Charity takeover of ABC Learning

THE Rudd government will provide $15 million in taxpayer funds for a loan to help fund a charitable takeover the ABC Learning group.

THE Rudd government will provide $15 million in taxpayer funds for a loan to help fund a charitable takeover of the nation's biggest childcare chain, the collapsed ABC Learning group.

A dozen philanthropists -- including Robin Crawford, a founding director of Macquarie Bank, Seek founder and BRW Young Rich-lister Matthew Rockman, and former Microsoft boss Daniel Petre -- also lent cash to the GoodStart consortium.

The charities -- Mission Australia, Brotherhood of St Laurence, Benevolent Society and Social Ventures Australia -- beat private equity fund Archer Capital yesterday to take control of ABC Learning, which collapsed under a $1.6 billion pile of debt a year ago.

As a charity, GoodStart will not have to pay taxes and will plough any profits back into the childcare centres.

The deal reverses the Howard government's drive towards privatised childcare, increasing the non-profit sector of the market from 25 per cent to 40 per cent.

The winning bid to take over the 678 ABC daycare centres is understood to be about $100m -- about a tenth of the valuation declared in ABC Learning's most recent annual report, two years ago.

ABC Learning founder Eddy Groves yesterday congratulated the new buyer.

"They've got a great group of childcare centres so good luck to them," Mr Groves said.

The GoodStart chairman is Mr Crawford, a wealthy businessman and high-profile philanthropist who chaired the Chris O'Brien cancer centre and has served on the boards of the Autistic Childrens Association, the Schizophrenia Foundation and Clean Up Australia.

Mr Crawford yesterday vowed to improve the quality of childcare, and transform ABC daycare into "neighbourhood centres" with an eye to helping disadvantaged kids.

"Early childhood is incredibly important," Mr Crawford told The Australian.

"We'd hope in five years' time we'll look back and say, `We really are making a difference'. Anything we do, we'll pass on to everyone else in the sector. We don't see them as competition."

The centres might eventually be renamed, Mr Crawford said, "but we would rather spend the $8m cost on children than on rebranding".

He revealed he had lent "millions" of his own money to set up GoodStart. The philanthropists would be paid 12 per cent interest a year on their unsecured notes -- compared with commercial rates of 15 per cent -- and repaid "in three or four years".

The charities also leaned on Deputy Prime Minister Julia Gillard for a loan, securing $15m to be repaid over seven years at the government's cost of finance, now a 6.4 per cent interest rate.

"We told the government that successful businessmen were writing good cheques and you should be there supporting them," Mr Crawford said.

"They said, `OK, it's only a loan, we'll get the money back'. It's not as if we laid back and said, `Tickle our tummy for us'."

Ms Gillard yesterday hailed the sale as "good news for parents".

"These organisations have committed to providing the highest quality, socially inclusive, accessible and affordable early childhood education and care for Australia's children," the Education Minister said.

A spokeswoman for Ms Gillard said GoodStart was the only bidder to have approached the government for a loan.

Taxpayers have already handed ABC Learning's receivers, McGrathNicol and PPB, $56m over the past year to prevent centres from closing.

Rival bidder Archer Capital -- a private equity group with a $2bn portfolio that includes Rebel Sport, Homy Ped and Cellarmasters Group -- would not comment yesterday. Mr Crawford said Archer had shown "a lessening of enthusiasm over the last week".

The National Australia Bank, which lost $140m when ABC Learning fell into receivership, is lending GoodStart an undisclosed sum, while the charities are also donating money for the takeover.

Mr Crawford revealed that he had dealt directly with NAB's deputy chief executive, Michael Ullmer. "I know him very well and he is quite involved in not-for-profits," he said. "It wasn't without risk but we had worked together before, and I think he liked the board we'd put together."

The interim board will include the chief executives of the founding organisations. Rowan Webb, the former clothing retail executive parachuted into ABC Learning to replace Mr Groves as chief executive on a $1.6m salary, will leave the company.