No images? Click here Smiles Inclusive Limited (SIL) - Selling Some Practices!Smiles Inclusive is selling its Gatton and Ladeley practices to 1300 Smiles Limited with sale completion expected by 20 December 2019 ie. Eight days’ time! Smiles Inclusive has also advised that it is considering the sale of its Gympie and Toowoomba practices! It’s a case of assets passing from weak hands to much stronger hands – 1300 Smiles likes to concentrate its activity within Queensland and has much stronger financials. It has been more discerning in its practice purchases than have other dental corporates. We expect that all or most of the cash from these transactions will go straight to the National Australia Bank as Smiles Inclusive remains in breach of its borrowing covenants. The long-term challenge is for Smiles Inclusive to somehow generate enough profit to persuade the NAB to permit it to continue to trade. The NAB is likely to allow Smiles Inclusive enough rope to see what can be recovered within current trading limits and may force more practice sales. However, if it cannot receive enough of its money owed to it fast enough there is the ever-present danger that it will appoint liquidators. A BLAST FROM THE PAST – BOND BOUGHT HOTEL OFF DONALD TRUMP Quirky Stuff from the Past Older dentists will remember that the 1980’s entrepreneur Alan Bond won the America’s Cup but then became the principal architect of massive corporate failure, becoming bankrupt, losing vast amounts of money belonging to minority shareholders in his network of heavily geared companies. How many people today realise today that among the assets that bond purchased and briefly owned was the St. Moritz Hotel in New York purchased off a much younger Donald Trump in 1988! Bond Corporation was almost certainly insolvent when it bought that hotel, but the fatal blow was landed by British entrepreneur “Tiny” Rowland, a tough character. Bond thought he had befriended Roland when his luxury yacht pulled up near Roland’s yacht at a Mediterranean resort. Bond had suggested over drinks that he might buy some shares in Roland’s company, Lonrho, to help out but Rowland said he didn’t need help. Bond didn’t take the hint and then began buying large quantities of shares in Lonrho (with borrowed money of course) and threatened Rowland’s position. Rowland was the sort of person who didn’t box by the rules. He had financial analysts pour over Bond’s network of company accounts and produce a 93-page report which pointed to the insolvency of Bond Corporation. The report was simultaneously delivered to every significant financial journalist in Australia and immediately the endless questioning of Bond Corporation’s solvency began. Bond desperately tried to deal his way out of trouble but potential buyers of Bond Corporation assets all realized that in a fire sale the assets would only get cheaper; so potential buyers sat on the sidelines while Bond Corporation’s interest bills mounted and its asset values collapsed. That was the environment in which the late Kerry Packer bought back the Channel 9 Network. Bond had paid far too much for Packer’s Melbourne and Sydney television stations and added the Brisbane and Perth television stations which Bond owned. Packer re-sold two television stations and bought back four television stations for about one-third of the price that Bond had paid aided by a very clever convertible preference share component in the original sale price which heavily favoured Packer. Sometimes it’s nice to look back on financial history as there are lessons from today – such as the National Australia Banks gearing inside Smiles Inclusive Limited’s balance sheet. While ever Smiles Inclusive remains in default of NAB’s bank covenants it is at the mercy of NAB deciding to call in liquidators. Best wishes to all dentists, GRAHAM MIDDLETON The Synstrat Group are Australia's most experienced Dental practice business advisers, accountants, practice valuers and licensed financial advisers. The information contained herein is of a general nature and no specific action should be taken without individual advice. Synstrat Management Pty Ltd P. 03 9843 7777 ABN 57 006 295 325 If you are not the intended recipient of this communication please delete and destroy all copies of this message and telephone Synstrat on +61 3 9843 7777 immediately. If you are the intended recipient of this communication you should not copy, disclose or distribute this communication without the authority of Synstrat. Any views expressed in this communication are those of the individual sender, except wh ere the sender specifically states them to be the views of Synstrat. If you do not wish to receive this email in future, please reply to the sender requesting termination of service. |