Smiles Inclusive No Images? Click here 28 March 2019 Timoney tries to regain a Board position at Smiles Inclusive Limited It is reported in the Australian Financial Review of the 28th March 2019 that former Chief Executive Mike Timoney and former Chairman David Herlihy who have stepped down from the company following its announcement that it breaches banking covenants are trying to force their way back onto the board having requisitioned an extraordinary general meeting. Reportedly the two own 18% of the shares of which Mr Timoney’s 15% holdings was awarded to him for establishing Smiles Inclusive Limited as reward for establishing the business. Elsewhere it is reported that Mr Herlihy has 18% shareholding in the company and Mr Timoney 15%. These events usually set off proxy fights as those for and against the move lobby shareholders’ to sign proxy forms. It is possible that lead banker NAB, who would have been instrumental in replacing Mr Timoney as CEO with Mr Tony McCormack following the breach of banking covenants may not be impressed with an attempt to force boardroom changes. If the company is trading in breach of its covenants then it remains at the mercy of its bankers. Forcing changes to the board may cause serious problems for the company if it leads to boardroom decisions which are not in line with the requirements of its bank lenders. Whether or not Mr McCormack can work through the difficult issues of restoring the company to a state where it is not in breach of banking covenants remains to be seen. Mr Timoney resigned at CEO on the 28th February 2019 and Mr Herlihy the inaugural Chairman left the board on the 25th March 2019 i.e. last Monday. Smiles Inclusive’s new Chairman David Usasz, who had been deputy chair offered himself up as a potential sacrifice a few days ago in a bid to prevent an “unnecessary distraction” of an extraordinary general meeting but his attempt to create a peaceful outcome failed. According to Mr Usasz:- “We are in a difficult situation at the moment.” he said. Mr Usasz is also quoted by the Australian Financial Review as saying that Mr Timoney had:- “Failed to elucidate any clear or compelling plan to improve the company’s performance, either as CEO or subsequently.” Ouch! Others being promoted as potential board members such as paediatric dental specialist and shareholder John Camacho, may find it prudent to take quality legal advice before stepping onto the board of a company in breach of banking covenants. It would appear that this sad story has further episodes to come. Best wishes to all dentists,
GRAHAM MIDDLETON
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