Bevo and Sun Pharm Complete Reverse Takeover to Become Zenabis Global Inc.

Licensed producer Zenabis Ltd. has merged with Bevo Agro to become Zenabis Global - will trade as Zenabis under exchange symbol "ZENA" January 10, 2019.

VANCOUVER, Jan. 8, 2019 /CNW/ - Today, Zenabis Global Inc. ("Zenabis") is pleased to announce the completion of the reverse takeover of Bevo Agro Inc. ("Bevo") (TSXV: BVO) by Sun Pharm Investments Ltd. ("Sun Pharm") to create a company that has the potential to become one of the largest licensed marijuana companies in the world.

As previously announced on October 4, 2018, Bevo and Sun Pharm entered into an arrangement agreement with respect to the spin-out (the "Spin-Out") of Bevo's interest in CubicFarm Systems Corp. ("CubicFarm") and subsequent a reverse take-over of Bevo by Sun Pharm (the "RTO"), with the resulting combined issuer being Zenabis.

While the Spin-Out and RTO were effective at 12:01 a.m. and 12:05 a.m., respectively, on January 8, 2019, Zenabis' understanding is that key timing for investors purchasing Bevo shares on the TSX-V over the coming days is as follows:

As these trading and settlement mechanics are not within Zenabis' control, investors trading or intending to trade in shares of Bevo or Zenabis prior to January 14, 2019 are strongly encouraged to contact their investment advisors with any questions in this regard.

As an update to the information regarding the RTO set out in Bevo's information circular dated November 23, 2018, in connection with the RTO Transaction, several existing Sun Pharm securityholders exercised rights or agreed to amendments of their existing securities:

• All of the Subordinated Secured Noteholders agreed to exercise, or exercised, their warrants, which will result in Zenabis receipt of $6,212,500 through the issuance of 2,346,406 Zenabis shares. This exercise price was determined as part of the October 4, 2018 financing round;
• Subordinated Secured Noteholders agreed to the optional conversion of $2,000,000 of their notes in exchange for 755,382 Zenabis shares. This conversion price was determined as part of the October 4, 2018 financing round;
• Certain Unsecured Noteholders agreed to optional conversion of $4,378,360 of their notes in exchange for 1,653,667 Zenabis shares. This conversion price was determined as part of the October 4, 2018 financing round;
• The remaining Unsecured Noteholders agreed to the extension of the maturity of their notes by one year without payment of any consideration on the part of Zenabis, resulting in $11,755,000 principal amount of unsecured notes being extended; and
• Holders of only 17,860 Bevo shares elected to receive Zenabis Preferred shares under the Plan of Arrangement. Zenabis intends to issue a redemption notice to these preferred shareholders to effect redemption at $2.70 per share.

"The commencement of trading on the TSXV marks the achievement of yet another goal in a long line of important milestones for our company," said Monty Sikka, Chair of the Board of Directors for Zenabis. "We see our entry into the public marketplace as an incredible opportunity, and look forward to significantly growing shareholder value as we continue to execute on our expansion strategy. Our goal is not only to maintain our commitments to domestic sales partners, but for Zenabis to become the supplier of choice across a range of international markets. As countries around the world follow Canada's lead, allowing greater access to cannabis and related products, we intend to become a global leader in cannabis production and products."

The resulting entity, Zenabis, has the potential to become one of the largest cannabis producers based on available production space.¹ Zenabis intends to become a market leader through the following competitive advantages:

High Production Capacity | With the addition of approximately 426,000 kilograms of capacity from Zenabis Langley, Zenabis' facilities have been designed for a maximum of approximately 479,000 kilograms of production capacity if the facilities are optimized and expanded as planned.

Leading Products and Brands | Zenabis intends to offer a full suite of products which have been developed in-house or licenced from established third-party brands.  Zenabis currently markets dry flower products for medicinal and recreational use and has several new dry flower and oil products in late stage development. Additional value-added products are being developed in anticipation of expanded legalization of recreational cannabis products in Canada.

Management, Propagation, and Growing Expertise | Bevo is one of the largest propagation businesses in North America, with over 30 years of experience in propagation in a state-of-the-art greenhouse serving clients throughout North America. Zenabis believes the addition of Bevo's significant propagation expertise and proven practices will allow Zenabis to achieve industry-leading operational efficiency, production costs and plant quality.

Low Production Cost | With the combination of the mild external climate, greenhouse structure, and state-of-the-art technologies, Zenabis believes that it is well positioned to deliver low production costs and operating efficiencies. Zenabis believes Bevo's existing relationships with greenhouse technology providers, combined with an increased global focus on greenhouse cannabis production, will allow it to continuously improve its propagation and growing techniques, thereby resulting in continuously declining production costs.

"Zenabis is the result of almost a year of hard work and dedication from the entire management team at Bevo and Sun Pharm", said Rick Brar, CEO of Zenabis. "We could not be happier to move forward as one team, incorporating a world-class propagator and agricultural expert. We are a focused, driven set of individuals that together aim to set the standard for cannabis production while becoming a market leader in every vertical we pursue."

Through its subsidiary licensed producer Zenabis Ltd. and other subsidiaries expected to be licensed, Zenabis Global Inc. will have 3.5 million square feet of constructed premises available that it has already converted or intends to convert into cannabis production space.²

Early Warning Disclosures as a result of Completion of the RTO
Manoj Sikka acquired control over 32,698,732 Zenabis Shares as part of the RTO Transaction, through the issuance of 32,548,392 Zenabis Shares to Bluecore Medical Partnership ("Bluecore"), an entity controlled by Mr. Sikka and 150,340 Zenabis Shares to him in his personal capacity, all of which were issued in exchange for the common shares each such person held in Sun Pharm prior to completion of the RTO Transaction. Bluecore also holds a convertible note in the principal amount of $3,200,000 that is convertible into 1,208,611 Zenabis Shares at a price of approximately $2.65 per share  On a non-diluted basis, Mr. Sikka exercises control over 32,698,732 (17.69%) of the Zenabis Shares. On a fully-diluted basis, Mr. Sikka exercises control over 33,907,343 (18.23%) of the issued and outstanding Zenabis Shares. 

Mark Joseph Catroppa acquired control over 32,738,360 Zenabis Shares as part of the RTO Transaction, through the issuance of 32,548,392 Zenabis Shares to Blue Samurai Medical Partnership ("Blue Samurai"), an entity controlled by Mr. Catroppa, 150,340 Zenabis Shares to him in his personal capacity and 39,628 Zenabis Shares to 1015359 B.C. Ltd., an entity controlled by Mr. Catroppa, all of which were issued in exchange for the common shares each such person held in Sun Pharm prior to completion of the RTO Transaction. Blue Samurai also holds a convertible note in the principal amount of $3,200,000 that is convertible into 1,208,611 Zenabis Shares at a price of approximately $2.65 per share  On a non-diluted basis, Mr. Catroppa exercises control over 32,738,360 (17.71%) of the Zenabis Shares. On a fully-diluted basis, Mr. Catroppa exercises control over 33,946,971 (18.25%) of the issued and outstanding Zenabis Shares. 

Brar Bioceutical Corp. ("Brar Bioceutical"), which is controlled by Rick Brar, was issued 25,758,352 Zenabis Shares as part of the RTO Transaction in exchange for the common shares it held in Sun Pharm prior to completion of the RTO Transaction. Brar Bioceutical also holds a convertible note in the principal amount of $2,600,000 that is convertible into 981,997 Zenabis Shares at a price of approximately $2.65 per share on a non-diluted basis, Brar Bioceutical holds 25,758,352 (13.94%) of the Zenabis Shares. On a fully-diluted basis, Brar Bioceutical holds 26,740,349 (14.39%) of the issued and outstanding Zenabis Shares. 

Each of Bluecore, Blue Samurai and Brar Bioceutical originally acquired its common shares in Sun Pharm as founders of Sun Pharm, and the convertible notes in connection with the amendment of the terms of existing indebtedness of Sun Pharm to each holder thereof in the same principal amounts. The common shares of Sun Pharm held by Mr. Catroppa and Mr. Sikka in their personal capacities and those held by 1015359 B.C. Ltd. were acquired for investment purposes. The Zenabis Shares (including those issuable upon conversion of the convertible notes) held by each of Bluecore, Blue Samurai and Brar Bioceutical are subject to the terms of the voluntary pooling agreement previously announced in a news release of Bevo dated December 21, 2018, a copy of which is available on Zenabis' SEDAR profile at www.sedar.com.  

The foregoing disclosure regarding Zenabis' holdings is being disseminated pursuant to National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting. A copy of the report to be filed with Canadian securities regulators in connection with the acquisition of these securities will be available on Zenabis' SEDAR profile at www.sedar.com or by contacting Shobana Thaya at 416-807-1009 or [email protected].

CubicFarm Update

CubicFarm has applied to list its common shares on the TSX Venture Exchange.  There can be no assurances as to if or when the common shares of CubicFarm will be accepted for listing on the TSX Venture Exchange.

Agentis Capital acted as financial advisor to Bevo regarding the RTO. Fasken Martineau Dumoulin LLP acted as counsel to Bevo and Stikeman Elliott LLP acted as counsel to Sun Pharm. 

Zenabis Key Milestones

• On September 17, 2018, Zenabis submitted its application package to license the Langley greenhouse, which is currently under active review
• On October 4, 2018 Bevo and Sun Pharm announced the Bevo-Sun Pharm Transaction and the intent of Bevo to change its name to Zenabis Global Inc. upon completion
• In October 2018, Zenabis became a founding partner of the Centre for Medicinal Cannabis ("CMC"), a UK based non-profit organisation advocating, educating and lobbying for the implementation of a fair, responsible, and evidence-based medicinal cannabis regime within the National Health System in the United Kingdom.
• On December 22, 2018, Zenabis submitted its cultivation license application for its Stellarton facility, which is currently under active review
• Since October 2018, three additional flower rooms have been approved by Health Canada and are in operation, with two more in active review
• As of January 8, 2019, Zenabis has secured purchase orders from government and third-party retailers/distributors in New Brunswick, Nova Scotia, British Columbia, Saskatchewan, and the Yukon Territory

About Zenabis

Zenabis is a significant Licensed Producer 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 land and premises that can, upon full conversion, be dedicated to production space.

Once all facilities have been fully built out, 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 have the design capacity to yield 479,700 kg of dried cannabis annually, for both national and international market distribution. The Zenabis brand name is used among the medical space, while Namaste is used to service the recreational market.

The management team at Zenabis has significant experience in agriculture, technology, pharmaceutical sales, consumer packaged goods, international distribution and brand marketing. Leadership is backed by the expertise of a Chief Growing Officer, a Chief Science Officer and Chief Medical Officer. As evidenced by letters of intent with strategic partners, and purchase orders with governments and a multitude of distribution partners, Zenabis has been proven as a trusted and innovative cannabis front-runner.

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: future production capacity of Zenabis; conversion, expansion and optimization of existing facilities; future products of Zenabis; and future production costs of Zenabis. 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 and the labour, materials and equipment necessary to complete such construction or conversion will be available. 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. 

SOURCE Bevo Agro Inc.