Smiles gets NAB bridging loan to access the JobKeeper wage subsidy

The troubled dental group has secured a bridging loan from NAB to access the JobKeeper wage subsidy.

Smiles Inclusive is scrambling for funds to turn the troubled business around. Picture: iStock

Listed dental group Smiles Inclusive has secured a bridging loan from NAB to access the JobKeeper wage subsidy as it scrambles to negotiate additional funding to turn the troubled business around.

The Australian can reveal a day after Prime Minister Scott Morrison accused the big banks of stymieing business attempts to gain bridging finance for wages, NAB provided additional funding to Smiles so it could access the JobKeeper wage subsidy.

Concerns over Smiles’ financial health are rising after the company — which listed on the ASX in April 2018 after raising $32m at $1 a share — delayed payments to suppliers long before the COVID-19 outbreak and deferred paying wages to staff, while at least 10 dentists have left the company citing insolvency.

Its shares, which have nosedived to 3.5c, have been suspended from trading for almost two months after it missed the ASX’s deadline to lodge its half year accounts in February; it is yet to get sign-off from its auditor.

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Businesses had to pay eligible staff the $1500 a fortnight wage subsidy before the Australian Taxation Office began reimbursing them from this month, highlighting the need to secure bridging finance. NAB had already waived Smiles’ covenant breaches on the condition it appointed an investigating accountant to provide ongoing review and regular reporting.

Smiles chief executive Michelle Aquilina, who was appointed almost three weeks ago, confirmed NAB had supplied additional financial support in an email to staff sent on April 24.

“I’m pleased to announce the NAB bank has confirmed with me today they will provide assistance to the company through the COVID-19 crisis with JobKeeper subsidy, part of the federal government’s COVID-19 stimulus package, for eligible employees,” Ms Aquilina said.

“This financial support will improve cash flow and assist with catching up on payments due to dentists and JVPs.”

Ms Aquilina told The Australian on Sunday: “To clarify, the NAB funds are for the sole purpose of paying JobKeeper wage only”.

She said Smiles’ board was in “advanced stages of negotiations to recapitalise the company’s balance sheet to support our operations and the ongoing restructuring of the business”.

Two weeks ago, a group of 16 dentists informed Smiles’ management via email that they were terminating their service agreements on insolvency grounds.

Ms Aquilina confirmed 10 of those dentists had left Smiles. “Totally Smiles contacted all patients who had appointments booked with the practitioners who left the business, offering either to re-book with another dentist operating within Totally Smiles or transfer their patient records in line with patient confidentiality laws to another practitioner of their choice.”