New plan for Smiles shareholders

AN alternative proposal for the buyout of failed Gold Coast dental group Smiles Inclusive would give shareholders 5 per cent of the shares in a recapitalised company.

This is part of the proposal by a group of joint-venture partners (JVP) headed by Dr Henry Chen and Dr Rajendra Jasthi.

It has applied to the Supreme Court seeking orders to prevent the sale of Smiles to Genesis Capital going ahead because creditors have not had the chance to vote on the agreement or any other proposed transaction.

The group’s proposal, called a deed of company arrangement (DOCA), calls for:

A second creditors meeting to vote on the sale proposals including the Chen DOCA.

$4m paid to NAB in return for the release of security held over 16 practices with encumbrances to remain in place on a further 10.

Remaining NAB debt to be reduced to $6.5m.

Existing shareholders to retain 5 per cent of the total stock in a restructured entity.

●Unsecured creditors to get 5 per cent on a pro-rata basis.

90 per cent of stock to be held by the JVP syndicate.

●All JVPs to be offered a buyout option and professional services agreements including a profit-sharing component.

Bid spokesman Andrew Johnson, of Greystones Lawyers and Corporate Advisors, said the proposal had the support of a number of shareholders, JVPs and unsecured and secured creditors.

“The DOCA provides for an injection of $4 million in capital and adoption of $6.5 million in debt plus favourable arrangements for JVPs, creditors and shareholders,” he said.

A spokesman for the administrators said they were confident the Genesis proposal provided the best outcome “for all creditors”.

Smiles fell into voluntary administration in November after being unable to pay back the NAB $20m.