Zenabis Global (TSX: ZENA) announced this morning two deals wherein the firm has secured funding for its operations. The first of which, was the amendment to a current outstanding facility that was expected to come due in October. The $25 million credit facility was pushed out to October 2020.
In connection with the amended credit facility, $12.5 million share purchase warrants were issued to the lender. The warrants allow the lender to acquire shares of Zenabis for a period of one year at a 15% premium to the prior days close of the equity on the TSX.
The second funding comes directly from Tilray Inc (NASDAQ: TLRY) and is entirely non dilutive. The agreement consists of Tilray advancing c$30 million to Zenabis, with Zenabis then to supply Tilray’s subisidiary High Park Holdings with the cannabis equivalent over the next twelve months. Delivery of product is expected to start in October 2019.
“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,”Andrew Grieve, Chief Executive Officer of Zenabis
The signing of both agreements significantly reduces the stress on Zenabis’ financial situation. While the firm had $25 million in cash in the bank as of the last quarterly statements, mounting current liabilities to the tune of $93 million was heavily weighing on the companies equity performance, with suspected heavy short selling. The firm now finds itself in a much better financial position thanks to the amended outstanding facility and the non-dilutive financing provided via Tilray.
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.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.