[March 05, 2008] ABC Learning rescue gets cool reception in Australia Tweet (Associated Press WorldStream Via Thomson Dialog NewsEdge) MELBOURNE, Australia_Debt-laden international childcare operator ABC Learning struck a deal to sell 60 percent of its American business to Morgan Stanley, but investors in Australia reacted coolly to the deal Thursday. Analysts said the 750 million Australian dollar (US$695 million; ?460 million) lifeline from Morgan Stanley's private equity arm would steady ABC Learning Centers Ltd. in the short term, but key questions remain about the business. The company's shares nose-dived last week after ABC Learning shocked markets with a 42 percent fall in half-yearly profit, wiping more than 40 percent off the share price and more than A$750 million (US$700 million; ?470 million) from the company's market value. ABC Learning, the largest childcare center operator in Australia and second-largest in the United States, halted trading Feb. 27 in its shares while it urgently sought help from potential buyers. ABC Learning brokered a deal on Wednesday with Morgan Stanley's private equity unit, with the money for a 60 percent stake in its U.S. operations to be used to repay a chunk of the company's A$1.2 billion (US$1 billion; ?660 million) in bank debt. Trading resumed Thursday, and the price bounced to A$2.75 before falling back to A$2.14 after about two hours, unchanged from its price when trading was halted. ABC has almost 1,200 childcare centers in Australia and New Zealand and more than 1,000 in the United States, as well as more than two dozen nurseries in Britain. UBS analyst Dan Hurren said the transaction does set a valuation yardstick and compares favorably with recent U.S. deals. "However, ABC still has issues to address; the key failure of ABC result was its inability to convey the underlying trading position, which was below market expectations," Hurren said in a note to clients. Copyright ? 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. [ Back To TMCnet.com's Homepage ]