ABC Learning Centres, the world’s biggest listed childcare provider, on Wednesday night agreed to sell a majority stake in its US business in a deal it said would significantly lessen the risk on its balance sheet and strengthen its capital structure.

Shares in Australia-listed ABC plummeted 70 per cent last week after it reported a 42 per cent decline in half-year profits that ignited fears over the company’s debt position. Net debt at December 30 was close to A$1.78bn. The downward share price spiral was exacerbated as hedge funds shorted the stock at the same time that directors were forced to sell shares to meet margins calls.