Zenabis Global Conducts Rights Offering at $0.15, 70% Discount to Share Price

Zenabis Global (TSX: ZENA) is in need of further funding yet again. The firm this morning announced that they are conducting a rights offering to raise $20.8 million. The offering is only available to holders of common shares of Zenabis as of the record date, being October 31, 2019.

Under the rights offering, each shareholder of Zenabis will receive one right per common share held. For each one and a half right held, the holder will be able to purchase a common share of Zenabis Global for a price of $0.15, which is a 73% discount to the volume weighted average price of the equity as of October 23, 2019.

139,086,624 common shares are expected to be issued as a result of the offering, which is currently 66.6% of all shares currently outstanding. The rights are expected to trading on the TSX under the symbol “ZENA.RT”.

Zenabis explicitly stated in the accompanying news release that while it does not need the funding, it would like to have “excess cash on hand in the best interest of shareholders.” The firm also indicated that the dilutionary event is the least dilutive option available to the company currently. However, the firm then goes on to state that the funds will be used as a result of the delays in its packaging operations scale up, as announced earlier this week, as well as for capital expenditures for its Zenabis Langley facility.

Insiders are expected to subscribe for $6.2 million in the rights offering, which equates to roughly 30% of the entire financing. The offering will see rights begin trading publicly on October 30, 2019, with the units expiring on November 27, 2019.

Zenabis Global is currently trading at $0.48 on the TSX.

Information for this briefing was found via Sedar and Zenabis Global. 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.