Learning might be the world’s biggest childcare company but it hasn’t
got a clue how to handle public or investor relations if this
morning’s extraordinary general meeting of shareholders is any guide.

Chairman Sally-Anne Atkinson, the former Lord Mayor of Brisbane, was
positively clueless and couldn’t even answer basic questions such as
how much debt the company will have once the $600 million placement is

worse, Sally was unwilling to defer to someone who did know something
when it came to several key questions. For instance, when asked how
much boutique investment bank Austock would pocket from handling the
$600 million placement she claimed not to know because it hadn’t been
finalised yet.

When I complained about having Austock chairman
Bill Bessemer on the board and the recent allocation of a 4.2% stake in
Austock to ABC Learning founder and largest shareholder Eddie Groves,
Sally denied there was any conflict of interest and said Eddie and Bill
never participated in any discussion about hiring Austock. This was
handled by independent director David Ryan who failed to show up this
morning due to fog at Sydney Airport.

Right, so when Austock was paid $16 million for corporate advice and
the $400 million equity raising when ABC Learning pulled together its
great three way merger in 2004, Big Eddie and his old mate Bill had
nothing to do with the negotiations. It was an obvious line, but I told
the board it was time to “grow up” and stop tolerating such 1980s-style
conflicts of interest.

Dressed in a black skivvy and brown jacket, Eddie came across as
someone who hated fronting shareholders and treated them just like he
treats the company’s 12,000 staff – badly. Asked what proportion of
staff own stock to align their interests, Eddie would only say that
half are eligible but no-one could come up with an answer about staff
equity participation. It sounds pretty low, which might partly explain
why their staff regularly sledge the company.

When it came to the various resolution on shares, options and cash
bonuses for the three executive directors – Eddie, his wife Le Neve and
fellow long-term executive director Martin Kemp – I pointed out that
they already owned more than $200 million worth of stock and didn’t
exactly need any more incentive. Why didn’t this incentive scheme
extend to the next tier of executives or is the $2.5 billion ABC
Learning still being run like a three-person private company? We’ll
take it on board, was the mumbled response.

All today’s resolutions were passed easily, so it marks an important
milestone in the company’s evolution because institutions now clearly
control the operation with about 70% of all shares on issue. Therefore,
it’s about time ABC Learning behaved like an outfit that is there to
serve independent shareholders.

Given that Eddie and Le Neve together dumped $32.8 million worth of
shares – 13% of their holding – last December in a classic ASX
announcement that was released at 3.55pm on a Friday, I asked Eddie to
outline his future intentions.

As with every other issue, Eddie was dead keen to avoid answering and
his supine chairman more than obliged when she declared she simply
wouldn’t allow him to answer. When asked the same question, Martin Kemp
was prepared to say that he wanted to keep buying shares and did at
every opportunity. So why didn’t he participate in the placement at
$7.30 a share, which is now underwater with the stock at $7.05? Sally,
after consulting with the company secretary, claimed that he couldn’t
under the Corporations Law. That’s funny, I asked the same question at
the recent Nexus EGM and the chairman said that all directors had
bought $5000 worth of shares in a placement.

After the meeting, Eddie did a rapid-fire runner to the exit where he was confronted by Julian Morrow and a crew from The Chaser.
This is a man who seemingly doesn’t like publicity or
accountability – yet he’s ultimately responsible for the welfare of
more children around the world than anyone else on the planet.

Peter Fray

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