Dentalcorp and Graham Rosenberg also agree to
shorten sunset provisions attached to Mr. Rosenberg’s Multiple
Voting Shares
dentalcorp Holdings Ltd. (“Dentalcorp” or the “Company”) (TSX:
DNTL) is pleased to announce today that it has bolstered its senior
leadership team by promoting Nate Tchaplia, the Company’s Chief
Financial Officer, to the role of President, effective immediately.
In addition, Kevin Mosher, a member of the Company’s Board of
Directors, will immediately assume additional responsibilities as
Executive Director.
Details of Senior Leadership Appointments
As a result of Mr. Tchaplia’s promotion to President, he will be
responsible for developing and executing the Company’s long-term
strategy alongside the Company’s CEO, Founder and Chairman, Graham
Rosenberg, as well as overseeing the day-to-day operations of the
Company. In addition, the Company will immediately commence a
search for a new CFO to join its senior leadership team. Mr.
Tchaplia will continue to fulfill his duties as CFO on an interim
basis until the Company has hired a new CFO.
“The Board of Directors and I have been collaborating closely to
develop a long-term plan that will position the Company to drive
sustained value for its practices, patients, and shareholders. To
that end, I would like to congratulate Nate on his new role; I am
very confident in his skills and abilities, as well as those of our
entire senior leadership team, and I look forward to working
alongside them throughout this next phase of the Company,” said Mr.
Rosenberg.
As Executive Director, Mr. Mosher will be primarily responsible
for supporting Mr. Tchaplia to ensure an effective and seamless
transition into his new role. Mr. Mosher will also remain a member
of the Company’s Board of Directors.
“Nate has an outstanding track record in multiple leadership
positions at Dentalcorp, and we look forward to supporting him in
his new role as President and the entire senior leadership team,”
said Jeff Rosenthal, Lead Director.
Certain Arrangements Involving Mr. Rosenberg
In addition to the senior leadership changes noted above, the
Company has entered into certain arrangements with Mr. Rosenberg.
In particular, (a) the Company has agreed to continue to nominate
Mr. Rosenberg as a director until January 1, 2029, provided that he
continues to own not less than 2.5% of the issued and outstanding
Subordinate Voting Shares and Multiple Voting Shares of the Company
(subject to certain limited adjustments consistent with similar
calculations under the Company’s articles); (b) Mr. Rosenberg has
agreed to convert the Multiple Voting Shares held by entities
controlled by him upon the earliest to occur of: (i) January 1,
2028 (rather than May 27, 2041); (ii) the listing by the Company of
its Subordinate Voting Shares on a national U.S. stock exchange;
and (iii) Mr. Rosenberg owning less than 2.5% of the issued and
outstanding Subordinate Voting Shares and Multiple Voting Shares of
the Company (subject to certain limited adjustments consistent with
similar calculations under the Company’s articles); and (c) certain
loans owed by Mr. Rosenberg to the Company, having an aggregate
principal amount of $52.3 million, will be exchanged for the same
($52.3 million) aggregate face amount of preferred shares, subject
to the approval of the Toronto Stock Exchange and the satisfaction
of certain customary closing conditions, on the terms described
below, all as approved by the Company’s Board of Directors (with
Mr. Rosenberg abstaining from voting), on the recommendation of its
Governance, Nominating and Compensation Committee (the “Exchange
Transaction”).
Pursuant to the Exchange Transaction, which the Company is
undertaking so that, like most other public companies, it will not
have outstanding any personal loans to its senior executives, the
Company’s full interest in its loans to GR BCM2 #2 Acquisition
Limited Partnership (the “Partnership”), a limited partnership
owned and controlled, directly or indirectly, by Mr. Rosenberg –
which have an aggregate principal amount of $52.3 million, are
non-interest bearing, are 50% forgivable if the Company’s share
price exceeds $28 per share, mature in 2026, are limited in
recourse to 8.1 million shares of the Company owned by the
Partnership and are secured by such shares (provided that the
Company has agreed to postpone and subordinate such security to a
third party lender in an amount not to exceed $50 million) – will
be transferred to a private holding company which is owned and
controlled, directly or indirectly, by Mr. Rosenberg (“HoldCo”). In
consideration for the transfer of these loan receivables, HoldCo
will issue $52.3 million aggregate face amount of redeemable
preferred shares to the Company (the “Preferred Shares”),
consisting of 2,000,000 Class B Preferred Shares with a face amount
of $7.35 per share ($14.7 million aggregate face amount) and
3,533,486 Class C Preferred Shares with a face amount of $10.65 per
share ($37.6 million aggregate face amount). Please refer to the
Company’s management information circular dated April 9, 2024 for
information regarding the Company’s existing management loan
program, which is available under the Company’s profile on SEDAR+
at www.sedarplus.ca.
After the completion of the Exchange Transaction, HoldCo will
have the option to redeem the Class B Preferred Shares from time to
time (and in certain circumstances will be obligated to redeem the
Class B Preferred Shares) at the redemption prices described below,
by either paying cash or delivering shares of the Company in the
manner described below; and HoldCo will be obligated to redeem the
Class C Preferred Shares no later than January 1, 2029 (or earlier,
in certain circumstances) at the redemption prices described below,
by either paying cash or delivering shares of the Company in the
manner described below.
Unless Mr. Rosenberg has been terminated for cause or resigned
without good reason, HoldCo may redeem a specified face amount of
the Class B Preferred Shares on specified dates for nominal
consideration ($6.4 million face amount on January 1, 2025; $3.2
million face amount on January 1, 2026; and $3.2 million face
amount on January 1, 2027). Any Class B Preferred Shares that are
not redeemed for nominal consideration in the foregoing manner may
be redeemed by HoldCo at any time, by paying $7.35 (or delivering
one share (or such fraction of a share with a value equal to $7.35)
of the Company) per Class B Preferred Share being redeemed. If Mr.
Rosenberg is terminated for cause, HoldCo must redeem all of the
Class B Preferred Shares that are then outstanding, by paying $7.35
(or delivering one share (or such fraction of a share with a value
equal to $7.35) of the Company) per Class B Preferred Share being
redeemed.
HoldCo must redeem all of the Class C Preferred Shares on the
earliest to occur of (a) January 1, 2029; (b) certain change of
control events; (c) Mr. Rosenberg’s termination for cause; or (d)
Mr. Rosenberg’s resignation without good reason, in each case by
paying $10.65 (or delivering one share (or such fraction of a share
with a value equal to $10.65) of the Company) per Class C Preferred
Share being redeemed; provided that if Mr. Rosenberg suffers a
death or disability, $12.8 million aggregate face amount of the
Class C Preferred Shares (less the aggregate face amount of the
Class B Preferred Shares that have already been redeemed for
nominal consideration in the manner described above) may be
redeemed for nominal consideration.
The ability of HoldCo to make any redemption payment that may be
required under the terms of the Preferred Shares will be subject to
the value of the shares of the Company owned by HoldCo, net of any
liabilities of HoldCo, being sufficient to satisfy such redemption
payment. Although HoldCo has agreed to certain restrictive
covenants imposing limitations (subject to certain exceptions) on
its ability to (among other things) sell Subordinate Voting Shares
of the Company, incur additional liabilities (with third-party debt
being limited to $24 million), pay dividends or similar
distributions, and repurchase its own common shares, there can be
no assurance that HoldCo will have sufficient funds to satisfy a
redemption payment on the Preferred Shares.
Early Warning
Although the Exchange Transaction will not result in any change
in the control, direction or beneficial ownership of the MVSs or
SVSs held by Mr. Rosenberg and his affiliates, this press release
is being issued in satisfaction of the requirements of Part 3.1(1)
of National Instrument 62-103 - The Early Warning System and
Related Take-Over Bid and Insider Reporting Issues to disclose a
change in a material fact included in a previously filed early
warning report. An early warning report regarding the Exchange
Transaction will be filed under the Company’s profile on SEDAR+ at
www.sedarplus.ca. The Partnership is located at 181 Bay Street,
Suite 2600 Toronto, Ontario M5J 2T3.
As of the date of this press release, and immediately following
completion of the Exchange Transaction, Mr. Rosenberg controls,
directs and beneficially owns, directly or indirectly, 9,183,822
Multiple Voting Shares, representing 100% of the issued and
outstanding Multiple Voting Shares or 33.83% of the votes attached
to all of the Company’s issued and outstanding Shares and 62,146
Subordinate Voting Shares, representing approximately 0.03% of the
issued and outstanding Subordinate Voting Shares or 0.02% of the
votes attached to all of the Company’s issued and outstanding
Shares. In addition, Mr. Rosenberg also holds 121,977 Restricted
Share Units, 134,268 Performance Share Units and 2,750,000 Options,
which are, in each case, exercisable for Subordinate Voting
Shares.
Forward-Looking Information
This release includes forward-looking information and
forward-looking statements within the meaning of applicable
Canadian securities legislation, including the Securities Act
(Ontario). The forward-looking information in this press release
includes, but is not limited to, the information and statements
about personnel changes, including Messrs. Tchaplia and Mosher’s
roles and responsibilities and the Company’s search for a Chief
Financial Officer, the conversion of the Company’s Multiple Voting
Shares into Subordinate Voting Shares, the potential listing of the
Company’s Subordinate Voting Shares on a national U.S. Stock
Exchange, completion of the Exchange Transaction and Mr.
Rosenberg’s ownership, control or direction over securities of the
Company, the Company’s objectives and strategies to achieve those
objectives, our financial outlook, and about the Company’s beliefs,
plans, expectations, anticipations, estimates, or intentions.
Forward-looking information includes words like could, expect, may,
anticipate, assume, believe, intend, estimate, plan, project,
guidance, outlook, target, and similar expressions suggesting
future outcomes or events.
Forward-looking statements are necessarily based upon
management’s perceptions of historical trends, current conditions
and expected future developments, as well as a number of specific
factors and assumptions that, while considered reasonable by
management as of the date on which the statements are made, are
inherently subject to significant business, economic and
competitive uncertainties and contingencies which could result in
actions, events, conditions, results, performance or achievements
to be materially different from those projected in the
forward-looking statements.
Actual results and the timing of events may differ materially
from those anticipated in the forward-looking information as a
result of known and unknown risk factors, many of which are beyond
the control of the Company, and could cause actual results to
differ materially from the forward-looking statements. Such risks
include, but are not limited to, the factors described under “Risk
Factors” in the Company’s most recent AIF and Annual MD&A.
Accordingly, we warn readers to exercise caution when considering
statements containing forward-looking information and caution them
that it would be unreasonable to rely on such statements as
creating legal rights regarding the Company’s future results or
plans. We are under no obligation (and we expressly disclaim any
such obligation) to update or alter any statements containing
forward-looking information or the factors or assumptions
underlying them, whether as a result of new information, future
events, or otherwise, except as required by applicable securities
laws. All of the forward-looking information in this release is
qualified by the cautionary statements herein.
About Dentalcorp
Dentalcorp is Canada's largest and one of North America's
fastest growing networks of dental practices, committed to
advancing the overall well-being of Canadians by delivering the
best clinical outcomes and unforgettable experiences. Dentalcorp
acquires leading dental practices, uniting its network in a common
goal: to be Canada's most trusted healthcare network. Leveraging
its industry-leading technology, know-how and scale, Dentalcorp
offers professionals the unique opportunity to retain their
clinical autonomy while unlocking their potential for future
growth. To learn more, visit dentalcorp.ca.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240617801898/en/
For more information, please contact: Investor Relations
Nick Xiang Senior Director, Corporate Finance
nick.xiang@dentalcorp.ca Media Sebastien Bouchard Vice
President, Corporate Communications
sebastien.bouchard@dentalcorp.ca
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