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EXCERPTS
Early Learning Services has been hit with the first of several possible lawsuits after backing out of contracts to buy childcare centres from private operators.
Canberra businesswoman Fiona O'Donnell is suing the Rob Borbidge-chaired ELS for more than $4 million, after the company terminated an agreement to buy two of her childcare centres in March.
The Brisbane-based owners of another childcare centre in Kalgoorlie, who did not wish to be named, have also raised concerns about ELS's alleged failure to obtain a childcare licence needed to complete a purchase.
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Sources close to the company said the resignation of ELS chief operating officer John Wall in January was linked to his disapproval of the company's termination of vendor contracts.
There is speculation that ELS has been holding out for better buying opportunities in a market vaccuum created by the recent woes of the formerly acquisitive ABC Learning Centres.
However one source said he was flummoxed by ELS's moves, since the centres in question were "great centres".
Both Mr Borbidge and ELS chief executive John Hutchison declined interview requests.
But ELS issued a statement saying it was "inappropriate to make any comment in respect to proceedings that are currently before the court".
In more woes for Mr Borbidge, Cairns-based CEC - of which he is also chairman - was sued last month in the Federal Court for about $319 million by Consolidated Properties.
As well as the former Queensland premier, the ELS board includes ex-Australian Securities Commission chairman Tony Hartnell, who was once a character witness for jailed businessman Rodney Adler.
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The share prices of all three companies are currently floundering.
After listing at $1 last December, ELS shares sank to an all-time low of 23.5c last week .
They closed down nearly 4 per cent, or 1c, at 25c.
There is also speculation ELS executives are in talks about selling the company to the Babcock & Brown-backed Ramsay Bourne.
Ramsay Bourne chief Jane Bourne did not return calls.
ELS had been due to finalise the purchases of four Canberra centres owned by Ms O'Donnell on February 1 but only settled two of these on March 17.
Ms O'Donnell, who lodged a statement of claim in the ACT Supreme Court on May 21, alleges breach of a contract signed on December 6 last year.
It is understood that Ms O'Donnell rescinded her childcare licence on three occasions in anticipation of the transfer of ownership, only to have to re-apply when ELS failed to settle.
In its annual report, ELS attributed its decision to terminate the Kalgoorlie contract to "delays by West Australian authorities in granting the necessary approvals and licences".
But the owners of the Kalgoorlie centre alleged ELS did not lodge its licence application with West Australian authorities until six weeks after the initial settlement date.
The owners said WA authorities had given their own Kalgoorlie centre "the all clear" after an inspection on March 6.
They then advised all that was required to complete a licence transfer was a copy of updated plans for the centre from ELS, which had not provided the plans.
The owners also said ELS had managed to obtain a licence in WA in February to settle the purchase of a centre in Broome, whose owner had allegedly accepted a scrip rather than cash offer.
The Broome contract was settled in just over three months, despite it being signed a month after that of the Kalgoorlie vendors.
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- reprinted from The Courier Mail