VANCOUVER, July 2, 2019 /CNW/ - Zenabis Global Inc. (TSX:ZENA) ("Zenabis" or the "Company") today announced that its wholly-owned subsidiary, Zenabis Ltd., has entered into an agreement with High Park Holdings Ltd. ("High Park") (the "Supply Agreement"), a wholly-owned subsidiary of Tilray, Inc. (NASDAQ:TLRY) ("Tilray"), pursuant to which High Park will advance CAD $30 million to Zenabis (the "prepaid amount") in return for a supply of dried cannabis from Zenabis.
Under the terms of the Supply Agreement, Zenabis will deliver a monthly quantity of dried cannabis to High Park commencing in October 2019. Zenabis expects the prepaid amount to be retired within a year. Zenabis does not expect delivery commitments to High Park to impact its ability to supply existing customers. The wholesale pricing under the Supply Agreement will vary depending on the product type and format High Park elects to order.
"Zenabis is well-positioned to supply high-quality cannabis to High Park via this non-dilutive financing arrangement that capitalizes on our rapidly increasing annual cultivation capacity, which we expect to reach 131,200 kg of dried cannabis before deliveries to High Park are scheduled to commence. This Supply Agreement demonstrates the confidence of high-quality counterparties in our ability to produce consistent, premium cannabis product and we are looking forward to fulfilling our commitments to High Park, as well as to our provincial counterparties and the communities in which we operate," said Andrew Grieve, Chief Executive Officer of Zenabis.
Mr. Grieve continued, "This arrangement significantly reduces the requirement for potential further draws on our $60 million unsecured convertible debenture facility."
Brownstone Advisors Inc. ("Brownstone") acted as strategic advisors to Zenabis in connection with the Supply Agreement. Zenabis will pay a strategic advisory fee to Brownstone, which fee will include (subject to receipt of all required regulatory approvals) 319,148 common shares of Zenabis.
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. In addition to gaining technologically advanced knowledge of plant propagation, the recent addition of state-of-the-art greenhouses in Langley, Pitt Meadows and Aldergrove provides Zenabis with 3.5 million square feet of facility space that can, if fully converted, be dedicated to cannabis production.
If all facility space at Zenabis Atholville, Zenabis Stellarton, Zenabis Delta and Zenabis Langley is fully converted 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 cannabis production space at its Langley facility, with this production strategically positioned on Canada's coasts. Zenabis expects these facilities to have an annual design capacity of 131,200 kg of dried cannabis by the third quarter of 2019. These facilities, if fully built out and converted for cannabis production, would have an annual design capacity to yield approximately 478,800 kg of dried cannabis annually, for both national and international market distribution. An additional 700,000 square feet of greenhouse space will be used to continue the existing propagation business and produce industrial hemp, and can be converted to cannabis production at such a time that is beneficial to the strategic position of the Company. The Zenabis brand name is used in the cannabis medical market, while the Namaste and Blazery 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. 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 the expected timing and quantities of deliveries under the Supply Agreement; and the expected timing and completion of current and planned 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 in the shelf prospectus dated April 9, 2019, 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.
SOURCE Zenabis Global Inc.