report in the australian

This company is gunna be the death of me. Check this out:

ABC Learning fails in Bid for Cash
Michael Sainsbury | October 22, 2008

BELEAGUERED childcare group ABC Learning has failed in a desperate approach to the federal Government for funds as it attempts to prop up its 1100-centre network.

The debt-laden company, which is responsible for 100,000 long daycare places, relies heavily on government funding and is anticipated to receive $300million this financial year from taxpayers through benefits paid on behalf of parents. ABC, which last month dumped founders Eddy and Le Neve Groves, is facing a looming class action from shareholders and is under investigation by the corporations watchdog. The Australian understands that ABC Learning has made the suggestion to Labor that it use the public purse to help fund its business in a series of discussions under way with the Department of Education.

The deal may have involved the Government injecting funds into the company or buying it outright to avoid any chance of liquidators being called in.

A spokesman for Education Minister Julia Gillard declined to comment on any approaches by ABC for assistance, but said that the Government had been closely monitoring the business, which accounts for about 20per cent of preschool places in Australia.

"At present, ABC Learning Centres continue to provide childcare as normal. The Government recognises that detailed processes are being worked through by ABC at present to provide information to the market and the public," Ms Gillard's spokesman said.

"The Government believes that these processes should be worked through as quickly as possible so that a statement can be made to clarify the situation."

ABC's shares have been suspended from the stock market since September after it failed to lodge its annual accounts.

ABC's shares have suffered a spectacular collapse since last year, falling from $8.62 last June to only 54c when its shares were taken off the market.

Its new auditors, Ernst & Young, have been sifting through the company's books and will restate its accounts for at least the past two years, triggering fears of much larger losses.

Debts from expansion into the US and Britain also saw it fall victim to the credit crisis, which is marking down companies that have borrowed too much.

ABC is believed to be at the centre of an investigation by the Australian Securities and Investments Commission, in which executives have been interviewed. ASIC is investigating how directors dealt with their margin loans and share sales earlier in the year as well as possible breaches of continuous disclosure rules.

Eddy Groves was forced to sell his $40 million stake at a fraction of its value to meet a margin call in February, which set off the short selling.

As well, there was a $600million discrepancy between ABC's forecast of a 15per cent profit made earlier this year and forecast losses of more than $437million. ABC's corporate affairs manager, Andrew Barber, said the company was still "aiming for the end of October" to release its financial results.

Litigation funder IMF is preparing a class action against the company on behalf of aggrieved shareholders who have seen their investment in the group rendered worthless.