Smiles Inclusive threatens legal action over former CEO's "destructive" campaign
29 May 2019, Written by David Simmons
The board of Smiles Inclusive has threatened to take founder and former CEO Mike Timoney (pictured) to court over his campaign to undermine the results of last week's extraordinary general meeting (EGM).
Gold Coast-based Smiles announced this morning it had received a notice from Timoney stating an intention to convene another EGM seeking to oust three directors, including chairman David Usasz.
Last week 900 shareholders representing around 89 per cent of Smiles Inclusive's share capital voted to remove Timoney and former chairman David Herlihy from the board.
Counter to that resolution, Timoney and Herlihy made a bid to remove Usasz and director Tracy Penn but both survived the spill.
This is despite the former executives holding close to 18 per cent of the shares on issue through different companies and trusts, while their attempt to place Clinical Advisory Committee head Dr John Camacho on the board also failed.
Now they are having another crack at removing Usasz and Penn, as well as independent director Peter Evans who had previously stayed out of the firing line.
Smiles says the vote was conclusive and independently scrutinised by Smiles' share registry.
"Notwithstanding the protestations of Mr Timoney and Mr Camacho as to the results of the meeting, there is no evidence whatsoever of any irregularities in the voting process conducted by Link Market Services," says Smiles.
"The simple fact is that very few shareholders who were not associates of Mr Timoney, Mr Herlihy, or Mr Camacho voted in support of them."
Smiles has also confirmed it received a previous notice from Timoney and Camacho on 24 April requesting a re-do of the EGM, but that was withdrawn after Smiles wrote to the pair expressing concerns about the necessity of another vote.
The company has threatened Timoney and Camacho with legal action including an injunction and indemnity costs from the relevant shareholders.
"Smiles' board and management team need to be able to focus on improving the company's financial and operating performance and restoring value for all shareholders," says Smiles.
"Any further meeting would create significant risk to the company's ongoing viability, and particularly to its relationship with its senior financier."
"The company calls on Mr Timoney and Mr Camacho to respect the decision of shareholders delivered at the meeting held on 22 May 2019 and cease their destructive, misleading and defamatory campaign."
The removal of founder Timoney and ex-chairman Herlihy comes as the two are being sued by Smiles Inclusive.
The action follows the substantial completion of an interim investigation into the conduct of the ousted former CEO and Herlihy.
The latter claims he resigned in late March protesting "ongoing abuse of good governance by the renegade directors".
Smiles Inclusive's leadership have had a tough time getting a hold of Timoney to discuss issues of importance, including details around a mobile dental clinic joint venture that has effectively collapsed.
The group said it had written to Timoney to express its concerns about a number of specific matters and request a meeting with him on almost three days' notice.
The company is seeking to recover losses from Timoney and his related parties, as well as Herlihy.
Court documents claim Timoney appropriated funds totalling $79,878 for his own alleged benefit between January 2017 and December 2018, predominantly for travel which Smiles Inclusive claims was for personal reasons, along with other transactions this year.
Shares in the Gold Coast-based company have plummeted over the past 12 months since listing on the ASX, with massive cuts to profit forecasts and a statutory loss of at least $500,000 expected this financial year.
This compares to the IPO prospectus' pro forma NPAT forecast of $5.8 million for FY18, and claims in August that NPAT would be at least $6 million in the current financial year.
Business News Australia
Author: David Simmons