Smiles plans $8 million raise to repay NAB loan in part

Smiles plans $8 million raise to repay NAB loan in part

Despite missing a 11 September deadline to pay back more than half of its $19 million debt to National Australia Bank (ASX: NAB), Smiles Inclusive (ASX: SIL) has today announced plans to raise $8 million to repay the bank in part.

The embattled dental practice network today told shareholders it had entered into an agreement with Angus Aitken and John Murray-led Aitken Murray Capital Partners (AMCP) for the raise.

The raise comprises a fully underwritten rights issue at an issue price of 2.5 cents per share, which will see 320 million more shares issued.

However according to the announcement released today, two weeks out from an extraordinary general meeting that will determine the fate of its directors, the raise is conditional on AMCP being satisfied with due diligence and the company's prospectus. 

The company's prospectus still needs to be approved by the Australia Securities and Investment Commission (ASIC) - the same corporate watchdog that has recently filed legal proceedings against Smiles over its inability to produce an audited financial report for the December 2019 half.

Smiles intends to use the funds to discharge its liabilities to NAB, despite having already missed a cut-off date to pay the bank back more than $12 million by 11 September.

The dental practice network says while NAB has not yet granted an extension to the repayment date agreed to under a deed, it is in "productive discussions" with the bank and will provide an update in the coming days.

That deal would have seen NAB release and discharge Smiles from liability under its various banking facilities on receipt of $12 million plus a $347,658 credit card facility by 11 September.

"While there are no direct consequences of non-payment under the release deed, the Company confirms that NAB still enjoys the customary rights it has for non-payment under its existing facilities," says Smiles.

Smiles also confirmed today that it has repaid the temporary JobKeeper facility held with NAB for the month of September.

"The recent progress in turning around the business has been instrumental in allowing us to sign this underwriting agreement to raise new capital and will help to create a sustainable financial base for the business," said Smiles chairman David Usasz.

Smiles directors accused of breaching shareholder privacy

The directors of Smiles have been accused of privacy breaches after shareholders alleged their private information, including phone numbers, was accessed.

According to a letter seen by Business News Australia from AJ & Co, the law firm representing shareholders, a "voluminous" number of complaints have been made to ASIC regarding the alleged misconduct of Smiles' directors.

"We been [sic] instructed that the Requisitioning Shareholders have received complaints in the last 24 hours from SIL shareholders regarding the use of their personal information by agents of the current SIL directors to contact them via telephone," said AJ & Co partner Caroline Snow in the letter addressed to ASIC chair James Shipton.

"The instructions provided by these agents of the SIL directors related to completion of the proxy form (voting against the resolutions) to ensure that the resolutions seeking to remove the current SIL directors are defeated and seeking to circumvent the use of the bona fide third-party proxy collector."

According to an anonymous Smiles Inclusive shareholder that was contacted following the alleged privacy breach the company and its directors used a call centre to contact shareholders to direct them to vote in against the resolutions proposed at the extraordinary general meeting.

If passed, the group of requisitioning shareholders led by dentists including Dr John Camacho, Dr Philip Makepeace and Dr Arthur Walsh would be successful in their calls for an overhaul of Smiles' board.

The form also includes a vote to remove any director appointed after the notice of requisition.

Company chairman David Usasz has been approached for comment.

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