Temasek's Aussie investment goes under
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Childcare operator ABC Learning Centres goes into receivership
By SIOW LI SEN
(SINGAPORE) A Temasek Holdings investment Down Under has gone under - a victim not just of the credit crunch but also dubious management.
Childcare operator ABC Learning Centres said yesterday that it has gone into receivership and appointed voluntary administrators to help clear a mountain of debt.
Reports are emerging that founder Eddy Groves, who was ousted in September, ran ABC's operations in such an 'opaque' way that potential rescuers find the business model hard to decipher.
ABC has also been attacked over related-party transactions. Mr Groves' former brother-in-law had a A$170 million (S$174 million) maintenance and renovation contract for ABC's childcare centres, and the service company lists its principal place of business as Mr Groves' Brisbane apartment.
Reports yesterday said the directors of ABC - the largest childcare centre operator in Australia and second-largest in the US - has appointed Ferrier Hodgson Group voluntary administrator.
Temasek Holdings is ABC's second-largest shareholder. In May last year, the Singapore investment company spent A$401.5 million or A$7.30 a share on a 12 per cent stake. Then early this year - as the stock sank - Temasek increased its stake to 14.7 per cent. This has since been pared to 12.68 per cent, after ABC completed an A$82 million equity placement in June.
Temasek Holdings spokeswoman Myrna Thomas said yesterday: 'We note the serious development announced by ABC Learning Centres. We are monitoring the situation closely and will explore all options available to us.'
Lazard Asset Management is ABC's largest shareholder with 12.93 per cent, followed by Temasek, then Morgan Stanley.
ABC said the company's banking syndicate has appointed advisory firm McGrathNicol as receiver, AP reported.
ABC chairman David Ryan said the company's board and management are 'disappointed' to be in this position but that quality childcare will continue. The company has almost 1,200 childcare centres in Australia and New Zealand, and more than 1,000 in the US, as well as more than two dozen nurseries in Britain.
ABC's debt on June 30, 2007 was A$2.2 billion, up substantially from A$111 million at the end of fiscal 2004.
The company, which gets a large proportion of its revenue from Australian government childcare subsidies, has delayed filing annual results for its latest financial year.
The government is in talks with creditors about ABC's future and has set up a task force to consider contingency plans to protect families that use the childcare service.
Potential buyers have been put off by the company's opaque management, after going through its books.
The Australian Financial Review newspaper said on Wednesday that instead of developing its own centres, ABC paid a company called 123 Global, run by former ABC executive Don Jones, to buy land, build centres and run them until occupancy rates were up, before selling them at a multiple of earnings.
But ABC could claw back liquidated damages if occupancy rates fell short, booking these as profits. In 2006, Mr Jones was running 123 Careers, which outsourced ABC Learning Centre staff. He paid a fee to ABC for a 10-year contract, which ABC front-loaded with payments over three years.
ABC is also said to have bought a toy distributor for A$5 million, loaded it with contracts to supply ABC Learning Centres, and then sold it for A$46 million.
Trading in ABC's shares has been suspended since Aug 21 as the company worked to resolve its debts. The shares last traded at 54 Australian cents.
extracted from the business times
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when the business times dated?
i know about this issue about 1- 1.5mth ago that it gona be broke!
somehow the recent sales of temasek assets, i found quite fishy.
maybe they are also trying to de-leverage. and then.....
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Originally posted by reyes:
when the business times dated?
i know about this issue about 1- 1.5mth ago that it gona be broke!
somehow the recent sales of temasek assets, i found quite fishy.
maybe they are also trying to de-leverage. and then.....
i think they are selling off assets to feature a "profit" in their financial reports, and to again some liquid assets, after their failed investment in the banks
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sighs......
not many Singaporeans know about it, they've all been hoodwinked by the Puppet Master and Marionette Master.
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'A Temasek Holdings investment Down Under has gone under..'
lol
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it saddens many of us to see T. losing on their widely publicised investments. Ever wondered what investment process is there in place before the investments were made. Hopefully it is not soo-kah soo-kah based on stomach feeling type!
Sigh.
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Originally posted by Daddy!!:
it saddens many of us to see T. losing on their widely publicised investments. Ever wondered what investment process is there in place before the investments were made. Hopefully it is not soo-kah soo-kah based on stomach feeling type!
Sigh.
i'm sure they would at least make use of the ouija board they have in the ceo's office.
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Originally posted by reyes:
when the business times dated?
i know about this issue about 1- 1.5mth ago that it gona be broke!
somehow the recent sales of temasek assets, i found quite fishy.
maybe they are also trying to de-leverage. and then.....
7 nov 2008 -
llike that also can??? wah... who ever dunno that is ABC got problem mean they are part of it too lah.. so clear got something wrong and no one make noise about it...
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Originally posted by reyes:
i know about this issue about 1- 1.5mth ago that it gona be broke!
next week in singapore snowing or typhoon? -
Temasek never do risk assessment before they invest? Or their risk tolerance very high, go geylang dun wear helemt one....
If got how come they invest what lose what... so suay arh? Ho CHING I suggest u go pray guanyinma. -
What is the probability of a normal investor investing in a random firm in Australia ?
Ans : 1/1200 = 0.083%. ASX has 1200 listed companies.
What is the probability of a listed company going bankrupt in Australia?
Ans : Less than 1% (inflated figure made easy for calculations)
The probability of an investor investing in a company going bankrupt in Australia would be close to 0.00083%. Chances of winning top prize in 4D is 0.01%, which is about 10x more probable than buying into a soon to be bankrupted ABC company.
So tell me, how can Temasek staffed by Singapore's brightest and most well paid individuals identify such an 'unique' investment and lose $500mil? Shouldn't the board of directors (i.e the cabinet ministers, PM, MM etc) question such performance publicly? Show the taxpayers that corrective action is done and such incidents would be minimized in the future? Otherwise, is there a point in paying these people over inflated salaries or even let them retain their jobs if the performance is so pathetic?
Really? What's going on?? Temasek tak boleh.
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Originally posted by whiskers:
Temasek never do risk assessment before they invest? Or their risk tolerance very high, go geylang dun wear helemt one....
If got how come they invest what lose what... so suay arh? Ho CHING I suggest u go pray guanyinma.
The risk tolerance can be high because the investment does not involve their personal money. -
The fault is due to the attitude that relentlessly throwing big money overseas will bring big return over the longer term, if not every investment being successful - it is hoped that big success will happen to a few to cover the larger loss.
It seems that the government agencies are more meticulously diligent in vetting the business proposals put up by enterprising Singaporeans then that given to their big ticket investments overseas.
Here in this SgForums, we have diehard SG noisy pussy blaming Oz for the poor performance of our investment downunder.
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What long term investment?
ABC has sunk and is relying on A$22 million from Aussie govt to keep classes going till the end of the year.....
This company collapse barely a year after Temasek bought in......great investment analysts we have.......how much bonus shall we pay them with our Singaporean money?
How much bonus should Madam Ho Ching get this year?
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Honest mistake.
Let's move on.
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in fact temasek failure is not without reason.
They just simply buy over a company which they deem profitable or with potential to earn profits over a period of times. not running the company.
this is very different from Buffet berkshire harthaway in which some investment are made by restructing the company into a profitable one.
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Originally posted by reyes:
in fact temasek failure is not without reason.
They just simply buy over a company which they deem profitable or with potential to earn profits over a period of times. not running the company.
this is very different from Buffet berkshire harthaway in which some investment are made by restructing the company into a profitable one.
You mean Temasick tikam tikam ah?
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tikam tikam most of the times can get a sweets at least mah.
temasick get lotsa bad debts instead.
haha.
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Originally posted by googoomuck:
You mean Temasick tikam tikam ah?
Paid so much to tikam?
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it is a mistake that no one from temasek will ever need to take responsibility. they never need to, dont have to.
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Irony of it all?
The investment is a "Learning Centre" .
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Originally posted by reyes:
in fact temasek failure is not without reason.
They just simply buy over a company which they deem profitable or with potential to earn profits over a period of times. not running the company.
this is very different from Buffet berkshire harthaway in which some investment are made by restructing the company into a profitable one.
not exactly a wrong approach, they've already showed themselves to be quite destructive when managing temasek. maybe someone decided to do things that way to make sure their "investments" as a form of insurance to at least make sure their investments don't need to earn, just don't lose as much can liao to counter the ceo.
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They should hv known that the aussie are from the down Under. Paid so much damn think tank scholars using our tax payers' fund for what???
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The accounts of ABC Childcare have been likened to the Mary Celeste because both are shrouded in mystery.
Anyway, the issue is so serious that the Federal Education minister had to step in.