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To receive deferred consideration of $24.7 million


Vancouver, British Columbia, January 4, 2021 – Zenabis Global Inc. (TSX:ZENA) (“Zenabis” or the “Company“) announces today that it has entered into a rental rebate, liability contribution and share purchase agreement (the “Agreement“) with Langley Propagation and Floral Company Ltd. (“Langley“), which provides for the sale of all of the shares of the Company’s wholly-owned subsidiary Bevo Farms Ltd. (“Bevo“) owned by Zenabis, funding for certain liabilities of Zenabis, the retention of the existing debt of Bevo by this entity combined with a guarantee of the existing debt of Bevo by Langley, and significant reductions to certain rent amounts owing by Zenabis to Bevo, subject to the terms and conditions therein (the “Transaction“). In connection with and concurrently with the execution of the Agreement, Langley subscribed for shares in the capital of Bevo (the “Subscription”), resulting in Langley owning approximately 99% of the issued and outstanding shares of Bevo, with the Company retaining approximately 1% of the issued and outstanding shares of Bevo pending the closing of the Transaction (the “Closing“).

Rationale for the Transaction

Zenabis believes the Transaction brings a number of key benefits to the Company’s shareholders, including:

  • Commitment to Core Business: The Transaction will result in the disposition of Zenabis’ propagation business, which has been operated through Bevo, allowing Zenabis to focus on its core business of producing and selling cannabis and value-add cannabis products.


  • Continuity of Zenabis Langley: The Transaction will enable the Company to continue to operate its cannabis facility in Langley, BC, which is owned by Bevo and leased to Zenabis.


  • Improved Financial Position: The Transaction will result in cash proceeds and rent concessions and rebates, as described below, that will improve the Company’s liquidity position and overall financial capacity.


  • Significant Reduction of Debt Obligations: The Transaction will reduce the Company’s outstanding debt obligations on a consolidated basis, as Langley has indirectly assumed the obligations of Bevo under a secured credit agreement provided to Bevo by a major Canadian chartered bank (the “Credit Agreement“), and has provided a guarantee under this Credit Agreement, resulting in an immediate reduction in the consolidated indebtedness of Zenabis of approximately $42,500,000.

Transaction Overview

The acquisition by Langley of all of the issued and outstanding shares of Bevo will be completed in the following steps: (i) the Subscription, by which Langley has subscribed for Bevo shares representing approximately 99% of the issued and outstanding shares of Bevo for aggregate consideration of $100,000 concurrently with the execution of the Agreement; and subsequently (ii) the purchase at the Closing by Langley of the remaining issued and outstanding shares of Bevo held by the Company pursuant to the Agreement (the “Purchased Shares“).


The Closing is subject to a number of conditions including, but not limited to, the settlement at or prior to the Closing of negotiations with one of the Company’s creditors regarding the discharge of certain subordinate encumbrances on certain assets of Bevo and its subsidiaries and a first-ranking encumbrance on the Company’s shares of Bevo.

Under the terms of the Agreement, the consideration receivable by Zenabis pursuant to the Agreement is comprised of the following:

  • Cash on Closing: Cash in an amount equal to $10,000,000, subject to customary adjustments (as adjusted, the “Cash Consideration“), including adjustments for amounts payable to discharge certain outstanding Bevo debt and encumbrances, which shall be paid by Langley and Bevo to Zenabis at the Closing.


  • Short-term Rent Rebate: Bevo has agreed to provide certain rent concessions, rebates, or forgiveness of rent payable in arrears by the Company under the existing lease agreement (the “Bevo Lease”) between Bevo and one of the Company’s wholly-owned subsidiaries, Zenabis Operations Ltd. (“Zenabis Operations”) in an aggregate amount of up to $5,700,000 (the “Short Term Rent Rebate“).


  • Long-Term Rent Rebate: Bevo and Langley agreed to pay or provide certain rent concessions and rebates in an aggregate amount of up to $9,000,000 (the “Long Term Rent Rebate“) upon the payment of future quarterly rents by Zenabis Operations in the amount of $750,000 (the “Quarterly Rent Amount“) under the Bevo Lease and satisfied by quarterly rebates in the amount of $375,000 (the “Quarterly Rent Rebate Amount“) for a minimum of six years.


Pursuant to the Agreement, Langley and Bevo have been granted the right to participate in certain qualifying equity offerings of the Company to (i) discharge certain outstanding encumbrances up to specified limits and to (ii) provide the Company with an alternative means of realizing the Short Term Rent Rebate and the Long Term Rent Rebate at its option (the “Equity Participation Right”). Any securities received by Langley or Bevo pursuant to the Equity Participation Right shall be sold by Langley and/or Bevo within no more than 120 days of receipt or the expiration of the applicable statutory hold period, with the cash proceeds from the sale of such securities paid to the Company to satisfy the Short Term Rent Rebate, first, and the Long Term Rent Rebate, second. The Company also has the right in connection with certain qualifying equity offerings of the Company to deem the Equity Participation Right exercised by Langley for the acquisition of equity securities with a value of up to $3,000,000, the proceeds of disposition of which shall be used to satisfy future Quarterly Rent Rebate Amounts payable by Bevo in the 12 months following such election. The Equity Participation Right and the right of the Company to deem the Equity Participation Right exercised are subject to the approval of the Toronto Stock Exchange (the “TSX”).

The shareholders of Langley have provided limited recourse guarantees in favour of the Company in respect of Langley’s obligations to pay the Cash Consideration under the Agreement in the aggregate amount of $13,723,000.

Bevo’s management team will remain with Bevo following the Transaction, and certain members of Bevo management have committed to making minority investments in Langley to support Bevo’s ongoing business.

The Company will continue to provide an unsecured guarantee of the obligations under the Credit Agreement as a Credit Party thereto until an outside date of January 22, 2022, provided that Langley and Bevo are required to use commercially reasonable efforts to procure an earlier release, while taking into account that Langley has also agreed to provide a guarantee under the Credit Agreement, and that the Company has an indemnity from Langley against any claims against this unsecured guarantee. The Agreement further provides that the Company will have certain approval rights with respect to the management and conduct of the business of Bevo until the Company has been released from all obligations under the Credit Agreement.

The board of directors of Zenabis has unanimously determined that the Transaction is in the best interests of Zenabis and its shareholders, the terms of the Transaction are reasonable and the Transaction will improve the financial position of Zenabis and will benefit all shareholders. Dan Burns, Chair of the Board of Directors of Zenabis, stated, “We are very pleased to take this step to focus on the continued success of our core cannabis business and significantly reduce our overall leverage.”

Subsequent to the Transaction and the December 31, 2020, $7.0 million repayment of Tranche 3 of the Secured Debentures, the Company’s debt totals $65.1 million, compared to $119.1 million as of September 30, 2020, the date of the Company’s most recently released consolidated interim financial statements.  Details of the Company’s current debt structure is included below:


Company's current debt structure table
The Agreement will be available under Zenabis’ profile at www.sedar.com. 


Zenabis is a significant Canadian licensed cultivator of medical and recreational cannabis. Zenabis employs staff coast-to-coast, across facilities in Atholville, New Brunswick; Langley, British Columbia; and Stellarton, Nova Scotia. Zenabis currently has 111,200 kg of licensed cannabis cultivation space across three licensed facilities in Canada, together with its cannabis import, export and processing joint venture, ZenPharm, operating from Birżebbuġa, Malta.


The Zenabis brand name is used in the cannabis medical market, and the Namaste, Blazery, and Re-Up brand names are used in the cannabis adult-use recreational market.



The TSX has not reviewed and does not accept responsibility for the adequacy of the content of the information contained herein. This press release contains certain “forward-looking statements” and “forward-looking information” as defined under applicable Canadian securities laws. Forward-looking statements or forward-looking information involve risks, uncertainties and other factors that could cause actual results, performances, prospects and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward- looking statements or forward-looking information can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “project,” “estimate,” “expect,” “believe”, “future,” “likely,” “may,” “should,” “could”, “will” and similar references to future periods. All statements other than statements of historical fact included in this release are forward-looking statements, including, without limitation, statements regarding the timing of and other matters associated with the closing of the Transaction. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements or information. Important risks and factors that could cause actual results to differ materially from Zenabis’ plans and expectations include the actual results of business negotiations, marketing activities, adverse general economic, market or business conditions, regulatory changes and other risks and factors detailed herein and from time to time in the filings made by Zenabis with securities regulators and stock exchanges. Any forward-looking statement or information only speaks as of the date on which it was made and, except as may be required by applicable securities laws, Zenabis disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. Although Zenabis believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance, and accordingly, investors should not rely on such statements.

For more information, visit: https://www.zenabis.com.

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Email: media@zenabis.com

Phone: 1-855-936-2247

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Phone: 1-855-936-2247