Zenabis Announces Heavily Dilutive Financing For $15.0 Million

Zenabis Global (TSX: ZENA) announced this evening that it intends to continue to implode its share structure. The company will be conducting an overnight marketed best efforts offering of units, valued at approximately $15.0 million.

The financing will see units of the company sold at a price of $0.13 per unit, with each unit having one common share and one purchase warrant. Each common share purchase warrant is exercisable at a price of $0.16 for a period of five years following the closing of the offering.

It’s estimated that the offering will result in approximately 115.38 million new shares of Zenabis being created, in addition to 115.38 million new warrants.

Funds from the offering are to be utilized for general working capital and corporate purposes, as well as partial repayment of debt. Repayment of debt may occur on subordinated secured notes that are currently outstanding, or the partial or full repayment of the “tranche 3 debt” or associated extension fee.

The tranche 3 debt in question is the recent $7.0 million short term loan with 14% per annum interest that was to be paid off by July 20, 2020 – an event which was expected to occur via the sale of the firms Zenabis Delta facility. With that having yet to happen, the maturity of the loan has now been extended to December 31, 2020.

The raise will further dilute the holdings of current shareholders of the company. As of March 31, Zenabis reported having 386,685,435 common shares outstanding, as well as 42.02 million warrants and 23.28 million options. None of those warrants or options are believed to currently be in the money. However, since the end of the first quarter, Zenabis has issued numerous securities as it looks to reduce its debt load in any way possible. Issuances since March 31, 2020 include:

  • 71,255,522 common share purchase warrants at an exercise price of $0.07017 for a period of 5 years to push out debt maturities.
  • 16,085,366 common shares via the early conversion of $1,125,976 in unsecured convertible debentures at $0.07 per share.
  • 25,415,836 common shares via the early conversion of $2,600,548 in secured convertible notes at $0.10232 per share.

Furthermore, revenues in excess of $20.0 million per fiscal quarter is subject to a royalty fee as high as 3.5%, with the company also taking on a further $3.75 million in debt as an amendment fee.

The offering announced this evening is expected to close on June 24, 2020.

Zenabis Global last traded at $0.14 on the TSX.


Information for this briefing was found via Sedar and Zenabis Global Inc. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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