ABC Learning Centres, the Australian-based parent company of the Busy Bees, Leapfrog and TLC nursery chains, lost A$360m of its value in one day's trading. Shares, which peaked at $8.40 last summer, dropped to a low of $1.15, before closing at $2.14.
The company's shares were suspended from trade last Wednesday as it discussed the sale of part of its business.
ABC's founder and chief executive Eddy Groves and some of the other directors sold their own shares to repay loans they had used to finance the business.
In reports in the Australian press ABC has denied that disappointing results, which showed a 42 per cent fall in profits, sparked the share crisis.
Dow Jones Newswires reported that a possible buyer could be private equity firm Bain Capital Partners, which has just bought Bright Horizons Family Solutions for US$1.3 billion (News, 24 January).
It was also reported that ABC's shareholders might sue the company. The website news.com.au said that shareholders who contacted the Australian Shareholders Association were told by them that ABC had defied disclosure laws aimed at protecting investors.
Deputy chairman Stephen Matthews said, 'To me their claim has legs and we would encourage concerned shareholders to contact litigation lawyers.'
- See Analysis, page 11.
