Zenabis Announces $60m Committed Revolving Credit Facility to Refinance Senior Debt held by Sundial Growers
Vancouver, British Columbia – January 22, 2021 – Zenabis Global Inc. (TSX:ZENA) (“Zenabis” or the “Company”) is pleased to announce that it has entered into a credit agreement (the “Credit Agreement”) with a Canadian private debt fund (the “Agent“), as agent on behalf of certain lenders, in respect of a committed revolving credit facility in a principal amount of up to $60 million, subject to borrowing base requirements based on eligible receivables, inventory and real estate (the “Facility“).
Advances made under the Facility will bear interest at a rate per annum equal to the greater of 10% and the Toronto-Dominion Bank ‘s prime rate, from time to time, plus 7.55%, calculated daily and payable monthly. The Facility will have a maturity date of January 21, 2022 and may be extended for up to two additional periods of 180 days each with the mutual agreement of the Company and the Agent. The Facility will be secured against certain real and personal property of Zenabis and its subsidiaries.
The proceeds of the Facility will be used to repay the Company’s outstanding secured debenture, which is currently held by an affiliate of Sundial Growers and currently bears interest at a rate of 14% per annum, and for general corporate purposes, including to finance working capital requirements. This refinancing of the secured debenture will substantially reduce the Company’s interest costs.
Pursuant to the Credit Agreement, the Company has agreed to pay customary financing review and commitment fees. An additional customary commitment fee is payable upon any extension of the term of the facility. Any undrawn amounts of the Facility will bear a non-utilization fee at a rate of 2.40% per annum. The obligation of the lenders to make advances under the Facility, including the initial advance, is subject to the satisfaction of a number of conditions precedent. In addition to conditions to funding, the Credit Agreement contains customary affirmative, negative and financial covenants and customary events of default.
The Company has the right to terminate the Agreement upon 30 days’ notice, including upon a refinancing or change of control, subject to the payment of a termination fee.
In addition to the cash fees, subject to the approval of the Toronto Stock Exchange (the “TSX“) and the provisions of the Credit Agreement, the Company is required to issue to the Agent, on behalf of the lenders, at the time of the first advance under the Credit Agreement, as a partial commitment fee, 5,972,873 Zenabis common shares (the “Commitment Shares“). The Commitment Shares will subject to a hold period of four months plus one date following the date of issuance of the Commitment Shares. The issuance of the Commitment Shares is subject to the approval of the TSX.
Echelon Capital Markets is acting as exclusive financial advisor in the arrangement of this credit facility.
Shai Altman, CEO of Zenabis stated: “We are very pleased to announce this new credit agreement with our new financing partners. This committed revolving credit facility will enable the Company to substantially reduce its cost of capital while providing increased liquidity with which to finance Zenabis’ continuing revenue growth and increase its operating flexibility. We’d also like to take this opportunity to thank Echelon Capital Markets for their assistance in arranging this credit facility”.
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 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 ability of Zenabis to drawdown amounts under the Credit Facility. 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 or events to differ materially from Zenabis’ plans and expectations include the satisfaction of conditions to the lender’s commitment to fund advances under the Credit Agreement and the timing thereof, including timely receipt of all required third party approvals, including TSX approval of the Commitment Shares, the lender’s ability to fund advances under the Credit Facility, actual results of business negotiations, marketing activities, adverse general economic, market or business conditions, regulatory changes, risks relating to the COVID-19 pandemic, governmental responses thereto, measures taken by the Company in respect thereto and the impact thereof on the global economy, capital markets, the cannabis industry and the Company, 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 or events, and accordingly, investors should not rely on such statements.
For more information, visit: https://www.zenabis.com.