ABS - ABC Learning Centres

[drsmith]

The financial accounts must be an absolute horror story given the ongoing delays in their release.

When finally released it will make for interesting reading.

 

[UMike]

Well while I can't provided an online link it has just been announced (FOX business) that ABC is in the hands of the receivers.

 

[Aussiejeff]

ASX ANNOUNCEMENT 11.22am Thu 6 Nov 2008
A.B.C. LEARNING CENTRES LIMITED (“ABC”) (ASX:ABS)
APPOINTMENT OF VOLUNTARY ADMINISTRATOR

The Directors of ABC (ASX: ABS) (ABN 93 079 736 664) today announced the appointment
of Peter Walker and Greg Moloney of Ferrier Hodgson as Voluntary Administrators of ABC
and a number of its subsidiaries pursuant to Section 436A of the Corporations Act 2001.

The action was taken following the Directors careful review of the company’s future.
ABC Chairman, Mr David Ryan, said “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. 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”.

Subsequent to the appointment of administrators to ABC, the company’s banking syndicate
appointed Chris Honey, Murray Smith and John Cronin of McGrathNicol as receivers of the
companies set out in the attached schedule.

Trading in ABC’s securities will remain suspended.

Media Enquiries should be directed to:
Angus Trigg Jo Collins Michael Cave
Gavin Anderson Gavin Anderson Ferrier Hodgson
0413 946 708 0423 029 932 0409 647 910

All Investor and Creditor enquiries should be directed to the Administrators office:
Ferrier Hodgson
Tel: 07 3831 4833
Fax: 07 3831 3862
E: abcenquiries@fh.com.au

Matthew Horton
Company Secretary
A.B.C. Learning Centres Limited

-----------------------

Good luck to those of you who still hold in this dead duck.

Who's next to fall?

 

[Aussiejeff]

Ironically, this also today -

-------------------

Federal Government won't run ABC Learning centres if it collapses
AAP
November 06, 2008 11:18am


THE Federal Government will not be involved directly in running the centres owned by the nation's biggest childcare provider, Finance Minister Lindsay Tanner says.

Debt-stricken ABC Learning says it is in discussions with stakeholders, including banks and the Federal Government to secure the future of its operations.

It said all of its 1200 childcare centres in Australia and New Zealand were continuing to operate as usual.

The Government has said it has contingency plans ready should ABC be placed in receivership.

"I wouldn't imagine we would be directly running them,'' Mr Tanner told Fairfax Radio Network.

"Clearly one of the key things we have got to do is to make sure we minimise disruption to people with arrangements.

"We can't allow a situation to emerge when there's thousands of families around the country that depend on their childcare is suddenly taken away and no alternative.''

---------------------

OK Mr Tanner. ABC is now in receivership.

What are the Government's secret "contingency" plans?

 

[integrity]

Said only half tongue in cheek as I fully expect it to form part of this "government's plan" (is that a contradiction in terms?) ...

Mr Swan will triumphantly announce that ABC child care centre workers will be able to go down to their local Centrelink office and receive paments equivalent to what they were earning with ABC ... to keep the child care centres running of course ... no mention of how current asset test rules will affect said worker's ability to receive such payments ... until government announces it is a work in progress and contingency plans are being drawn up to prevent said poor working famileis from suffering at the hands of un-Australian speculators and short sellers. No word will be made of how the children of said families (and every other Australian child) will pay the future tax bill being placed on the government's credit (nay debt) card.

 

[rajeev]

Doen anybody know what does happen to the share holding in case of Recieverships/volutary administration. the shares become 0 value? if anybody knows how these things work?

 

[prawn_86]

Doen anybody know what does happen to the share holding in case of Recieverships/volutary administration. the shares become 0 value? if anybody knows how these things work?

Once the banks and other lenders have been paid out then shareholders get the leftovers (if any). If the banks do not get enough back then ordinary shareholders will recieve 0

 

[derty]

Mr Swan will triumphantly announce that ABC child care centre workers will be able to go down to their local Centrelink office and receive paments equivalent to what they were earning with ABC ...

Given what child care workers are paid, this is probably a cheaper alternative than them receiving unemployment benefits :

Good luck to all holders - I'm not surprised though, margins are incredibly fine in childcare, even with the govt's childcare bonus, and servicing their debt with those margins was a very optimistic proposition.

 

[ROE]

Doen anybody know what does happen to the share holding in case of Recieverships/volutary administration. the shares become 0 value? if anybody knows how these things work?

just assume you get nothing when the company fold, it nearly impossible for share holder to get anything back because the asset backing worth very little
when it comes to a fire sale... Most of those sell goes to secure creditors, then bond holders, invoice payment etc..

share holders is the last in line so expect nothing.
just take it as a risk of doing business/investing when company fold and learn
from those lessons and never repeat the same mistake

 

[skc]

There used to be some providers out there that let you transfer to them the title of zombie or dead shares for a nominal sum so that it allows you to claim a capital loss before everything like liquidation is sorted out. You also pay an admin fee and forfeit any eventual payout (if any)

Does anyone know any names of such? I can't recall any names and couldn't google any.

 

[Julia]

Said only half tongue in cheek as I fully expect it to form part of this "government's plan" (is that a contradiction in terms?) ...

Mr Swan will triumphantly announce that ABC child care centre workers will be able to go down to their local Centrelink office and receive paments equivalent to what they were earning with ABC ... to keep the child care centres running of course ... no mention of how current asset test rules will affect said worker's ability to receive such payments ... until government announces it is a work in progress and contingency plans are being drawn up to prevent said poor working famileis from suffering at the hands of un-Australian speculators and short sellers. No word will be made of how the children of said families (and every other Australian child) will pay the future tax bill being placed on the government's credit (nay debt) card.

This suggestion will soon be reality, not tongue in cheek at all, Integrity.
There seems to be a widespread expectation that we taxpayers will bail out ABC Learning. When this happens I hope there will be a demand from the taxpayers funding such a bail out to know the exact terms. At the very least it should be a short term loan at market interest rates.

 

[chops_a_must]

This suggestion will soon be reality, not tongue in cheek at all, Integrity.
There seems to be a widespread expectation that we taxpayers will bail out ABC Learning. When this happens I hope there will be a demand from the taxpayers funding such a bail out to know the exact terms. At the very least it should be a short term loan at market interest rates.

It'll be funny if the government employs the workers on exactly the same terms.

Could be a bit of a "ruh-roh" moment, given a lot of the workers will be getting paid below award wages.

Would be good for parents to pay full price though. Can't see that happening...

 

[Julia]

The company should never have been allowed to become effectively a monopoly. If the ACCC had been doing their job the current position would not have meant that a bail out is probably necessary in view of the lack of alternative child care centres.

 

[awg]

the recievers sure will have a job on their hands. are they pro-bono?

i laughed when Roger Clime said they may be worth 19c per share.

even my amateurish FA could see they were worth < 0c

that is correct...cash flow will not cover operating expenses, including interest.

the real killer is they have vastly overinflated the value of their properties.

the only possible alternative I see, is the shareholders and ALL unsecured creditors will take a complete loss. The secured creditors will take a huge bath, even if they dont get sued for lending to insolvent, I would hate to be the former auditor!

The only way they can keep the doors open, is to short term lease to a willing operator, with the requisite expertise, and by God I would be driving a hard bargain.You need requisite licences to run child care

One thing I can say for sure, most people wont work for nothing, so unless the liquidator has access to a complete debt holiday, he wont have the funds to pay wages, let alone accrued entitlements....u can be absolutely sure the previous management would have left the operating account in a pillaged state..hence the liquidation.

value of all childcare operations will be severely reduced cause of this (hopefully temporary)

 

[drsmith]

According to an article in The Australian, one person familiar with the company described the accounts as a "complete mess" and an "absolute disgrace".

 

[integrity]

I see the government is giving ABC $22mil to keep the centres open.

http://www.news.com.au/business/story/0,27753,24613676-462,00.html

I must admit I am somewhat surprised. Given the tax the government (to be fair - taxpayer) receives on every litre of fuel, they could have made all of this back, and then some, by making the employees go to Centrelink to pick up their pay rather than through their pay checks. No vision, no vision at all ...

 

[grace]

I've been in the bush too long it seems.

Actually, I went to uni with Simon Green, the audit partner at Pitcher Partners responsible for the ABC audit in past years.

No matter how large or small the audit firm was, all auditors must apply the same stardards. One can't use the excuse that you took on something too big for your firm to handle I'm afraid.

Oh dear, Simon is in deep ... I think. He was quite bright at Uni too!

Don't think the old professional indemnity insurance will be big enough for this one!

 

[Julia]

I see the government is giving ABC $22mil to keep the centres open.

http://www.news.com.au/business/story/0,27753,24613676-462,00.html

I must admit I am somewhat surprised. Given the tax the government (to be fair - taxpayer) receives on every litre of fuel, they could have made all of this back, and then some, by making the employees go to Centrelink to pick up their pay rather than through their pay checks. No vision, no vision at all ...

The announcement from the government is very vague.
Should we assume this is a loan, to be paid back in the final wash-up?

And isn't a government bail out of ABC Learning setting a dangerous precedent for other failed companies? Maybe this needs to be a separate thread.

 

[awg]

I have been following this story fairly closely, ever since I decided NOT to invest.

But i do own CBA, so I am still somewhat appalled, as they have a large unsecured loss awaiting.

not to mention a taxpayer - $22m

thing that strikes me, is the similarity to ENRON.

Even tho I didnt follow that very closely, I seem to remember, the principles got canned for booking up profits that were manipulations, third party deals, improper account and audit practice, misleading lenders and shareholders.

ABC has allegedly done all these things (IMO)

If proved, the ir(responsible) parties should be jailed, absolutely no doubt at all in my mind.

they jail shoplifters and welfare cheats for $10k.

Can understand various parties will do all they can to prevent companies failing, for obvious reasons, but there surely has to be better accounting standards to protect investors ( or the existing ones were not followed)

the thing that annoys me more than anything is I didnt short the bejesus out of the stock, like plenty of others did, but I was just a beginner then and didnt short ( i just didnt buy an obvious dog)

 

[grace]

Anyone got a list of the Centres the Receivers wish to sell by any chance? Have emailed the receiver.......

Anyone heard anything?