Smiles Inclusive Ltd to raise $1.2m through new share issue as two shareholders criticise plan

Gold Coast dental group Smiles Inclusive has announced how it plans to start turning the devastated company around. But sidelined agitators are not going to make it easy.

Smiles Inclusive Chair David Usasz.

GOLD Coast dental group Smiles Inclusive has announced plans to raise $1.2 million by issuing new shares.

The new investors will pay 14c for the shares, which had ended Thursday’s trading session down 3.85 per cent to 12.5c. It had risen 12 per cent to 14c by market close Friday.

In an announcement after trading closed on Thursday the company said it had arranged a placement of 8.7 million new shares “to sophisticated and professional investors in Australia”.

The cash will be used to help deliver the Company’s turnaround plan and meet working capital requirements.

Smiles said it was undertaking “a number of cost reduction initiatives” which it did not specify but said they were expected to take effect next financial year.

The company’s external company secretary Jessica Watter has left the role, with chief financial officer Emma Corcoran to assume those responsibilities.

Smiles Inclusive hopes funds raised by a share issue will kickstart its turnaround. Photo: iStock

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Two minority shareholders, part of a bitter and unsuccessful campaign to oust the current board, issued a media release after the Smiles announcement, accusing it of “only postponing the inevitable — its demise”.

A statement from John Camacho and Arthur Walsh said the current board and management was “incapable of turning the Company around”.

“There is no evidence of any turnaround plan gaining traction nor much needed deep cost cutting,” the statement said.

“In the absence of the current Board and management also agreeing to step aside today’s news will only ensure the Company stays in a permanent state of conflict. The business is going backwards. It is time to get real. It is a case of now or never.”

Dr John Camacho at May’s EGM. (AAP Image/Richard Waugh)

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The pair, along with Smiles founder Mike Timoney and former chairman David Herlihy comprehensively outvoted at an extraordinary general meeting last month, and lost a subsequent bid to hold a second EGM.

Mr Timoney was removed as CEO after poor first-half results but has since agitated for his replacement to be dumped.

He has questioned the independence of new director Peter Evans and accused director Tracey Penn of ‘moonlighting’ with a second job as a direct sales agent for a scrapbooking company.

The company is suing Mr Timoney and Mr Herlihy for misconduct, part of which relates to allegations they engaged wife Ildi Redak to throw extravagant cocktail events that were marked up by between 10 and 30 per cent.

In April, after months of turmoil, Smiles flagged a full-year loss of “at least $4 million” after previously downgrading guidance from a net profit of $2.3 million to a loss of between $500,000 and $1 million.