Zenabis strengthens its leadership team with new CEO, Andrew Grieve
Co-Founder and former CEO Rick Brar will continue to contribute as a Special Advisor
Vancouver, British Columbia – January 21, 2019 – Zenabis Global Inc. (“Zenabis”) (TSXV: ZENA) announced today that it has appointed Andrew Grieve as Chief Executive Officer, effective immediately.
Rick Brar, Zenabis’ Co-Founder and former CEO, will continue to contribute and join fellow Co-Founder Mark Catroppa as a Special Advisor. In addition, shareholders of Zenabis holding ~10% of the common shares have entered into the existing Pooling Agreement with the result that ~67% of the currently outstanding common shares are subject to Pooling Agreement restrictions on disposition. Finally, Zenabis has also entered into a credit agreement with a major Canadian chartered bank for an aggregate of $51m. ~$12m will be drawn to fund the completion of Zenabis’ Topgro acquisition.
“With the completion of the recent listing and Zenabis’ entering the next phase of its growth, as a publicly traded company, the Board has appointed a CEO with extensive experience in organizational leadership and the execution of complex transactions,” said Zenabis Board Chair Monty Sikka. “Andrew Grieve stood apart as a business and military leader with an extraordinary ability to connect vision, people, and ideas to achieve the intent of our organization. Andrew’s experience as both an entrepreneur and as financial advisor on multi-billion-dollar transactions is exactly what Zenabis requires as we enter this new phase of growth.”
Mr. Grieve is a Co-Founder of Agentis Capital, and as Co-Head of Advisory at Agentis Capital has advised on more than $20 billion of completed acquisition, financing, and project development transactions across a wide range of sectors, from infrastructure to technology and industrials. These financial advisory transactions include multi-billion dollar construction or infrastructure projects with counterparties such as the Maryland and Colorado Departments of Transportation, and clients such as the Canada Pension Plan Investment Board, the Public Service Pension Plan of Canada, and major international construction firms. Mr. Grieve has led many of Agentis Capital’s 18 principal investments, including investments where he has taken on an extensive operational role. Mr. Grieve has been an officer in the Canadian Army Reserve for 15 years, and he is currently a Major and the Battery Commander of 68 Battery, 15th Field Artillery Regiment, The Royal Regiment of Canadian Artillery.
For the past nine months, Mr. Grieve and Mr. Brar have been the primary architects behind the transaction to create Zenabis, and will continue to collaborate, combining their respective strengths to achieve Zenabis’ full potential. Mr. Grieve and Mr. Brar worked closely on developing the strategy, vision, and organizational design of Zenabis as they successfully completed the Zenabis Transaction, with ZENA debuting on the TSXV on January 10, 2019.
“This is the perfect time for Andrew to become Zenabis’ Chief Executive Officer,” said Mr. Brar, Co-Founder and former CEO. “With Zenabis becoming a public company, Andrew has the experience necessary to translate financial understanding, leadership, and organizational design into world-class execution. Andrew is a champion of the Zenabis culture and has proven his complete commitment to supporting Zenabis’ values. I look forward to continuing to contribute to Zenabis as a Special Advisor.”
“I am grateful to the Board of Directors for putting their faith in me and asking me to serve as CEO,” said Mr. Grieve. “The values of Zenabis are my values: excellence, responsibility, compliance with the law, and delivery of stakeholder value. I am excited to be working with a management team that shares these values, and shares the vision that Rick and I conceived of nine months ago. I look forward to faithfully executing my role serving the shareholders of Zenabis.”
Mr. Grieve will forego short-term annual salary and bonus compensation and instead receive long-term compensation consisting of:
- 750,000 options granted in connection with his appointment, exercisable at current market price and vesting over three years; and
- A performance incentive payment (the “PIP”) comprised of two components:
- a. A share of EBITDA generated in 2020 above $0.42 per share (subject to certain adjustments or debt outstanding); and
- b. A share of EPS generated in 2020 above $0.16 per share.
The PIP is payable in four equal installments on a quarterly basis from June 2021 through March 2022, and at each payment date is only payable to the extent the share price exceeds a specified, increasing threshold that was fixed on the basis of the current 5-day VWAP. Mr. Sikka stated, “Andrew proposed a compensation plan that was solely performance based and ensured alignment with the creation of long-term shareholder value.”
In connection with Mr. Grieve joining Zenabis as CEO, Zenabis has also agreed to enter into a separate agreement with Agentis Capital Partners in order to continue to receive financial advisory services from Agentis. The financial advisory agreement is for a term of one year and is intended to assist Zenabis in its participation in the anticipated industry consolidation over the coming year. Agentis will receive customary, market-based, success fee payments on completion of financings, acquisitions and dispositions during the term of the agreement.
In addition, a number of major shareholders in Zenabis holding ~10% of the currently outstanding common shares have executed joinders to the Pooling Agreement initially described in Zenabis’ press release dated December 21, 2018. This results in ~67% of the common shares currently outstanding being subject to the restrictions on disposition set out in the Pooling Agreement. The Pooling Agreement generally provides for the release of the shares thereunder over a 15 month period: 1% of the shares deposited thereunder for each of the first 3 months, 7.5% of the shares thereunder for each of the following 6 months and 8.75% of the shares thereunder for each of the 6 months thereafter. Mr. Grieve commented, “I am excited that several additional shareholders provided this vote of confidence in Zenabis by joining the Pooling Agreement.”
Credit Facility and Topgro Acquisition
Finally, Zenabis has also entered into a credit agreement with a major Canadian chartered bank for an aggregate of $51 million, of which $46,700,000 is a term loan, $2,000,000 is a revolving line of credit, $2,000,000 is a hedging facility, and $300,000 is available on corporate credit cards. Zenabis expects to draw ~$33 million today to repay existing indebtedness to Farm Credit Canada, repay existing equipment loans and to fund Zenabis’ Topgro Acquisition.
The credit agreement and the facilities thereunder are described in greater detail in a separate press release also dated January 21, 2019. Zenabis also expects to disseminate a press release on imminent completion of its Topgro acquisition, providing greater detail regarding the previously-announced Topgro acquisition, including a breakdown of the acquisition cost.
Zenabis Key Corporate Milestones
- On September 17, 2018, Zenabis submitted its application package to license the Langley greenhouse for cannabis production, which is currently under active review.
- In October 2018, Zenabis became a founding partner of the Centre for Medicinal Cannabis (“CMC”), a UK based non-profit organization advocating, educating and lobbying for the implementation of a fair, responsible, and evidence-based medicinal cannabis regime within the National Health System in the United Kingdom.
- Since October 2018, five additional flower rooms and 19 total rooms have been approved by Health Canada for cannabis activities and are in operation.
- On December 22, 2018, Zenabis submitted its cultivation license application for its Stellarton facility, which is currently under active review.
- On January 9, 2019, Bevo Agro Inc. and Sun Pharm completed the reverse takeover contemplated on October, 4, 2018, to become Zenabis Global Inc.
- On January 20, 2019, Zenabis executed a $51m credit agreement with a Canadian Chartered bank
- As of January 21, 2019, Zenabis has secured purchase orders from government and third-party retailers/distributors in New Brunswick, Nova Scotia, British Columbia, Saskatchewan, and the Yukon Territory.
Zenabis is a significant licensed cannabis cultivator of medical and recreational cannabis, and employs staff coast-to-coast, across facilities in Atholville, New Brunswick; Delta and Langley, B.C.; and Stellarton, Nova Scotia. In addition to gaining technologically advanced knowledge of plant propagation, the recent addition of state of the art greenhouses in Langley provides Zenabis with 3.5 million square feet of facility space that can, upon full conversion, be dedicated to cannabis production space.
If all facility space is dedicated to production, Zenabis will own, and have access to, 660,000 square feet of high quality indoor cannabis production space, as well as 2.1 million square feet of greenhouse space at its Langley facility (an additional 700,000 square feet of greenhouse space will be used to continue the existing propagation business, to be converted at such a time that is beneficial to the strategic position of the company), strategically positioned on Canada’s coasts. These facilities, if fully converted for cannabis production, would have the design capacity to yield 479,700 kg of dried cannabis annually, for both national and international market distribution. The Zenabis brand name is used among the medical space, while Namaste is used to service the recreational market.
The management team at Zenabis has significant experience in finance, agriculture, technology, pharmaceutical sales, consumer packaged goods, international distribution and brand marketing. Leadership is backed by the expertise of a Chief Growing Officer, a Chief Science Officer and Chief Medical Officer. As evidenced by letters of intent with strategic partners, and purchase orders with governments and distribution partners, Zenabis has been proven as a trusted and innovative cannabis front-runner.
This news release contains statements that may constitute “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information may include, among others, statements regarding the future plans, costs, objectives or performance of Zenabis, or the assumptions underlying any of the foregoing. In this news release, words such as “may”, “would”, “could”, “will”, “likely”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate” and similar words and the negative form thereof are used to identify forward-looking statements. In this news release, forward-looking statements relate, among other things, to: future production capacity of Zenabis; conversion, expansion and optimization of existing facilities; future products of Zenabis; future production costs of Zenabis; anticipated use of funds under its credit facility and expected completion of its Topgro acquisition. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. No assurance can be given that any events anticipated by the forward-looking information will transpire or occur. Forward-looking information is based on information available at the time and/or management’s good-faith belief with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond Zenabis’ control. These risks, uncertainties and assumptions include, but are not limited to, those described Zenabis Management Information Circular dated November 23, 2018, a copy of which is available on SEDAR at www.sedar.com, and could cause actual events or results to differ materially from those projected in any forward-looking statements. Furthermore, any forward-looking information with respect to available space for cannabis production is subject to the qualification that management of Zenabis may decide not to use all available space for cannabis production, and the assumptions that any construction or conversion would not be cost prohibitive, required permits will be obtained and the labour, materials and equipment necessary to complete such construction or conversion will be available. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Zenabis does not intend, nor undertake any obligation, to update or revise any forward-looking information contained in this news release to reflect subsequent information, events or circumstances or otherwise, except if required by applicable laws.
For more information, visit: https://www.zenabis.com.
Zenabis Global Inc.