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Zenabis Completes $15 million First Tranche of $75 million Convertible Debenture Financing

Zenabis Completes $15 million First Tranche of $75 million Convertible Debenture Financing

VANCOUVER, BC, March 27, 2019 – Zenabis Global Inc (TSXV:ZENA) (“Zenabis” or the “Company”) is pleased to announce that it has closed its previously announced bought deal private placement of 15,000 unsecured convertible debentures (the “Convertible Debentures”) of the Company, at a price of $1,000 per Convertible Debenture (the “Issue Price”) for gross proceeds of $15,000,000 (the “Offering”). Eight Capital (“Eight Capital”) acted as underwriter of the Offering.

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.

The Convertible Debentures have a maturity date of September 27, 2021, being 30 months from the date of issue (the “Maturity Date”) and bear interest from the date of issue at 6.0% per annum, payable semi-annually on June 30 and December 31 of each year. The Convertible Debentures are 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 Maturity Date. The Convertible Debentures have a conversion price of $3.62 per Common Share (the “Conversion Price”). The purchaser of the Convertible Debentures also received, for no additional consideration, 55 warrants of the Company for every Convertible Debenture purchased (the “Warrants”). Each Warrant is 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.

The Company may force the conversion of all of the principal amount of the then outstanding Convertible Debentures at the applicable Conversion Price at any time after the date that is four months and one day following the date of issue of the Convertible Debentures, provided that the Company gives 30 days’ notice of such conversion, which notice may be given at any time after the daily volume weighted average trading price of the Common Shares is greater than a 40% premium to the Conversion Price for any 10 consecutive trading days.

The Convertible Debentures, the Warrants and the Common Shares underlying both, are subject to a statutory hold period which expires on July 28, 2019, being four months and one day following the date of issue of the Convertible Debentures.

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

In addition, the Company has also entered into an Investment Agreement with three institutional investors (the “Subscribers”), and an Agency Agreement with Eight Capital, pursuant to which Eight Capital has agreed to offer for sale, and the Subscribers have agreed to purchase, an additional 60,000 convertible debentures (the “Additional Debentures”) at the Issue Price, for additional gross proceeds of $60,000,000 (the “Additional Offering”). The Additional Debentures will be issuable in four tranches of $15,000,000, at the option of the Company. 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 the issuance of each tranche of Additional Debentures (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, provided, however, that the Company may decline, in its sole discretion, to issue any Additional Debentures. Purchasers of Additional Debentures will receive, for no additional consideration, that number of warrants that is equal to 20% of the number of Common Shares that an Additional Debenture shall be convertible into (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. As consideration for its services in connection with the Additional Offering, Eight Capital will receive a cash commission equal to 8.0% of the gross proceeds of the Additional Offering.

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 approximately 479,300 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 adult-use recreational market.

Note: Neither the 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.

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 any Additional Offering, the use of the proceeds of the Offering or any Additional Offering, and 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.

Media Relations

Investor Relations
Shobana Thaya
Zenabis Global Inc.

Andrew Grieve
Chief Executive Officer