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Law firm Holding Redlich has confirmed the process is underway for a class action against embattled Gold Coast-based dental group Smiles Inclusive (ASX: SIL).
The company has seen profits, cash and its share price deteriorate since its April 2018 initial public offering (IPO) that raised $35 million to support an ambitious national acquisition plan.
Smiles' expansion included joint venture partnerships (JVPs) with dentists around the country, but its guidance to the market and results worsened over time.
From a listing price of $1 the company's share price has dwindled to 4.6 cents at the time of writing, as Smiles undertakes a capital raising to stay afloat and pay a small fraction of the $19 million it owes to National Australia Bank (ASX: NAB).
The capital raising was announced prior to a substantial adjustment to Smiles' FY19 loss from $19 million in the unaudited results to $31 million in the statutory figures.
Two JVP dentists who have been vocal about governance issues at the group are Dr John Camacho and Dr Arthur Walsh, who are now taking their battle against the corporate up a notch.
"Holding Redlich Melbourne have stepped forward ready to lead the $50 million class action process," Camacho said in a press release this morning.
"Regardless if Smiles goes into administration, we are committed to recouping cash from Morgans, KPMG, Talbot Sayer and Smiles Directors and Officers personally.
"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."
ASX grills Smiles Inclusive over KPMG audit
Holding Redlich confirmed with Business News Australia that the action was on the cards.
"Holding Redlich have agreed to lead a class action process working closely with aggrieved dentists and shareholders. The IPO is the starting point," a spokesperson for the firm said.
Smiles Inclusive CEO Tony McCormack has responded claiming he is "not aware that any class action has commenced and has not received any legal proceedings".
In an announcement to the ASX yesterday evening, Smiles said it had become aware that some parties were "sending misleading and deceptive information to shareholders and issuing media releases which deliberately misrepresent matters relating to the Company and its operations".
"All interested parties should treat these statements with extreme caution," the company said.
"The motivation of these parties is unknown at this time, but all indications are is that their intention is to see the company fail.
"The Company's recently announced rights issue is fully underwritten and will provide the Company with the opportunity to execute its turnaround plan."
At the time of writing, Smiles had not responded to requests for comment about which specific information it believed was "misleading and deceptive".
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