Also provides update on Convertible Debenture financing and announces filing of Preliminary Base Shelf Prospectus
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
VANCOUVER, March 18, 2019 /CNW/ - Zenabis Global Inc (TSXV:ZENA) ("Zenabis" or the "Company") is pleased to provide this update on certain operational matters.
Construction at Zenabis Atholville is progressing on schedule. The remaining conversion work is expected to add an additional 25,000 kg in annual production capacity, which will become operational in stages in the second quarter of 2019. Zenabis has submitted a license amendment for five additional flower rooms at Zenabis Atholville. This amendment is expected to increase the run-rate production capacity of Zenabis Atholville to 12,500 kg per year by the end of April 2019 (at this point in time the total run-rate production capacity of Zenabis is expected to be 13,400 kg per year). Zenabis has approximately $47,600,000 in capital expenditure remaining at Zenabis Atholville.
Conversion of Zenabis Langley is split into the following stages:
- the first 10 acres of greenhouse ("Site A"); and
- the remaining 38 acres of greenhouses ("Site B").
Construction is currently focused on Site A. To date, Zenabis has spent $3,700,000 of the approximately $30,000,000 budget for Site A. Approximately 41.7% of the Site A buildout will be funded by the BMO term loan. Zenabis expects that approximately half of Site A will be operational by June 2019 with a run-rate production capacity of 43,050 kg per year. Zenabis expects that Site A will be fully operational by early in the third quarter of 2019, representing incremental production capacity of 43,050 kg per year (the total Zenabis Langley run-rate production capacity at this point of time is expected to be 96,100kg). Zenabis expects that work will begin at Site B late in the second quarter of 2019 or early in the third quarter of 2019. Zenabis' budget for the Site B conversion is approximately $120,000,000.
The Company also announces that it expects to close the previously announced private placement of 15,000 unsecured debentures on or about March 20, 2019. Eight Capital has agreed to purchase the debentures on a "bought deal" private placement basis pursuant to applicable securities laws exemptions, at a price of $1,000 per debenture for gross proceeds of $15,000,000. Also as previously announced, Eight Capital has agreed to offer for sale an additional 60,000 convertible debentures for additional gross proceeds of $60,000,000. The additional debentures will be issuable in tranches at the option of the Company.
Finally, the Company announces that it has filed a preliminary short form base shelf prospectus (the "Shelf Prospectus") with the securities commissions in each of the provinces of Canada, except Québec.
The Shelf Prospectus, when made final, will allow the Company to offer up to $100,000,000 of common shares, preferred shares, debt securities, warrants and units, or any combination thereof, from time to time during the 25-month period that the (final) Shelf Prospectus is effective. The Company filed this Shelf Prospectus in order to maintain financial strength and flexibility going forward but has not entered into any agreements or arrangements to authorize or offer any securities under the Shelf Prospectus at this time. The specific terms of any future offering of securities, including the use of proceeds from any offering, will be established in a prospectus supplement to the Shelf Prospectus, which supplement will be filed with the applicable securities regulatory authorities.
A copy of the Shelf Prospectus can be found under the Company's profile on SEDAR at www.sedar.com. Copies of the Shelf Prospectus may also be obtained by contacting the Chief Administrative Officer of the Company at Suite 205, 1688 – 152nd Street, Surrey, British Columbia V4A 4N2, telephone (855) 936-2247.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Zenabis is a significant licensed cannabis cultivator of medical and recreational cannabis, and employs staff coast-to-coast, across facilities in Atholville, New Brunswick; Delta and Langley, B.C.; 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 provides Zenabis with 3.5 million square feet of facility space that can, upon full conversion, be dedicated to cannabis production.
If all facility space is fully built out 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 space at its Langley facility (an additional 700,000 square feet of greenhouse space will be used to continue the existing propagation business, to be converted at such a time that is beneficial to the strategic position of the company), strategically positioned on Canada's coasts. These facilities, if fully converted for cannabis production, would have the design capacity to yield approximately 479,300 kg of dried cannabis annually, for both national and international market distribution. The Zenabis brand name is used among the medical market, while Namaste is used to service the adult-use recreational market.
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: completion of any offering of securities under the Shelf Prospectus, the use of the proceeds thereof, and the design capacity, conversion, expansion and optimization of our facilities, and the budget for such conversion, expansion and optimization. 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 Zenabis Management Information Circular dated November 23, 2018, 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, labour, materials and equipment necessary to complete such construction or conversion will be available, and funds necessary to complete such construction or conversion will be available on terms acceptable to the Company. 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.
For further information: Andrew Grieve, Chief Executive Officer, 1-855-936-2247; Media Relations: [email protected], 1-844-523-8679; Investor Relations: Shobana Thaya, Zenabis Global Inc., [email protected], 1-844-523-8679