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.

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