of 15-20%, and the share price is around 2/3 of its book value even with the diluted number shares on offer.

buffettologist said:

Assuming the $600 million tranche of exploding convertible notes is true and it dilutes the earnings per share at a worse case scenario say 50%, ABS is still trading at a forcasted 2008 earnings yield of 10% and 2009 earnings yield of 15-20%, and the share price is around 2/3 of its book value even with the diluted number shares on offer.

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You would have to wait until the deal with the private equity group is spelled out. The assumption from that article was that ABS may have issued exploding convertable notes to them.

Well i believe there is at least one very disgruntled ABC stakeholder who rumour has it would like to have a quite word to fast eddy, This guy relies on the kindness of the ABC learning staff to keep him from having to pan handle outside city offices & scour the city for scraps,he is worried that if the ankle biters dont get their milk & tuna sandwiches neither will he.keep an eye on today tonight & a current affair as the street corner tip is a 6 figure amount for his story has been sent to his agent, none other than the ubiquitous max markson(aca) & ex long bay client harry m miller(tt)...tb

tigerboi said:

Well i believe there is at least one very disgruntled ABC stakeholder who rumour has it would like to have a quite word to fast eddy, This guy relies on the kindness of the ABC learning staff to keep him from having to pan handle outside city offices & scour the city for scraps,he is worried that if the ankle biters dont get their milk & tuna sandwiches neither will he.keep an eye on today tonight & a current affair as the street corner tip is a 6 figure amount for his story has been sent to his agent, none other than the ubiquitous max markson(aca) & ex long bay client harry m miller(tt)...tb

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look out this guy means business!i reckon he could run ABC better than fast eddy...slash costs on the food to the rugrats & refloat as the XYZ non learning centres,how to roll up the rugrats pre schools & screw the average punter as you leverage your **** so tight you wouldnt get a tally ho in your crack!however eddy was shown what a dose of humility is all about it is the banks that own your **** if you go being a mug lair at a clever 31 centres to a 1000+ all on someone elses money & used that leverage in an attempt to make himself fat cat eddy,look out when machine gun pussy cat gets him!as i said previously next cab off the rank,blabcock & brown!...talk about furious bum covering going on there.the best expansion is organic it sets the company up much better & the punters can rest easy...tb

MRC & Co said:

Yeh, I think you got this one wrong prawn.

Any buying (long) is going to push price up. Vice-versa, selling (shorting, i.e. selling borrowed stocks) is going to push the price down. Supply and demand.

Hangseng, I heard Eddy came out before all the shorting, saying he had a margin loan and said the hedge funds will never "get him". Arrogance? Sounds like it! Leant a BIG lesson, NEVER challenge the hedge funds, especially with a margin loan and a shaky, high debt company. Its like a pack of vultures seeing a weak lamb stuck in the mud. They are going to eat him alive!

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Yes evidence everywhere of the shorters hitting the stop losses which creates the rapid downward momentum. Especially CFD providers who know where the CFD traders stop losses are.

I agree that Eddy would have been better not to even talk about it. If you are going to bluff about your position, be prepared.