It was ambition, not greed: former ABC Learning chief Eddy Groves

EDDY Groves still harbours hopes of buying back into ABC Learning, the crashed childcare conglomerate he founded in Brisbane 20 years ago.

EDDY Groves still harbours hopes of buying back into ABC Learning, the crashed childcare conglomerate he founded in Brisbane 20 years ago.

"I'd like to own some of it," he told The Australian yesterday.

Having forcibly sold his stake in the company and stepped down "by mutual agreement" as chief executive a fortnight ago, Mr Groves still believes he was the best person to run the business.

"I definitely think I have the most knowledge," he said.

"All they've got to do is focus on the children, the families and the staff. That's the key. If you focus on all those things you'll get occupancy and it will create profitability."

Yet Mr Groves concedes he was never cut out for the corporate world. "I don't think I fit into that model," he said.

Speaking for the first time about his company's crash - which has cost him much of his fortune and left angry investors with shares frozen at a fraction of what they were worth a year ago - Mr Groves revealed how he got out of his depth when he waded into the US market just before it went wobbly. "In hindsight ... you would never have gone to the United States, you would never have gone to the UK. You just wouldn't have let it happen."

In a speech to the Ipswich Chamber of Commerce, the 42-year-old blamed unimagined financial turmoil, "scary" short selling and "self-fulfilling prophecies" based on unfounded rumours for the southward spiral in his company's share price.

But he insisted it was ambition, rather than greed, that drove him to float his successful private childcare company in 2001, borrow $1.8 billion, and launch an overseas expansion that grew the company from 43 centres to 2100 in seven years.

"We'd got to a point where we couldn't grow any further using traditional finance with banks," he told the gathering of business leaders.

"(The float) was about how can we extend this great-quality care we think we're delivering to children, and the best way for us was the public market. Contrary to public opinion that it was about creating this massive personal wealth, it wasn't. It was something that came as a by-product of public listing. And as quick as it comes, it can go."

Back in 2006, when ABC Learning's shares soared above $7, BRW magazine estimated Mr Groves's wealth at $260 million. Today, with shares frozen at 54c and angry investors planning to launch a class action against the company, Mr Groves refuses to reveal his worth.

"I took a hit," he said of the margin call on $40 million worth of shares in February which set off the domino of short-selling. Asked if he had lost $35 million, he replied: "No, I think it was a little bit more than that. But I never had it. You never had it until you actually got it."

So is he in debt? "I left with my pants on but I've got holes in my pants. At the end of the day, I'd bought shares at probably nearly their highest point because I thought the company was undervalued then, and most of the shares were sold out from me somewhere between $1 and $2 so I think I took the heat with everybody else."

As Mr Groves sees it, he got into strife when he took out $40 million in margin loans to buy shares at $6.90. He had wanted to reassure Temasek, the Singaporean investor that had built up a 12 per cent stake in the company last year, with his own faith in the company.

"When the share price started to slide, I wanted to show them I was with them, so I bought $40 million worth of stock," Mr Groves said.

"That was the reason I had margin lending, not because I lived a high-flying life."

When margin calls forced him to sell his shares, Mr Groves says "rumours started to build up steam".

Mr Groves blames market pressure for fuelling ABC Learning's aggressive expansion.

"The enormous amount of pressure that the public market can put on a company to continue to grow is astounding," he said.

"Even though you tell yourself not to fall into that trap, it's very difficult not to because the share prices continue to grow, the returns were continuing to grow and people want you to maintain that pace."

In December 2006, ABC Learning became the world's largest childcare company with 2100 centres after paying $US330 million for the La Petite chain in the US and $178million for the Busy Bees chain in Britain. Only months after that fateful acquisition, Mr Groves said, "the world started to change". Exchange-rate fluctuations hurt earnings in the US, and the toy company Funtastic, in which ABC Learning owned a big stake, reported profit downgrades.

Had anyone predicted a year ago the extent of the current financial meltdown, he said, "they'd say you were smoking drugs".

Trading in ABC has been suspended since August, pending the release of its financial results. The company has lost 95 per cent of its market value in a year. New auditors are revising the 2007 accounts. Mr Groves stands by the numbers.

For now, Fast Eddy is savouring life in the slow lane.

"I've only ever known how to work 18 hours a day," he said. "I do have my daytime television schedule worked out quite well now - a lot of Dr Phil and a lot of Oprah. I'm just taking it easy at the moment."