Smiles Inclusive: Embattled Gold Coast dental group to face prospect of $50M class action

An embattled Gold Coast dental group is facing the prospect of a $50 million class action in the latest blow for the struggling company.

Coast dental group Smiles Inclusive is facing the prospect of a $50 million class action in the latest blow for the struggling company.

EMBATTLED Gold Coast dental group Smiles Inclusive is facing the prospect of a $50 million class action in the latest blow for the struggling company.

Sydney-based law firm Holding Redlich confirmed yesterday it has agreed to play a lead role in a class action working with “aggrieved dentists and shareholders” without elaborating on what grounds the action would proceed. It comes after Smiles reported a $31 million loss earlier this month, up from the original unaudited figure of a loss of $18.9 million in September.

The $31 million was heavily impacted by the inclusion of goodwill impairment following a poor performance from clinics in the Smiles group.

Smiles reported a $31 million loss earlier this month, up from the original unaudited figure of a loss of $18.9 million in September. Photo: iStock

SUBSCRIBE TO THE BULLETIN FOR $1 A WEEK FOR THE FIRST 8 WEEKS (Min. cost $4)

Smiles listed in April last year at an IPO price of $1 a share with 52 clinics as part of the group.

However, it has seen its share price drop to as low as 3.5¢ amid boardroom infighting, bitter legal battles, problems integrating the clinics, and a breakdown in relationships with some joint-venture partners. They include Dr Arthur Walsh and Dr John Camacho who yesterday issued a statement welcoming the class action.

“The class action, aimed at recouping 95 cents a share, offers a lot more upside for shareholders than the current 4 to 5 cents on offer,” Dr Camacho said.

Dr John Camacho has been highly critical of the current board of Smiles Inclusive. (AAP Image/Richard Waugh)

SMILES INCLUSIVE TO RAISE $1.2M THROUGH NEW SHARE ISSUE

Dr Walsh claimed that a “misleading rights issue offer document” was the “final piece in the puzzle” of the class action.

He was referring to a claim on Friday that Smiles failed to include the audited FY19 result of a $31 million loss in an investor presentation attached to the retail entitlement offer documents released on October 2. The final audited loss of $31 million, including goodwill impairment, had been released the day before.

The Bulletin has sought a response from Smiles to the allegation. Yesterday CEO Tony McCormack lashed out at critics of the company, saying they want to “see the company fail”.

Smiles Inclusive shareholders have seen the stock price drilled to a fraction of the original IPO price. Photo: iStock

In an announcement issued to the ASX on Tuesday night, Mr McCormack wrote the company has become aware that “some parties” are sending misleading and deceptive information to shareholders and issuing media releases that “deliberately misrepresent” the company.

“All interested parties should treat these statements with extreme caution,” the release reads.

“The company’s recently announced rights issue is fully underwritten and will provide the company with the opportunity to execute its turnaround plan.”