It appears that the dilution coming to Zenabis Global (TSX: ZENA) is worse than previously thought in light of the raise announced last night. The benefit however, is that the company has upsized the financing to a whopping $20.5 million in gross proceeds.
The company announced this morning that it will be issuing 157.6 million new units of the company at a price of $0.13 per unit. Each unit consists of one common share and one common share purchase warrant, with an exercise price of $0.13 and an expiry of five years. An over-allotment option is also available, for up to a 15% increase in the offering size.
Net proceeds from the offering will be put towards a number of purposes, including:
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- Partial repayment of subordinated secured notes
- Partial repayment of Zenabis’ unsecured convertible debentures
- Partial or full repayment of its recent $7.0 million short term loan that yesterday saw a maturity extension to December 31, 2020
- Payment of an extension fee if applicable to the $7.0 million short term loan
The offering is expected to significantly impact the firms share structure, which as per TMX Money this morning has a total outstanding share count of 431,870,620. Upon closing of the latest financing, that number is to balloon to approximately 589.5 million, before any further warrants or options are exercised.
The financing is being conducted by a syndicate of agents co-lead by AltaCorp Capital and Eight Capital. Zenabis has agreed to pay finders fees consisting of a cash commission of 6%, as well as warrants equal to 6% of the offering at a price of $0.13 per warrant. Each broker warrant is valid for a period of one year.
The offering is expected to close June 24, 2020.
Zenabis Global last traded at $0.09 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.
