UPDATE: Michael Sainsbury | November 06, 2008
CHILDCARE group ABC Learning has been forced into the hands of receivers and administrators after auditors failed to sign off its accounts, casting a shadow on the future of 100,000 childcare places across the country.The group - which has 38 subsidiaries - has collapsed in a mire of related party transactions and confusion over accounting treatment which has seen it book $2 billion in goodwill to its balance sheet
The company is already under investigation by the Australian Securities and Investments Commission with founder and former chief executive Eddy Groves already interviewed by the corporate cop.
McGrath-Nicol has been appointed receivers and Ferrier Hodgson has been appointed as the voluntary administrator.
Today’s ABC Learning statement to the stock exchange confirmed a news report yesterday by The Australian’s John Durie, which named both Ferrier Hodgson and McGrath-Nicol in the positions that were announced today.
Yesterday’s report in The Australian also named forensic accounting firm PPB as likely to be appointed as an adviser to the federal Government.
ABC Learning chairman David Ryan said he was “disappointed'.
The receivers McGrath-Nicol moved quickly to assure parents that all ABC Learning’s 1200 centres would remain open.
“I would like to assure all parents and staff that following our appointment their local childcare centre will continue to operate as usual,” McGrath-Nicol partner Chris Honey said.
“The interests of children, families, staff and their entitlements are central to our considerations in this process.
“I therefore encourage parents and guardians to continue their support for and relationship with the team at their local ABC childcare centre.
“It is our intention to manage this process smoothly, and avoid disruption to families.”
The childcare chain is the biggest provider of long-term day-care for Australian pre-schoolers, operating 25 per cent of all places.
Its collapse represents a significant headache for the federal Government, the major revenue provider for the company.
Finance Minister Lindsay Tanner said today the government would do all it can to ensure working parents have certainty around childcare arrangements.
"Look, I wouldn't imagine we would be directly running them, but clearly one of the things we've been working through in recent weeks is the prospect of what might happen if this eventuality does emerge,” he said.
"And, clearly, one of the key things we've got to do is make sure that we minimise the disruption to people's arrangements. That's obviously a key focus. I wouldn't imagine that would extend to us directly running centres.
The Australian reported last week that the board of ABC Learning had approached the Government for an injection of funds or a possible buyout.
The federal Education Department is already looking at a range of contingency plans in case ABC collapses.
Yesterday, Deputy Prime Minister Julia Gillard said the Government was closely monitoring developments at the company.
The Government has set up a task force to ensure families are not adversely affected by any changes to the nation's biggest childcare provider.
ABC shares were placed in a trading halt on August 21, when it last traded at 54 cents. It was trading at about $7 in August 2007.
In July, ABC forecast a pre-tax earnings loss of $437 million for 2007/08.
ABC has had a tough year after ructions in financial markets knocked down the value of its assets and forced it to sell parts of its business to repay debt.
In September, the company sold its UK voucher business, Busy Bees Childcare Vouchers, to share registry Computershare for about $191 million.