Nov. 6 (Bloomberg) -- ABC Learning Centres Ltd., the world's largest child care operator, was seized by lenders after the global credit crisis forced up interest payments, which jumped almost 20 times over a three-year buying spree.

Outside managers from Ferrier Hodgson were appointed, the Brisbane-based company said in a statement today. Bankers for ABC Learning, including Commonwealth Bank of Australia and Westpac Banking Corp., named McGrathNicol as receiver to 38 divisions of the business.

ABC Learning, which looks after one in three Australian children in daycare through almost 1,100 centers, joins Allco Finance Group as the nation's second listed company to appoint outside managers this week. Former ABC Chief Executive Officer Eddy Groves, who left the business Sept. 30, borrowed to expand in the U.S. and U.K., almost quadrupling the number of centers the company operated in 2 1/2 years.

``The board and current management team are disappointed to be in this position despite the efforts of so many staff and the continued support of parents,'' Chairman David Ryan said in the statement. ``The management team have worked tirelessly over the past few weeks to ensure that families across Australia and New Zealand continue to have access to quality childcare.''

Debt Balloons

After peaking at A$8.80 in 2006, giving ABC Learning a market value of A$4.8 billion ($3.4 billion), its shares lost 94 percent of their value before being halted from trade in August, when it failed to release earnings.

ABC Learning's total debt at June 30, 2007, was A$2.2 billion, compared with A$111 million at the end of fiscal 2004. The company, which hasn't filed annual results for the year to June 30, 2008, owes money to Australia's four largest banks.

Australia & New Zealand Banking Group Ltd., the worst- performing Australian bank stock this year, said today the child-care operator owes it A$182 million. Westpac Banking Corp., Australia's second-biggest bank by market value, has a A$200 million exposure.

National Australia Bank Ltd. has an exposure of about A$140 million to ABC while Commonwealth Bank, Australia's second- biggest lender by assets, said Aug. 13 it took a A$100 million provision on the value of listed notes in ABC Learning.

Government Talks

``As they have appointed voluntary administrators, it's clearly the opinion of the company's directors that the company is either insolvent or about to become insolvent,'' Chris Honey of receivers McGrathNicol told reporters on a conference call.

Australia's government is in talks with creditors to ensure childcare centers remain open. ABC Learning has about 120,000 children in its centers and employs more than 16,000 people, the government said in a statement.

``The government's priority is to ensure working families reliant on ABC Learning can continue to access child care for their children and ABC Learning employees have some immediate stability,'' Deputy Prime Minister Julia Gillard said in a statement.

About 40 percent of ABC Learning's Australian sales came from government subsidies, while 25 percent came from the U.S. Australia is forecast to spend A$11 billion on childcare services by fiscal 2012. The U.S. government spends about $22 billion on child care subsidies and funding, about 40 percent of all childcare expenditure, ABC Learning said last year.

After starting with 43 centers when it made an initial share sale in 2001, ABC Learning acquired operators in Australia, New Zealand, the U.S. and U.K.

ABC now has stakes in 2,323 childcare centers including 1,000 in the U.S. from its takeover of operators including La Petite Holdings Inc. and Children's Courtyard LLP.

U.S. Sale

The company sold a 60 percent stake in the U.S. operations to Morgan Stanley in April, and in September Computershare Ltd. agreed to buy ABC Learning's U.K. vouchers business for 90 million pounds ($142 million).

Groves, who topped the BRW magazine's Young Rich List in 2006 with an estimated fortune of A$260 million, and his wife Le Neve quit the company in September and Rowan Webb, a former retail clothing executive, was appointed as interim CEO.

The Groves, once the third-largest investors in ABC Learning with a 7.8 percent stake, sold most of their 37 million shares this year as the slumping price prompted margin lenders to demand sales.

Temasek, Singapore's state-owned investment firm, paid A$402 million for a 12 percent stake in ABC Learning in May 2007.

To contact the reporters on this story: Robert Fenner in Melbourne rfenner@bloomberg.netTim Smith in Sydney at tsmith58@bloomberg.net

Last Updated: November 6, 2008 02:49 EST