Zenabis Announces Extension and Partial Conversion of Secured Convertible Notes
Vancouver, British Columbia – June 4, 2020 – Zenabis Global Inc. (TSX:ZENA) (“Zenabis” or the “Company”) is pleased to announce that it has entered into definitive agreements (the “Note Amending Agreements”) with the holders (the “Noteholders”) of each of the subordinated secured convertible notes originally issued by Zenabis Investments Ltd. on October 17, 2018, as amended on August 21, 2019 and January 31, 2020 (each, a “Note” and collectively, the “Notes”). The key terms of the Note Amending Agreements include:
- the deferral of the maturity date of the Notes from June 30, 2020 to March 31, 2021 (the “New Maturity Date”) with amortization payments against the remaining principal amount of each Note (after giving effect to the Immediate Conversion) due on September 30, 2020 (40% of the remaining principal amount of each Note) and December 31, 2020 (40% of the remaining principal amount of each Note);
- the immediate conversion of 22.88% of the outstanding principal amount of each Note into common shares of Zenabis (“Common Shares”) at a price of $0.10232 per Common Share (the “Immediate Conversion”) resulting in the issuance of an aggregate 25,415,836 Common Shares to the Noteholders and an aggregate reduction to the principal amount of the Notes of $2,600,548 (from $11,364,783 to $8,764,234);
- Zenabis’ payment of: (i) the accrued interest on the Notes in cash on the date of the Immediate Conversion; and (ii) an amendment fee of 5% of the remaining principal amount of each Note (after giving effect to the Immediate Conversion) on the New Maturity Date; and
- Zenabis’ grant to each Noteholder of the right to participate in future equity financings of Zenabis completed prior to March 31, 2021
Kevin Coft, Chief Executive Officer of Zenabis, stated, “We are pleased to eliminate the prior June 30 maturity through these agreements. When combined with the previously announced secured note amendment, this transitions the majority of our cannabis debt capital structure to an amortizing structure.”
The Toronto Stock Exchange (the “TSX”) has conditionally approved the Immediate Conversion and the listing of the additional Commons Shares issuable pursuant to the Immediate Conversion. Listing of these securities is subject to the Company fulfilling standard TSX listing requirements.
Zenabis is a significant Canadian licensed cannabis cultivator of medical and recreational cannabis, and a propagator and cultivator of floral and vegetable products. Zenabis employs staff coast-to-coast, across facilities in Atholville, New Brunswick; Delta, Aldergrove, Pitt Meadows and Langley, British Columbia; and Stellarton, Nova Scotia. Zenabis currently has 111,200 kg of licensed cannabis cultivation space across four licensed facilities. Zenabis has 3.5 million square feet of total facility space dedicated to a mix of cannabis production and cultivation and its propagation and floral business.
Zenabis expects its Zenabis Atholville, Zenabis Stellarton and Zenabis Langley facilities to be in steady state production in 2020. The Zenabis brand name is used in the cannabis medical market, the Namaste, Blazery and Re-Up brand names are used in the cannabis adult-use recreational market, and the True Büch brand name is used for Zenabis’ kombucha products.
Forward Looking Information
This news release contains statements that may constitute “forward-looking information” within the meaning of applicable Canadian securities legislation. This forward-looking information includes, among other statements, statements regarding the closing of the transactions contemplated by the Note Amending Agreements; Zenabis’ issuance of 25,415,836 Common Shares pursuant to the Immediate Conversion and 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. 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 in the annual information form dated March 30, 2020, 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.