Zenabis Global Inc. has entered into a letter agreement dated December 31, 2020, with a major Canadian licenced producer of cannabis, pursuant to which the Buyer has agreed to purchase $7 million of dried cannabis on delivery terms to be agreed under a cannabis purchase agreement to be negotiated between the parties.
At the Buyer’s discretion, it may as an alternative to entering into the Purchase Agreement, enter into a private placement transaction with Zenabis. In the event the Buyer chooses to complete the Placement as an alternative to the Purchase Agreement, Zenabis shall negotiate in good faith to conclude a definitive subscription agreement with the Buyer as soon as possible following the Buyer’s notice of same. The Placement would be subject to applicable regulatory approvals, including from the TSX.
Zenabis has directed the Purchase Amount to be paid to its senior lender, a wholly-owned subsidiary of Sundial Growers Inc., another licenced producer of cannabis, to satisfy its principal repayment obligations of $7 million to the senior lender, which were due on December 31, 2020. The Company also satisfied its other debt obligations which were due December 31, 2020. The Letter Agreement and subsequent Purchase Agreement (or Placement), together with the sale of Bevo Farms Ltd. announced concurrently and the repayments of key debt obligations which were due December 31, 2020, has greatly improved the Company’s liquidity position and overall financial capacity.
As a result of the $7.0 million repayment to its senior lender, and the concurrently announced sale of Bevo Farms Ltd. and the repayments of key debt obligations which were due December 31, 2020, the Company’s debt totals $65.1 million, compared to $119.1 million as of September 30, 2020, the date of the Company’s most recently released consolidated interim financial statements. Details of the Company’s current debt structure is included below:
|
Principal |
Principal |
||
|
Outstanding at |
Outstanding at |
Interest |
|
|
In millions of Canadian dollars |
September 30, 2020 |
December 31, 2020 |
Rate |
|
Bevo Term Debt |
|||
|
Canadian Chartered Bank Financing |
$ 42.5 |
$ – |
Floating |
|
Long-term Cannabis Debt (>2 years) |
|||
|
Secured Debentures |
$ 51.4 |
$ 51.4 |
14.0% |
|
RDC Mortgage |
$ 2.0 |
$ 2.0 |
6.0% |
|
Near-term Debt (<2years) |
|||
|
New Secured Debentures |
$ 7.5 |
$ – |
14.0% |
|
Unsecured Convertible Debentures |
$ 3.8 |
$ 3.8 |
6.0% |
|
Secured Convertible Note |
$ 2.5 |
$ 0.2 |
11.0% |
|
Unsecured Convertible Note |
$ 9.4 |
$ 7.7 |
6.0% |
|
Total |
$ 119.1 |
$ 65.1 |
Zenabis is a significant Canadian licensed cultivator of medical and recreational cannabis. Zenabis employs staff coast-to-coast, across facilities in Atholville, New Brunswick; Langley, British Columbia; and Stellarton, Nova Scotia. Zenabis currently has 111,200 kg of licensed cannabis cultivation space across three licensed facilities in Canada, together with its cannabis import, export and processing joint venture, ZenPharm, operating from Birżebbuġa, Malta.
