This article is from the Australian Property Journal archive
The month of May is turning into a time ASX listed education and property group ABC Learning Centres would rather forget with its share price falling a massive $1.72 in the past two months.
ABC started May at $7.75, but in the 22 subsequent days its shares have dipped to $6.83 down 34 cents – or 4.7% – at the close of trade yesterday and a long way of its March high of $8.55.
Overall, more than 40 million shares have been traded – or more than 10% of the companies stock since the beginning of May.
The company’s market woes began after a $600 million capital raising, which saw 82 million shares added to its register at $7.30.
ABC reassured the market that the capital raising would have a minimal effect on earnings per share for this financial year.
It stated: “Australian earnings remain on target to meet market expectations. Learning Care Group, Inc. in the US is trading slightly ahead of budget, with the integration progressing well.”
Share punters and analysts were not convinced and soon after they began to shed the company’s stock.
Several days later, ABC publicly brawled with the Victorian government in the Supreme Court, over a runaway toddler from one of its child care centres.
The Supreme Court rejected ABC’s argument that criminal blame over the runaway, who was found outside its child care centre, should rest only with individual child-care workers, rather than the company.
"A young child who was neither properly protected nor adequately supervised got out of an ABC centre into the surrounding streets, where he was exposed to potential harm," Justice Kevin Bell declared.
ABC had appealed over a $200 magistrate’s court fine for a breach of Victoria’s Children’s Services Act.
"A young child who was neither properly protected nor adequately supervised got out of an ABC centre into the surrounding streets, where he was exposed to potential harm," Justice Bell said.
The case severely dented ABC’s public image and it didn’t improve after a recent 60 Minutes report.
But not learning from its most recent Court outing, ABC is preparing for yet public stoush once again in the Supreme Court, concerning the power of Victorian authorities to investigate alleged breaches in care standards at two centres in East Melbourne and Bendigo.
In its quest to further expand and acquire Kids Campus Limited, the Australian Consumer and Competition Commission, forced ABC to divest five child care centres thus not allowing the aggressive child care centre owner and developer to create a monopoly in certain regional areas.
ABC currently owns over 755 child care centres in Australia in all states and territories. KDS owns or manages around 91 child care centres across Australia.
According to the ACCC, the acquisition of long day child care centres “can affect competition on a local basis”.
"The ACCC considers that this undertaking is necessary to ensure that prices for long day child care services in these areas do not rise as a result of the merger and that, in particular, parents in regional areas continue to have a choice of long day child care services for their children", ACCC chairman, Graeme Samuel said recently.
With all that has happened in the past three weeks it’s little wonder the marketplace remains visibly cautious about ABC’s immediate future.
By Ted McDonnell
