Zenabis Enters Into Credit Agreement with a Major Canadian Chartered Bank for $51,000,000 Credit Facility
Zenabis has entered into a $51,000,000 credit agreement for credit facilities, provided by a major Canadian chartered bank for the purposes of repayment of existing Bevo Farms Ltd. debt, the intended acquisition of Topgro and conversion of the Langley Facility for cannabis production
Vancouver, British Columbia – January 21, 2019 – Zenabis Global Inc. (“Zenabis”) (TSXV: ZENA) is pleased to announce that on January 20, 2019 (the “Closing Date”) Zenabis, through its subsidiary Bevo Farms Ltd. (“Bevo”), entered into a credit agreement for an aggregate of $51,000,000 in credit facilities (the “Facilities”) with a major Canadian chartered bank (the “Lender”). The Facilities are available as a $46,700,000 term loan, $2,000,000 revolving line of credit, $2,000,000 hedging facility, and $300,000 credit card for purposes described below.
- Revolving Facility: $2,000,000 credit facility to be drawn, repaid and redrawn at the discretion of the borrower to fund working capital and general corporate purposes.
- Term Facility Tranche 1: $33,256,958 by way of a single advance for the repayment of current indebtedness provided by FCC, the repayment of existing equipment loans and the intended acquisition of Topgro.
- Term Facility Tranche 2: $13,443,042 for capital expenditures. This includes $12,943,042 towards the conversion of first 435,600 sq. ft. of Zenabis Langley for the purposes of cannabis cultivation and production, available from time to time at the discretion of the borrower in up to five installments, up to and including the Final Advance Date of July 30, 2019. This tranche also includes $500,000 for propagation conversion capital expenditures for Zenabis Topgro.
- Hedging Facility: $2,000,000 credit facility for the purposes of managing interest rate and foreign exchange risks.
- Credit Card Facility: $300,000 for general corporate purposes.
The obligations under the Facilities will be primarily secured by Zenabis’ Langley facility and the Topgro facilities. The Revolving Facility and Term Facility will mature on the date that is three years from the Closing Date, January 21, 2022. The sources and intended uses of funds regarding the term facility are outlined below. Any advances under the Revolving Facility and Term Facility are subject to certain conditions precedent customary for financings of this type.
All credit facilities are subject to the customary financial covenants (measured quarterly) for a financing of this type.
|Sources of Funds||$||%|
|Term Facility Tranche 1||33,256,958||71.2%|
|Term Facility Tranche 2||13,443,042||28.8%|
|Uses of Funds||$||%|
|Repayment of FCC Loans||20,865,000||44.7%|
|Repayment of Equipment Loans||391,958||0.8%|
|Zenabis Langley Capital Expenditure||12,943,042||27.7%|
|Topgro Capital Expenditure||500,000||1.1%|
The Topgro transaction is expected to close imminently.
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.