Australian child care multinational ABC Learning Centres is in a financial crisis that could force the sale of centers around the world.
The financial collapse is a perfect example of why Canada’s federal and provincial governments need to prevent ABC or any other for-profit child care chain from gaining ground here.
In the fall, CUPE helped uncover news that 123 Busy Beavers, a corporation closely linked with ABC, was expanding into Canada, targeting BC, Ontario and Alberta. To date, 123/ABC has bought 11 centres in Alberta.
This week, ABC’s share prices on the Australian stock exchange plummeted nearly 70 per cent, prompting a halt in trading. Investors were concerned about ABC’s borrowing, which has shot up to support its rapid global expansion, and a 42-per-cent drop in profits.
Canadian-born owner Eddy Groves, his wife and several directors have been dumping their stock. Groves sold 8 million of his 20 million shares, and his wife Le Neve Groves sold 11 million of her 17 million shares. One company director sold all his stock.
Meanwhile parents are starting to worry their child care arrangements could be at risk, amid rumours ABC will have to sell less profitable centers. The crisis highlights how corporate acquisition strategies to maximize profits are at odds with providing high quality, affordable, and accessible child care.
According to media reports, possible buyers of ABC’s holdings include a US private equity firm, Australia-based buyout specialists Macquarie Group, and an investment firm owned by the Singapore government.
The news of ABC’s crisis comes as the Ontario Coalition for Better Child Care and the Ontario Federation of Labour are touring the province, with the message “It’s time for public child care.” The tour is calling on Premier Dalton McGuinty to to stop licensing commercial child care, in order to keep 123 Busy Beavers out of Ontario. The two groups are also supporting legislation introduced by NDP MPP Andrea Horwath. Bill 26 would restrict new child care licenses to the not-for-profit sector in the future, while keeping licenses for existing for-profit child care. The legislation may be debated as early as March 6.
The OCBCC/OFL tour has a comprehensive package of useful materials. Stay tuned for a cross-Canada tour by Australian academic Deb Brennan, who has written extensively about ABC learning centres. The tour, organized by Code Blue for Child Care, kicks off in late March.