CHILDCARE entrepreneurs Eddy and Le Neve Groves have been hit...

CHILDCARE entrepreneurs Eddy and Le Neve Groves have been hit with an $8.6 million lawsuit from Citigroup involving their recent sales of ABC Learning Centres shares.

Documents lodged in Queensland's Supreme Court this week said that amount remained outstanding and painted a conflicting picture with information given to the stockmarket about recent director sales.

No defence had been filed by midday yesterday, but a spokesman for the Groves' said the debt would be paid either yesterday or Monday.

The lawsuit marks Citigroup's third action against high-profile Queensland entrepreneurs. BusinessDaily yesterday revealed actions against the present and past chief executive of funds manager MFS.

The Groves lawsuit comes amid recent hits to shares in ABC, which grew from one centre in Brisbane in 1988 to more than 2300 centres across four countries.

A plunge accelerated in recent weeks to a low of $1.15 after a surprise profit fall, concern about debts and hedge-fund trading.

That plunge triggered margin calls - when a lender demands investors who borrowed to buy shares pay back part of their loan or sell part of their portfolio to cover losses.

The court case listed two such calls.

Citigroup claimed Mr Groves had entered one lending agreement for up to $15 million in March 2004. Dr Le Neve Groves later became guarantor of that loan.

Shares were offered as security with 2.3 million in Mr Groves' name and 4.6 million in Dr Groves' name in the account on February 26.

The stock slumped that day to $1.15, after the profit result release.

So Citigroup said it exercised the right to sell the shares on-market, fetching $1.46 each. But the proceeds did not cover the balance and $3.7 million remained outstanding.

Citigroup and Mr Groves had a second agreement signed on September 2005 for a loan of up to $55 million.

Ten million of Mr Groves' shares were security on February 26, the document states, although this contrasts with earlier statements that Dr Groves' shares would have been the security.

Citigroup said it notified Mr Groves in writing of a margin call that day.

On February 27 Citigroup "agreed not to sell (the shares) on the ASX and instead agreed to sell off-market at $2.10 per share".

This was following a "request" from Mr Groves, although the request's date is not specified.

Mr Groves has said that ABC received a letter from US investment group Morgan Stanley on February 26 at 11pm about selling US assets.

Citigroup said it sold the 10 million shares off-market for $2.10 at an unspecified date, reducing the outstanding balance owed by Mr Groves at March 3 to $4.9 million.

Trading records show a line of 10 million shares at $2.10 each crossed on February 27, before a trading halt was in place. ABC did not confirm if these were the same shares.

The court documents contrast with changes to director shareholdings lodged with the stock market.

On-market sales of Mr and Dr Groves' holdings were recorded as occurring on February 26 -- the day of the margin calls.

But the next changes to Mr Groves' holdings were recorded as having transpired on March 6, with all 12.16 million of these trades being "on-market".

It is unclear why there is a discrepancy with the dates and method of sales.

Dr Groves also was recorded as having reduced holdings on March 6 via on-market trades.

ABC was unable to answer queries by deadline yesterday. Its board has previously said, in relation to other margin lending arrangements, it was satisfied to have fully complied with "all relevant legal and continuous disclosure requirements".