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Zenabis Announces $75 million Convertible Debenture Financing

Zenabis Announces $75 million Convertible Debenture Financing

VANCOUVER, BC, March 4, 2019 – Zenabis Global Inc (TSXV:ZENA) (“Zenabis” or the “Company”) is pleased to announce that it has entered into a letter of engagement with Eight Capital (the “Eight Capital Engagement”) under which Eight Capital has agreed to purchase 15,000 unsecured convertible debentures (the “Initial Debentures”) of the Company on a “bought deal” private placement basis pursuant to applicable securities laws exemptions, at a price of $1,000 per Initial Debenture (the “Issue Price”) for gross proceeds of $15,000,000 (the “Initial Offering”). In addition, pursuant to the Eight Capital Engagement, Eight Capital has agreed to offer for sale an additional 60,000 convertible debentures (the “Additional Debentures” and, together with the Initial Debentures, the “Convertible Debentures”) at the Issue Price, for additional gross proceeds of $60,000,000 (the “Additional Offering” and, together with the Initial Offering, the “Offering”). The Additional Debentures will be issuable in tranches at the option of the Company, as described in greater detail below.

The Convertible Debentures will have a maturity date of 30 months from their date of issue (the “Maturity Date”) and will bear interest (payable in cash only) from their date of issue at 6.0% per annum, payable semi-annually on June 30 and December 31 of each year.

The Convertible Debentures will be convertible, at the option of the holder, into common shares of the Company (“Common Shares”) at any time prior to the close of business on the last business day immediately preceding the applicable Maturity Date. The Initial Debentures will have a conversion price of $3.62 per Common Share (the “Conversion Price”), being the last closing price of the Common Shares on the TSXV. Each tranche of Additional Debentures shall have a conversion price equal to a fifteen percent premium to the volume-weighted average price of the Common Shares on the TSX Venture Exchange during the 5 trading-day period immediately preceding their date of issue (the “Additional Debenture Conversion Price”). Each tranche of Additional Debentures will be issuable beginning on the 30th day following the closing of the most recently issued tranche of Additional Debentures (or the closing of the Initial Debentures), provided, however, that the Company may decline, in its sole discretion, to issue any Additional Debentures.

Purchasers of the Initial Debentures will also receive, for no additional consideration, 55 warrants of the Company for every Initial Debenture purchased (the Initial Warrants”). Each Initial Warrant will be exercisable to purchase one Common Share at an exercise price of $3.62 per share, for a period of 30 months from the date of issue. Purchasers of Additional Debentures receive, for no additional consideration, that number of warrants that is equal to 20% of the number of Common Shares into which the Additional Debenture is convertible (based on the applicable Additional Debenture Conversion Price), at an exercise price that is equal to a fifteen percent premium to the applicable Additional Debenture Conversion Price.

The Company intends to use the net proceeds of the Offering to fund the cost of conversion of its facilities to cannabis production and for working capital.

As consideration for its services in connection with the Offering, Eight Capital will receive a cash commission equal to 8.0% of the gross proceeds of the Offering.

The closing date of the Initial Offering is scheduled to be on or about March 15, 2019 and is subject to certain customary conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the TSX Venture Exchange (“TSXV”) and applicable securities regulatory authorities.

Note: Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

About Zenabis

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.

If all facility space is fully built out and 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 market, 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.

Zenabis has established distribution relationships with government and third-party retailers/distributors in 9 Canadian jurisdictions; British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, and the Yukon Territory. In addition, on February 4, 2019, Zenabis announced an agreement with Shoppers Drug Mart, adding a major new retail channel to serve medical patients across Canada.

Forward Looking Information

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: completion of the Offering, the use of the proceeds thereof, the design capacity, conversion, expansion and optimization of our facilities. 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.

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Investor Relations
Shobana Thaya
Zenabis Global Inc.