I agree pulling out of 123 sounds like a smart decision from new management who don't have the related party relationships to muddy their decision making (if the 123 'related party' rumor is correct?).
If ABC gets the staff they require at a cost of anything less than the $70 million cost of buying 123 then that's a sensible decision.
As for the media spin on the government 'bailout' and Gillard's 'contingency plans? As a modern politician - relying more on spin than substance - what would you say if asked by a journalist whether you had plans in place in the event of the largest childcare provider in Australia collapsing? Makes a great story...sell some papers too...Who leaks this stuff?
Its a mistake to get 'government contingency plans' and the reality of the business confused. Our press and market speculators work well together through fear in order to make "perception become reality". The perception and confidence of investors has been smashed. We will not know the truth until the company spells it out for us. What is in the press at present is pure headline grabbing speculation. Correct me if anyone knows of a recent 'story' that contains substance rather than hype.
There is no doubt their has been a significant speculative element to the trading in ABC shares. They were flogged around mercilessly, with massive price movements in both directions. It seemed to start after the Morgan Stanley Private Equity capital raising right up until they were suspended.
My understanding is that the company is 70% held by major shareholders, some who bought in very recently. Logic says that one or more of the following is true;
$ they were deceived with ABC's false accounting; or $ they were stupid with other peoples money buying a broken business; or $ they actually knew what they were buying.
NAB Capital was buying in at about $1.50. Morgan Stanley Private Equity Asia bought at a "discount" of $1.15.
ABS Price at posting:
54.0¢ Sentiment: None Disclosure: Held
