Major legal case dropped against Smiles Inclusive

Major legal case dropped against Smiles Inclusive

Shares in embattled dental care company Smiles Inclusive (ASX: SIL) are rallying for the third straight day this morning after three longstanding court cases were put to bed.

Smiles joint venture partner (JVP) Australian Aged Dental Care, which traded as Australian Mobile Dental Care, was seeking damages after the partnership went south with mobile vans left idle after they were brought under the Smiles OnSite business.

The plaintiffs had complained of problems surrounding the lease agreement, the business sale agreement and employment contracts, and alleged $20 million in profit share had been lost.

To put that figure into perspective, it's more than the $19 million Smiles Inclusive owed to National Australia Bank (ASX: NAB) in its last debt update.

If the plaintiffs had proceeded with the case and won, it could have been the nail in the coffin for a company that has struggled with cash flow, depended heavily on underwriters to raise capital, and has only recently started putting out tangible messages about what its turnaround strategy actually means

In today's announcement, Totally Smiles (part of the Smiles Inclusive group) announced three longstanding litigation matters relating to Smiles Onsite's closure in October 2018 had been withdrawn.

Totally Smiles chief executive officer Tony McCormack says he is pleased to have all the legal matters resolved and to have recovered the relationship with the related JVPs.

"We are now focused on full recovery of the business which will occur progressively but should be in full operation by the end of February 2020."

The plaintiffs' General Counsel Cabral Douglas (pictured) says an extensive negotiation process has not only delivered an agreement to settle all matters pending before the various courts, but also a comprehensive plan to grow the mobile dentistry business nationally.

"Tony has he's [sic] cleaned house and has put the necessary strategy, people and systems in place to support the future growth of the business.

"The mobile clinics have been returned to base, a new general manager has been appointed and key personnel engaged to drive the process forward."

Douglas believes the mobile dentistry division of the Smiles Inclusive business will be the catalyst for significant growth and profitability once the company is "properly run and all of the key stakeholders appropriately engaged, which is well underway".

Totally Smiles' mobile dental division is headquartered in Sydney and has two businesses with a combined fleet of five three-chair dental clinics (48 foot semi-trailers); two one-chair dental
clinics (trucks) and 14 portable dental chairs operating in New South Wales and Victoria.

Arthur Bushell, who sold his Sydney-based business Future Care Dental Group (FCDG) to Smiles Inclusive in December last year, says the group's mobile care businesses will face difficulties in New South Wales and Victoria in light of new Medicare-covered schemes that are in direct competition.

SIL shares were up 27 per cent to 5.6 cents at 11:10am AEDT.

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