from ninemsn news....
Government announces 22 million dollar ABC bailout
7/11/2008 2:00:00 PM
Deputy Prime Minister Julia Gillard has announced that the government will spend $22 million to keep ABC Learning Centres operating until the end of the year.
Gillard added that early findings from investigatons by ABC's administrators showed that some 40 percent of the company's 1200 childcare centres are not making a profit.
The news comes as Australian banks revealed they are owed $760 milliion by the collapsed childcare giant.
Commonwealth Bank of Australia Ltd (CBA) confirmed on Friday it has a debt exposure to childcare operator ABC Learning Centres Ltd of around $240 million, taking the total confirmed exposure of the major banks to an estimated $762 million.
Toy wholesaler Funtastic Ltd also said on Friday its earnings could be adversely affected by ABC going into voluntary administration and receivership.
CBA said its senior debt exposure to ABC, which was placed in receivership and administration on Thursday, was around $240 million.
But the bank also holds 4.456 million ABC hybrid notes, with a carrying value of about $220 million, following an $100 million write down of the value of the notes earlier this month.
ANZ bank said on Thursday ABC owed it $182 million, Westpac Banking Corp said it had a credit exposure of about $200 million, and NAB confirmed a $140 million exposure.
Meanwhile, Funtastic said one of its subsidiaries, Judius Pty Ltd, had a contract with ABC's subsidiary, ABC Developmental Learning Centres Pty Ltd, for the supply of child care products to ABC centres in Australia, New Zealand and the United States.
The toy company, whose brands includes The Wiggles and Power Rangers, said the ABC's receivership could have an adverse impact on its earnings.
"The appointments of receivers and voluntary administrators to ABC Learning and certain of its subsidiaries could have an adverse effect on the earnings of Funtastic for the year ending December 31 and potentially future years' earnings," Funtastic said.
"It is also possible that the potential effect could be material."
Funtastic said it was not possible yet to quantify the potential effect, or to assess how material it might be.
Funtastic said its board had decided to conduct a detailed review of its exposure to ABC.
Funtastic expects to enter discussions with ABC's receivers and administrators to continue the contractual arrangements with ABC Development Learning Centres.
The receiver of ABC, Chris Honey of McGrathNicol, has assured parents that all of ABC's 1200 childcare centres in Australia and NZ will remain open.
The federal government says it's in talks with the company's creditors to keep the centres operating.
ABC Learning has 16,000 staff who care for more than 100,000 children across Australia.
Is this leftlunacy govt trying to go the way of USA with all the bailouts of failing businesses. Surely we have other essential services that need taxpayer money to keep them viable especially in the light of terrorism etc. Services such as Police, Fire Brigade and Hospitals.....etc... ABC childacre was a private business, and the owner of this made sure he made his millions of dollars before fleeing overseas. The news services were big on promoting him as an entrapreneur and lauding his centres in the media, with no regard to the struggling child care centres who were losing business and money because of the ABC centres. Why does the govt not prop up these other centres instead of bailing the ABC out of millions if not billions of debt owed to banks...and where are the banks going to get this lost money from?.... the people who invest their money for their futures. Before we know it, our stupid moronic leaders will be bailing out finance institutions just like the fanny and freddie debacle. Where does it all end? Why not put a system in place where business can only expand when it has the proven finances to do so.