ABC Developmental Learning Centres
In 1988, Groves and his subsequently estranged wife, Le Neve, opened a childcare centre in suburban Brisbane, having previously concluded that childcare was a universally "needed service" much like milk distribution. Run as a franchise model, their centres quickly became successful, expanded quickly, with bank finance from St George Bank of $20 million by 1993 and listing on the Australian Stock Exchange (ASX) in 2001. They both held a 14.9% share in the company worth $2.5 billion at its peak, making Eddy Groves one of Australia's richest people at the time, according to Business Review Weekly.
However, in February 2008, with the share price falling rapidly, both Groves and his wife had to sell their entire shareholdings in the company because of margin calls by banks who had lent against the value of the shares. The fall in the share price was caused by a 42 per cent fall in net profit, and rumours that the company was in default of its lending covenants.
Even though Groves stated to the ASX that ABC had complied with its financial obligations, there was concern that several directors had sold shares in the days leading up to the announcement, before the price fell, and that Groves had not fully revealed the effect that the stock losses would have on the business through the effect of margin calls by lending partners. At the end of February 2008, the ASX was reported to be watching activity closely.
Groves and his wife left the company in September 2008.
On the 6th November 2008, ABC Learning Centres Ltd voluntarily appointed administrators for the ABC Group.
As of 10 November 2008, Eddy Groves and ABC is estimated to owe the main banks in excess of $1B with the Federal Government appointing a forensic accountant to go over the books, due to incorrect financial reporting. The Federal Government has given ABC childcare financial security to keep operating to the end of December 2008. After this it will be seen whether the company will be closed or sold off.
Read more about this topic: Eddy Groves
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