PSQ - Pacific Smiles Group

Agreement with nib finalised

Pacific Smiles Group Limited (ASXSQ) (Pacific Smiles) announces that it has finalised the Amendment to its long term contract with nib Health Funds (nib).

The Amendment reflects the proposed changes announced to the market on 19 June 2024 with nib Health Funds in relation to contractual arrangements for the provision of a gap-free offering to nib members.

PSQ currently owns and operates 11 nib Dentalcare centres where nib members can attend and be eligible for fully funded gap-free preventative dental care.

These arrangements are governed by a contract that is in place until May 2027.

PSQ and nib have agreed an amendment to that contract (the Amendment).

The Amendment allows the provision of the preventative gap-free dental offering for nib members to the 117 Pacific Smiles Dental centres on an exclusive basis in the geographies in which they operate, for 2 years.

This announcement was authorised by the Pacific Smiles Board.

ENDS

i hold PSQ

MA Financial intends to vote its 13.4% shareholding in favour of the NDC Scheme

Pacific Smiles Group Limited (ASXSQ) (Pacific Smiles) has entered into a Scheme Implementation Deed with NDC BidCo Pty Ltd (NDC) pursuant to which NDC proposes to acquire 100% of the shares in Pacific Smiles by way of scheme of arrangement for cash consideration of $1.911 per share (Scheme), subject to certain conditions.2

Pacific Smiles is pleased to announce that MA Financial Group Limited (MA Financial),representing approximately 13.43% of the Pacific Smiles Shares on issue, has advised Pacific Smiles that it intends to vote all Pacific Smiles Shares it controls in favour of the Scheme Resolution, in the absence of a higher offer.

This announcement follows the announcement on 22 July 2024 that HBF Health Limited intends to vote its 10% shareholding in Pacific Smiles in favour of the Scheme Resolution and the announcement today that Genesis Capital Manager I Pty Ltd intends to vote its shareholding against the Scheme as presently formulated.

Your vote is important in determining whether the Scheme proceeds and the Pacific Smiles Directors strongly encourage you to vote.

MA Financial has consented to the inclusion in this announcement of references to its statement of intention.Refer to the Scheme Booklet or https://investors.pacificsmilesgroup.com.au/Investors/for details on how to vote.

This announcement was authorised by the Pacific Smiles Board.

ENDS

i hold PSQ

Dr Alison Hughes intends to vote ~10% shareholding in favour of the NDC Scheme

Pacific Smiles is pleased to announce that Dr Alison Hughes, co-founder of Pacific Smiles Group Limited (ASXSQ) (Pacific Smiles), representing approximately 9.90% of the Pacific Smiles Shares on issue, has advised Pacific Smiles that she intends to vote all Pacific Smiles Shares she controls in favour of the Scheme Resolution.

Pacific Smiles has entered into a Scheme Implementation Deed with NDC BidCo PtyLtd (NDC) pursuant to which NDC proposes to acquire 100% of the shares in PacificSmiles by way of scheme of arrangement for cash consideration of $1.911 per share(Scheme), subject to certain conditions.2

Your vote is important in determining whether the Scheme proceeds and the Pacific Smiles Directors strongly encourage you to vote.Dr Alison Hughes has consented to the inclusion in this announcement of references to her statement of intention.

Refer to the Scheme Booklet or https://investors.pacificsmilesgroup.com.au/Investors/for details on how to vote.

This announcement was authorised by the Pacific Smiles Board.

ENDS

i hold PSQ

interesting someone must be very concerned enough share-holders will reject the offer

Genesis Revised Proposal determined to be a Superior Proposal; matching rights process enlivened

Highlights

: Pacific Smiles Board has determined that the Genesis Revised Proposal is a Superior Proposal under the Scheme Implementation Deed.
 Pacific Smiles has provided NDC with notice under the matching rights process in the Scheme Implementation Deed, and Pacific Smiles is currently in discussions with NDC.
 Scheme Meeting to be immediately adjourned until 11:30am (AEST) on Thursday, 8 August 2024 (or such later date to be advised).
As announced by Pacific Smiles Group (ASX: PSQ) (Pacific Smiles) on 29 July 2024,Pacific Smiles received a revised proposal from Genesis Capital Manager I Pty Ltd(Genesis Capital) to acquire all of the shares of Pacific Smiles via a scheme of arrangement (Genesis Revised Proposal) for cash consideration of $1.90 per share,with the option for shareholders to obtain all or part consideration in scrip.
The Board carefully reviewed the terms of the Genesis Revised Proposal and determined it is a Superior Proposal under the terms of the scheme implementation deed (Scheme Implementation Deed) between Pacific Smiles and NDC BidCo Pty Ltd(NDC) (NDC Scheme)1 because it:
 is reasonably capable of being completed in accordance with its terms in a reasonable time; and
 would be reasonably likely to be more favourable to Pacific Smiles shareholders than the NDC Scheme,taking into account all aspects of the Genesis Revised Proposal.

Under the terms of the Scheme Implementation Deed, Pacific Smiles has provided notice to NDC which enlivens the matching period during which NDC may announce or formally provide to Pacific Smiles a Counterproposal (as defined in the Scheme Implementation Deed) to the Genesis Revised Proposal.

The matching period is due to expire at 11:59pm (AEST) on 1 August 2024.Pacific Smiles is currently in discussions with NDC, however as at the time of this announcement, NDC has not provided to Pacific Smiles a Counterproposal, and there is no guarantee that it will do so.

Pacific Smiles will keep shareholders informed of any Counterproposal received from NDC, and the implications under the Scheme Implementation Deed if:
 a Counterproposal is received which the Board determines would produce an equivalent or superior outcome for Pacific Smiles shareholders as compared to the Genesis Revised Proposal;
 a Counterproposal is received which the Board determines would not produce such an outcome for Pacific Smiles shareholders; or
 no Counterproposal is received at the expiry of the matching period.Until the end of the matching rights process, as required under the Scheme Implementation Deed, Pacific Smiles Directors continue to unanimously recommend that all Pacific Smiles Shareholders vote in favour of the Scheme Resolution to approve the NDC Scheme, subject only to no Superior Proposal emerging and the Independent Expert not withdrawing or adversely changing its conclusion.

Scheme Meeting

The Scheme Meeting for the NDC Scheme which is scheduled to be held on Thursday, 1August 2024 will open at 11:30am (AEST) and immediately be adjourned by the Chairperson to Thursday, 8 August 2024 at 11:30am (AEST) (or such later date to be advised by Pacific Smiles) to allow the Board to assess any Counterproposal received from NDC under the matching rights process and ensure Pacific Smiles Shareholders have sufficient time to consider all relevant information regarding the NDC Scheme ahead of the Scheme Meeting.

The adjourned Scheme Meeting will be held in person at Automic Group, Level 5, 126Phillip Street, Sydney NSW 2000 and online (virtual meeting link to be announced to ASX in due course).3

If no such Counterproposal is received from NDC by the end of the matching period,then Pacific Smiles intends to take necessary steps to vacate the Scheme Meeting.Your votes on the Scheme Resolution All Pacific Smiles shareholders who were entered on the Share Register at 7:00pm(AEST) on 30 July 2024 will be entitled to vote at the adjourned Scheme Meeting.

The cut-off time for receipt of proxy forms for the adjourned Scheme Meeting is 11:30am (AEST) on Tuesday, 6 August 2024 (or such date which is 48 hours before any later date for the adjourned Scheme Meeting).

You may vote on the Scheme Resolution in the manner set out in the Notice of Scheme Meeting contained at Attachment A to the Scheme Booklet.If you have already voted on the Scheme Resolution your vote remains valid. If you:

 wish to change your vote, then you can do so by lodging a new proxy form or vote in person (or online) at the Scheme Meeting (noting your updated vote will supersede your previous proxy vote); or

 do not wish to change your vote, you do not need to take any action.

This announcement was authorised by the Pacific Smiles Board.

ENDS
i hold PSQ

Recommended NDC Counterproposal at $2.05 per share
Highlights:
 As announced on 31 July 2024, Pacific Smiles Board determined that the Genesis Revised Proposal is a Superior Proposal under the Scheme Implementation Deed with NDC.
 NDC has provided a counterproposal of $2.05 per share with no Ticking Fee and a corresponding increase to the break fee under the matching rights process in the Scheme Implementation Deed (NDC Counterproposal)
. Pacific Smiles Board has determined the NDC Counterproposal of $2.05 per share would produce a superior outcome to shareholders as a whole when compared to the Genesis Revised Proposal.
 Pacific Smiles Directors unanimously recommend that all Pacific Smiles Shareholders vote in favour of the Scheme Resolution to approve the NDC Scheme under the NDC Counterproposal, subject only to no Superior Proposal emerging and the Independent Expert not withdrawing or adversely changing its conclusion.
 Scheme Meeting to be immediately adjourned until 11:30am (AEST) on Thursday, 8 August 2024 (or such later date to be advised).
 If you wish to change your vote, then you can do so by lodging a new proxy formor vote in person (or online) at the Scheme Meeting. If you do not wish to change your vote, you do not need to take any action.
As announced by Pacific Smiles Group (ASX: PSQ) (Pacific Smiles) on 29 July 2024,Pacific Smiles received a revised proposal from Genesis Capital Manager I Pty Ltd(Genesis Capital) to acquire all of the shares of Pacific Smiles via a scheme of arrangement (Genesis Revised Proposal) for cash consideration of $1.90 per share,with the option for shareholders to obtain all or part consideration in scrip.
On 31 July 2024, Pacific Smiles announced that the Board had carefully reviewed the terms of the Genesis Revised Proposal and determined it is a Superior Proposal under 2the terms of the scheme implementation deed (Scheme Implementation Deed)between Pacific Smiles and NDC BidCo Pty Ltd (NDC) (NDC Scheme)1 because, it:
 is reasonably capable of being completed in accordance with its terms in areasonable time; and

 would be reasonably likely to be more favourable to Pacific Smiles shareholders than the NDC Scheme,taking into account all aspects of the Genesis Revised Proposal.

NDC Counterproposal In response to a notice provided by Pacific Smiles to NDC under the matching rights regime in the Scheme Implementation Deed, NDC has submitted a counterproposal of $2.05 per share with no Ticking Fee and a corresponding increase to the break fee(and on terms otherwise consistent with the existing Scheme Implementation Deed)(NDC Counterproposal).

The Board assessed the NDC Counterproposal and determined it would produce a superior outcome to shareholders as a whole when compared to the Genesis Revised Proposal.Pacific Smiles and NDC have varied the Scheme Implementation Deed to give effect to the price increase under the NDC Counterproposal, in addition to:

 removing the Ticking Fee concept; and
 increasing the Break Fee payable to $3.3 million , so that it represents approximately 1% of the Aggregate Scheme Consideration on the basis of the$2.05 Scheme Consideration per share under the NDC Counterproposal.


Therefore, if the NDC Scheme becomes Effective, Pacific Smiles Shareholders will be entitled to receive Total Cash Value of $2.05 for each Pacific Smiles share held,comprising:
 the Permitted Dividend of $0.07 for each Pacific Smiles Share held on the Permitted Dividend Record Date, to be paid by Pacific Smiles; and
 the Scheme Consideration of $1.98 for each Pacific Smiles Share held on the Scheme Record Date, to be paid by NDC.1

Further details are set out in the Scheme Booklet released to ASX on 26 June 2024. Capitalised terms in this announcement have the meaning given in the Scheme Booklet, unless the context otherwise requires.3


If the Scheme becomes Effective, all Pacific Smiles Shareholders on the Scheme Record Date will receive the increased consideration regardless of whether they have already voted, or if they vote for or against the Scheme Resolution.


The Pacific Smiles Directors recommend that all Pacific Smiles Shareholders vote in favour of the Scheme Resolution to approve the NDC Scheme under the NDC Counterproposal, subject only to no Superior Proposal emerging and the Independent Expert not withdrawing or adversely changing its conclusion.2


Scheme MeetingThe Scheme Meeting for the NDC Scheme which is scheduled to be held on Thursday, 1August 2024 will open at 11:30am (AEST) and immediately be adjourned by the Chairperson to Thursday, 8 August 2024 at 11:30am (AEST) (or such later date to be advised by Pacific Smiles) to ensure Pacific Smiles Shareholders have sufficient time to consider all relevant information regarding the NDC Scheme ahead of the Scheme Meeting.

The adjourned Scheme Meeting will be held in person at Automic Group, Level 5, 126Phillip Street, Sydney NSW 2000 and online (virtual meeting link to be announced toASX in due course).
Your votes on the Scheme Resolution All Pacific Smiles shareholders who were entered on the Share Register at 7:00pm(AEST) on 30 July 2024 will be entitled to vote at the adjourned Scheme Meeting.

The cut-off time for receipt of proxy forms for the adjourned Scheme Meeting is 11:30am (AEST) on Tuesday, 6 August 2024 (or such date which is 48 hours before any later date for the adjourned Scheme Meeting).
You may vote on the Scheme Resolution in the manner set out in the Notice of Scheme Meeting contained at Attachment A to the Scheme Booklet.2

The Pacific Smiles Directors’ interests are set out in section 5.11 of the Scheme Booklet.

Mr Andrew Vidler holds Pacific Smiles Cash Rights which entitle him to be paid a total amount of $50,603 in cash subject to the Scheme becoming Effective.
The Pacific Smiles Board considers that, despite these arrangements, it is appropriate for MrVidler to make a recommendation on the Scheme Resolution given his role in the operation and management of Pacific Smiles, and that Pacific Smiles

Shareholders would wish to know Mr Vidler’s views in relation to the Scheme Resolution.

Mr Vidler also considers that it is appropriate for him to make a recommendation on the Scheme Resolution. 4

If you have already voted on the Scheme Resolution your vote remains valid. If you:

 wish to change your vote, then you can do so by lodging a new proxy form or vote in person (or online) at the Scheme Meeting (noting your updated vote will supersede your previous proxy vote); or

 do not wish to change your vote, you do not need to take any action.Further details

Further details regarding the NDC Counterproposal will be provided to shareholders shortly, including regarding the Board’s assessment of the Genesis Revised Proposal and NDC Counterproposal, the Independent

Expert’s conclusion regarding the NDC Counterproposal and implications for the adjourned Scheme Meeting and proposed NDC Scheme timetable.

This announcement was authorised by the Pacific Smiles Board.

ENDS

i hold PSQ

Results of Scheme Meeting, 2024 Full Year(“FY 2024”)

Results Release Date and Conference Call

Highlights
 Pacific Smiles shareholders today voted against the NDC Scheme.
 Pacific Smiles Board supports management to continue to execute on their strategic objectives and deliver value for shareholders.
 In addition, Pacific Smiles is open to exploring alternative transactions if considered to be in the best interests of shareholders.
 Pacific Smiles expects to release its financial results for the full year ended 30 June 2024 on Wednesday, 28 August 2024.
Pacific Smiles Group Limited (ASXSQ) (Pacific Smiles) refers to the Scheme Meeting held today, at which Pacific Smiles Shareholders had the opportunity to vote on a resolution in relation to the proposed scheme of arrangement under which NDC BidCoPty Ltd would acquire 100% of the shares in Pacific Smiles (NDC Scheme), subject to all applicable conditions being satisfied or waived (as applicable).

Capitalised terms in this announcement have the meaning given in the Scheme Booklet released to the ASX on 26 June 2024, unless the context otherwise requires.

Results of the Scheme Meeting

The Scheme Resolution, as set out in the Notice of Scheme Meeting included in theScheme Booklet, was not approved by the requisite majorities of Pacific Smiles Shareholders at the Scheme Meeting.

In summary:
 63.31% of the total number of votes cast by Pacific Smiles Shareholders were in favour of the Scheme Resolution; and
 81.41% of Pacific Smiles Shareholders present and voting (whether in person,attending online, by proxy, by attorney or by a corporate representative) voted in favour of the Scheme Resolution.

i hold PSQ

one offer ( narrowly) beaten

now if forced to take the alternative offer i would rather take the scrip deal ( to me , my holding is about exposure to the dental care industry )

Higher volumes and operating efficiencies driving earnings growth

Dentist service organisation Pacific Smiles Group Limited (ASX: PSQ) today released its financial results for the 12 months ended 30 June 2024.
The Group’s focus on increasing utilisation within existing centres to grow appointment volumes and improve operational efficiency has delivered patient fee growth and increased profitability.
The Group’s strong financial performance and cash flow has allowed for repayment of all borrowings during the financial year and a final dividend of 3.25cps bringing the total dividend for FY24 to 5.35cps.

FY24 Results Summary:
• Patient Fees of $291.8m, up 7.9% vs pcp
• Group Revenue of $179.8m, up 8.7% vs pcp
• Underlying1 EBITDA of $28.2m, up 16.9% vs pcp
• Underlying1 NPAT of $8.9m, up 98.3% vs pcp
• Return on Equity of 13.2% vs 4.0% in the pcp
• Net Cash of $17.7m at year end, and debt free position
• Final Dividend (fully franked) of 3.25cps declared, for a Total Dividend of 5.35cps in FY24, representing a payout ratio of 100% of Underlying NPAT
• FY25 YTD performance indicates continued growth across key operating and financial metrics.In FY24 growth was driven through increased engagement with practitioners, as well as a focus on attracting new patients.
Patient fees increased by 7.9% year on year (YoY) to $291.8m, as the Company saw improvements across all centre cohorts.
Total practitioner hours rose 3.9% to over 717,000 hours, while total appointments attended increased 3.5% to ~1.05 million.
Underlying EBITDA rose 16.9% YoY to $28.2m, reflecting the contribution of higher patient fees, and improved operational efficiency. Inflationary cost pressures increased in FY24, largely driven by the Fair Work Commission Wage Decision of a 5.75% increase to modern award rates, and CPI-linked lease increases.
This was partly offset by a reduction in consumables costs due to improved supplier partnership arrangements and focused in-centre inventory management.
Despite these1 Underlying results exclude the impact of the Australian accounting standard (AASB 16) and other one-off related items.
A reconciliation of underlying to statutory results is disclosed in the Appendix of the FY24 Investor Presentation, Appendix 4E and theAnnual Report.
2 inflationary and cost of living headwinds, Pacific Smiles continued to drive growth and manage profitability effectively.
EBITDA margins improved, both at a centre level and group level, reflecting the revenue uplift and focused expense management. Underlying NPAT of $8.9m represented an increase of 98.3% on the pcp, with a final dividend of 3.25cps (fully franked).Pacific Smiles’ corporate overhead ratio reduced to 6.4% of patient fees from 6.9% in the prior year, driven by cost and headcount discipline.Capital expenditure for the year was lower at $3.8m compared to $11.1m in FY23,primarily due to there being no new centre openings.
$3.3m was spent on equipment,including the purchase of 30 new dental chairs to be used in growing the network and to replace ageing chairs in the fleet.
Of the remaining capital expenditure, $0.3m was spent on IT-related investment and $0.2m on refurbishing dental centres.
This improved financial performance resulted in a material deleveraging of the Company’s balance sheet, with $17.7m net cash and no debt at 30 June 2024.
The Pacific Smiles management team remains focused on maintaining the company’s positive culture, for both dentists and employees. As such it is pleasing to report that employee turnover continues to improve, while dentist turnover has remained largely steady over a long period.

Patient satisfaction remains high with a year-end patient net promoter score of 90.Pacific Smiles Managing Director & Chief Executive Officer, Andrew Vidler, said: “We are exceptionally pleased with this year’s result, which is a real testament to the team’s commitment. Our focus on the utilisation of existing centres and to drive growth in patient fees has underpinned this performance.
Utilisation has improved across the business, especially among our newer cohorts. Our revenue growth and ongoing efficiency improvements drove margin improvement, offsetting the impact of inflationary cost pressures.
“We continue to deliver and extend the benefits of Pacific Smiles’ service model to an increasing number of Australia’s dentists while growing the number of patients withan active preference for dental care at Pacific Smiles.“I am proud of the dedication of our team and their focus on delivering the highest quality customer care, despite the distraction of corporate interest in the business over the course of this year.

Overall, Pacific Smiles is well placed for growth.
”Trading Update

Performance to date for FY25, as of 27 August 2024:
• Patient Fees $50.8m
• Patient Fees +10.9% YoY (+8.4% YoY normalised on like-for-like trading days) 2,32 No new centres were opened in FY24, therefore total patient fee growth is equivalent to same centre patient
Fee growth.3
There has been two additional weekdays of trading YTD compared to the previous corresponding period.3

Investor presentation
Pacific Smiles will host a conference call for investors to discuss the full-year results at11:00 am AEST, Wednesday 28 August.
Pre-Registration Link:https://s1.c-conf.com/diamondpass/10040930-ugbur.html

Complete full-year results materials will be released to the ASX and will be available on the Company website via the following link:https://investors.pacificsmilesgroup.com.au/Investors/?page=ASX-Announcements

This announcement was authorised for release by the Pacific Smiles Board.

i hold PSQ

and yet the board/management were very eager to accept a take-over deal ( stopped by a relevant minority of share-holders )

am i missing something apart from the 100% NPAT profit payout ( which signifies minimal plans for near-term expansion )

Still seems pricey @divs4ever? Even though the takeover tilt was offering more.
Priced at 4.6 X Book Value (FY23) , no debt, new share issuance low but ROE 13%

divs4ever said:

Return on Equity of 13.2% vs 4.0% in the pcp

Click to expand...

Don't see a compelling attraction given results of last 3 years incl now FY24
Not Held

my average is $1.14 ( not counting the cash rescued @ $3 ) and bought as low as 88.5 cents

the attraction for me is as a 'defensive stock' ( health-care related without all those crazy trials and approvals ) the same reason i bought in SDI and ONT ( which has been taken over , sadly )

more ' a position play ' rather than dreaming of a multi-bagger , for me .

it might sound bizarre but that is my reasoning , while most people have teeth , there will be some demand

( fun fact ... i had all my teeth removed at 21 ) ( oh , the money i have saved with the decision )

divs4ever said:

• Return on Equity of 13.2% vs 4.0% in the pcp

Click to expand...

This is in line with comments I have made in other threads that corporate rollups especially in a small market such as Australia and especially in these types of small service businesses tends to offer low rates of return on equity at least after a certain period of time.

Firstly when growing by acquisition you tend to have to offer pay a premium to buy others out and in a small industry in a small market like Australia a few big players consolidating the industry can push prices up, secondly once the highest quality locations/operators are bought then you rapidly sliding down the quality scale to buy less profitable/efficient operations. In addition when its such a personalized service business (which healthcare tends to be) a lot of the customer base will eventually leave when that person disappears. Usually the agreement is that the dentist/doctor/accountant etc is only that they have to stay on for a 2 or 3 year transition period. Often they decide to retire after selling their business as often the reason for sale was retirement and also some of them don't want to work for others after being self employed for so long.

What happens to the customer base after the original owner leaves after the transition period?

Also there are some small scale advantages (bulk software subscription, bulk purchasing of dental supplies, etc) in these types of business but its fairly minimal compared to other types of business such as transportation (e.g. trucking), manufacturing, big box retail, etc so growing by acquisition does give the same level of synergy as other types of businesses.

finicky said:

Priced at 4.6 X Book Value (FY23) , no debt, new share issuance low but ROE 13%

Click to expand...

Crazy that another company paid 4.3x book value for a company earning only 13% return on equity with generally no track record of earning consistent high returns. I guess the muppets that bought it think they are so smart and can run the business a lot more profitably. Which I doubt given they were dumb enough to pay 4.3x book value for the stock.

Actually that's just roughly the current market multiple @Value Hunter, the potential acquirer who failed with their bid was offering a bit more if I follow div's posts rightly. Price today is 1.83

divs4ever said:

Recommended NDC Counterproposal at $2.05 per share

Click to expand...

finicky said:

Actually that's just roughly the current market multiple @Value Hunter, the potential acquirer who failed with their bid was offering a bit more if I follow div's posts rightly. Price today is 1.83

Click to expand...

yes to some ( who didn't reduce @$3 ) the offer looked good

but i was/am looking for sector exposure , i have made large capital gains elsewhere

when your stock owes you nix , you don't mind 0.2% div. returns on the current share price

and before buying the last packet @ 88.5 cents that was where i was with PSQ ( sitting in the bottom drawer )

Resignation of Managing Director & CEO

Pacific Smiles Group Limited (ASX: PSQ) (Pacific Smiles) today announces the resignation of its Managing Director & Chief Executive Officer (CEO), Mr Andrew Vidler.

The Board would like to thank Mr Vidler for joining Pacific Smiles at a time of significant ambiguity and stepping up to lead the Company through the receipt of multiple change of control proposals and the Scheme process.

Pacific Smiles Chair, Ms Giselle Collins, said “Mr Vidler has had a strong focus on bringing the team together and keeping them delivering best practice services to our patients and dentists.

We recognise the challenge he faced managing the business alongside the transaction workload whilst delivering strong financial results.

We wish him every success in his new endeavour.

”Mr Vidler has a six month notice period and the Board will work with him to agree on a final date.

An update will be provided to the market in due course.

The Board will commence a recruitment process.

i hold PSQ

This announcement was authorised by the Chair of Pacific Smiles.

Off-market Takeover Offer from Genesis Capital

Pacific Smiles Group Limited (ASXSQ) (Pacific Smiles) refers to the announcement and Bidder’s Statement released to the ASX this morning under which Beam Dental BidCo Pty Ltd, an associate of Genesis Capital Manager I Pty Ltd (Genesis Capital),proposes to acquire 100% of the shares in Pacific Smiles by way of an off-market takeover bid for $1.90 (in cash, scrip or a mix of cash and scrip) per Pacific Smiles share(Offer).

The Offer will need to be considered in detail by the Board of Pacific Smiles and its advisers before a formal recommendation is made to shareholders.
The Board will also take into account feedback from shareholders and the likelihood of success of the Offer.
The Offer, which is subject to conditions, is expected to open in coming weeks and is expected to remain open for at least one month; there is therefore no urgency to take action at this time.Pacific Smiles will provide shareholders with a Target’s Statement in due course.

Shareholders should wait until they receive and consider the Target’s Statement before deciding whether to accept or reject the Offer.In the interim shareholders are advised to TAKE NO ACTION in relation to the Offer or any documents shareholders may receive from Genesis Capital.This announcement was authorised by the Chair of Pacific Smiles.

ENDS


Beam Dental Bidco announces off-market takeover bid for Pacific Smiles sharesBeam Dental Bidco Pty Ltd ("Bidco"), an associate of Genesis Capital Manager I Pty Ltd (“Genesis Capital”),is pleased to announce its intention to make an off-market takeover bid to acquire all the ordinary shares in Pacific Smiles Group Limited (“Pacific Smiles” or the “Company”) for a choice of
$1.90 per Pacific Smiles share (the “Cash Offer”)i,
1 Holdco Shareii per Pacific Smiles Share (the “Scrip Offer”) or
47.5 cents cash and 0.75 Holdco Shares per Pacific Smiles share (the “Mixed Offer”)iii (together, the “Offer”).

i hold PSQ

( this is an investment in a market niche for me , rather than outright capital gains )

so my choices are .. no deal , all scrip or the cash/scrip mix

decisions decisions

Pacific Smiles’ Board Intends to Recommend Shareholders REJECT Genesis Capital Off-market Takeover Bid

To REJECT, simply do nothing in response to the Offer

Highlights
• Pacific Smiles has received intention statements from MA Financial Group Limited(with a relevant interest in 13.43% of Pacific Smiles Shares) and Dr Alison Hughes, cofounder of Pacific Smiles (with a relevant interest in 9.94% of Pacific Smiles Shares),that they do not intend to accept the Offer on the terms of their statements (seebelow).
• The Offer’s 90% Minimum Acceptance Condition can therefore not be met in the current circumstances.
• Pacific Smiles’ recently released FY24 results demonstrate the operating momentum in the business including strong utilisation improvement in newer cohorts, its continued cash flow generation and healthy net cash position.
• Genesis Capital’s Offer is materially below NDC BidCo’s prior cash offer of $2.05 per Share.
• Genesis Capital’s Offer has not improved from its revised proposal received on 28 July 2024, despite strong FY24 results and cash flow generated during this time.
• Following payment of the full-year dividend in October this year, the All Cash Consideration paid by Genesis Capital would be $1.8675 per Share at completion.
On Tuesday 17 September 2024, Beam Dental Bid Co Pty Ltd (Bidco), an associate of Genesis Capital Manager I Pty Ltd (Genesis Capital) announced an off-market takeover bid to acquire 100% of the ordinary shares (Shares) in Pacific Smiles Group Limited (ASXSQ) (Pacific Smiles) for $1.90 per Share (in cash, scrip or a mix of cash and scrip) (Offer). Genesis Capital has a 19.9% relevant interest in Pacific Smiles.

You are expected to receive the Bidder’s Statement from Genesis Capital shortly. The Board of Pacific Smiles will release its Target’s Statement in mid October 2024.
Ahead of that date, the Board advises that it intends to unanimously recommend that shareholders REJECT THE GENESIS CAPITAL OFFER and TAKE NO ACTION.
In forming this intention, the Board has carefully considered a number of relevant commercial and strategic factors.In addition, the Board notes that, under the Offer, Pacific Smiles shareholders who elect for All Cash Consideration would receive $1.90 less the full cash amount of any dividend declared or paid by Pacific Smiles after 17 September 2024.
As Pacific Smiles has now passed the ex-dividend date and will pay its 3.25 cent declared dividend on 10 October2024 regardless of the Genesis Capital Offer, shareholders who elect the All Cash Consideration option would only receive $1.8675 per Pacific Smiles Share from Genesis Capital if and when the Offer completes.
The Board’s key reasons for intending to recommend you REJECT THE GENESIS CAPITAL OFFER are set out below.
1. The Offer is not able to complete in the current circumstances
The Offer is subject to a Minimum Acceptance Condition of at least 90% (by number) of Pacific Smiles Shares.
The Pacific Smiles Board has received written intention statements from:
• MA Financial Group Limited, holder of a 13.43% relevant interest in Pacific Smiles Shares (being 21,427,932 shares), that it intends to reject the Offer, seeing long term value in the business above the Offer price, “validated by the FY24 results and corporate interest from multiple private equity firms”; and
• Dr Alison Hughes, co-founder of Pacific Smiles and holder of a 9.94% relevant interest in Pacific Smiles Shares (being 15,860,190 shares), that she intends to reject the Offer as contained in the Bidder’s Statement (reserving the right to reconsider if there is any variation to any terms, a waiver of any Conditions or any announced alternative control proposal).
Bidco’s current financing arrangements, as disclosed in the Bidder’s Statement, require the Minimum Acceptance Condition to be met, and therefore the Offer is not capable of being completed in the current circumstances.
2. The Offer is opportunistic
The Offer is opportunistically timed considering:
• the strong performance of Pacific Smiles, notwithstanding the corporate activity it has been subject to. For the year to 30 June 2024, Pacific Smiles’ delivered an increase in group revenue year-on-year of 8.7%, underlying EBITDA increase of 16.9%and a dividend payout of 100% of underlying NPAT (in line with its dividend policy);
• the business and its shareholders have invested significantly in its installed footprint which continues to benefit from increasing utilisation as its centres mature;
• the recent resignation of the CEO and CFO, and in progress changes to the leadership team who will focus on a refreshed strategy to drive operational performance through both technology and commercial drivers; and
• Genesis Capital voted against a Board recommended cash offer of $2.05 via scheme of arrangement, which would otherwise have been passed by the requisite majorities.
3. Shareholders should pay careful attention to disclosures within the Bidder’sStatement about the prospects for, and governance of, Holdco
These disclosures include that Holdco would be highly levered at up to 5.6x net debt /EBITDA, that Holdco’s interest costs are expected to be equivalent to the majority of Pacific Smiles’ FY24 free cash flow, and that Holdco shareholders do not have the ability to prevent Genesis Capital entering into related party transactions which are deemed“arm’s length” by the Holdco Board and could dilute their interest in HoldCo (noting there is an absence of basic shareholder reserved matters that are often included in these documents).
Genesis Capital has separately acknowledged in its Bidder’s Statement that there is no assurance the present or future value of the All Scrip Consideration or Mixed Consideration will be equal or higher than the All Cash Consideration, and may be materially lower than such value.
Next steps
Pacific Smiles will provide its shareholders with a formal Target’s Statement in response to the Offer in mid October 2024, as required pursuant to the Corporations Act.
This will include full details of the Board’s recommendation.Shareholders are advised to wait until they receive the Target’s Statement and can consider it carefully before deciding whether to accept or reject the Offer.

The Board intends to recommend shareholders TAKE NO ACTION in relation to the Offer.
As previously announced, the Board is focused on delivering value for shareholders, and will only recommend a transaction that is in the best interest of shareholders as a whole.Pacific Smiles continues to engage Greenhill & Co. as financial adviser and Gilbert +Tobin as its legal adviser.

Definitions capitalised in this announcement but not defined have the meaning given to them in the Genesis Capital Bidder’s Statement released to the ASX on 17 September 2024.This announcement was authorised by the Board of Pacific Smiles.

ENDS

For further information, please contact:

Olivia Brown
Morris Brown M: +61 409 524 960E:
olivia@morris-brown.com.au


i hold PSQ

hmmm

accept the ( all ) scrip deal , wait or do nothing

interesting that the same parties who were willing to take the ( other ) all cash deal , now want to cling dearly to the PSQ shares

i suppose there is little chance of this dropping to $1 ( or less ) so i can grab some extras