An arbitrator has determined Nashville, Tenn.-based SmileDirectClub owes San Jose, Calif.-based Align Technology a $99.7 million award, including $54.2 million already paid, Yahoo Finance reports.
SmileDirectClub must pay Align $45.5 million and additional daily interest of $3,000 starting March 13 until payment is made in full. The payment is related to claims made by Align about the valuation of Align’s membership interest in SmileDirectClub.
On July 3, 2019, Align filed a confidential demand for arbitration challenging the propriety of SmileDirect Club’s entities’ determination of the capital account balance as of Oct. 31, 2017.
The arbitrator favored Align and determined the value of the capital account balance to be $97.6 million, offset by $54.2 million paid over the last two years to Align for the capital account. The arbitrator directed SmileDirectClub to pay the difference of $43.4 million plus interest of $2.1 million, and additional interest of approximately $3,000 per day.
Align has requested the American Arbitration Association identify March 31, 2021, as the deadline for SmileDirectClub’s payment of the $45.5 million.
“SmileDirectClub is pleased to resolve this matter in a way that will not have a material impact on the company or its financials, with a payment in an amount the Company had already set aside,” Susan Greenspon Rammelt, chief legal officer and executive vice president of business affairs at SmileDirectClub, said in a statement emailed to Becker’s. “While we are disappointed that the arbitrator awarded any additional funds to a party who was found to have breached the terms of the restrictive covenants that it was subject to, SmileDirectClub got the ability to repurchase Align’s 19 percent ownership in the Company, worth over 1 billion dollars, for a fraction of that price, and also obtained the extension of the restrictive covenants through August 2022.”