VANCOUVER, BC, Jan. 6, 2021 /CNW/ – Zenabis Global Inc. (TSX: ZENA) (“Zenabis” or the “Company“) is providing an update on its review of its strategic alternatives. As previously announced on December 21, 2020, the Company appointed Echelon Capital Markets (“Echelon“) as its financial advisor. The Company has been working with Echelon to investigate alternatives to maximize shareholder value.
On December 30, 2020, Sundial Growers Inc. (“Sundial“), another licenced producer of cannabis and a competitor of Zenabis, announced that it had made a strategic investment in the senior lender (the “Senior Lender“) to the Company’s wholly-owned subsidiary, Zenabis Investments Ltd. In the Company’ view, the actions taken by Sundial since December 30, 2020 clearly demonstrate that Sundial made such investment in an attempt to coerce Zenabis into being acquired by Sundial. Prior to Sundial’s acquisition of the Senior Lender, the Company had been in late-stage discussions with the Senior Lender relating to the extension of its obligation to repay $7 million of principal amount of debt on December 31, 2020. Contrary to the discussions with the Senior Lender prior to the point at which it was acquired by Sundial, the Senior Lender substituted the soon to be consummated extension with a demand that the $7 million principal repayment be made on December 31, 2020 accompanied by a forbearance agreement. The forbearance agreement required Zenabis to enter into exclusivity arrangements with the Senior Lender in relation to any sale of the Company and also required Zenabis to accept significant potential financial penalties in excess of the outstanding balance of the debt owed to the Senior Lender. On December 31, 2020, Zenabis entered into a letter agreement to sell $7 million of dried cannabis to another major Canadian licenced producer of cannabis (the “Buyer“) and used the proceeds received under that letter agreement to make the $7 million repayment to the Senior Lender. Since making that payment on December 31, 2020, Zenabis has received notice from the Senior Lender alleging a variety of defaults under the terms of the amended and restated debenture dated June 28, 2020 (the “Senior Debt“). None of the alleged defaults are for failure to make payments of principal or interest. The Company believes the Senior Lender’s allegations to be spurious and without merit and intends to vigorously defend against what it considers to be an ill-disguised attempt to circumvent a fair and competitive process to acquire the Company by improperly foreclosing the equity of the Company or compelling Zenabis to enter into a transaction with Sundial.
Separately from discussions with Sundial, Zenabis has entered into exclusive discussions for a potential merger transaction with another significant licenced cannabis producer. There can be no assurance that these discussions will result in a binding agreement or the completion of a transaction. No further details regarding such discussions, including the identity of the counterparty, will be disclosed at this time. Zenabis does not currently intend to make any further announcements or comments on these discussions unless the circumstances so warrant.
Subject to its exclusivity obligations, Zenabis intends to continue to actively explore a broad range of alternatives to maximize shareholder value. There can be no assurance that this strategic review will result in any binding agreements or the completion of any transactions.
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 potential for, timing of and other matters associated with the execution of an agreement for, or the completion of, any strategic 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.
SOURCE Zenabis Global Inc.
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