ABS a.b.c. learning centres limited

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    Morgan Stanley buys into ABC Learning's US operations
    Email Print Normal font Large font AdvertisementMarch 5, 2008 - 7:04PM
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    ABC Learning Centres will sell 60% of its US childcare business to a private equity firm and use the expected $750 million of cash proceeds from the divestment to pay down debt.

    ABC today entered into a memorandum of understanding with Morgan Stanley Private Equity for the sale of the stake, in a deal that puts a value of $US775 million ($836 million) on the entire US business.

    The transaction will result in proceeds of about $750 million, plus an additional $US30 million payable shortly after 30 June 2009.

    ''Certainly it seems, on the surface, a pretty good deal, in the sense it allows Eddy and his team to fight another day,'' said Paul Xiradis, chief executive of fund manager Ausbil Dexia, adding ABC looked to have got a good price. Ausbil Dexia sold its stake in ABC 12 months ago.

    ABC will lift its trading halt, the company said. The company's shares last traded on February 26, when they sank 43%, or $1.60, to $2.14.

    At a multiple of 14.1 times earnings before interest, tax and depreciation for calender 2007, the asset sale will allow ABC to realise significant value, retain a material presence in an important market and strengthen its capital structure, chief executive Eddy Groves said.

    ''We continue to believe that the US represents a significant growth and return opportunity for ABC,'' he added.

    ''I am delighted that Morgan Stanley Private Equity will become our strategic partner in the US,'' Mr Groves said.

    ''Morgan Stanley Private Equity shares our vision for the business and supports the existing management team to deliver it.''

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