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Subjects: OFR, MAT

Zenabis Announces Details of Completed Over-Subscribed Rights Offering


/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

VANCOUVER, Dec. 9, 2019 /CNW/ - Zenabis Global Inc (TSX: ZENA) ("Zenabis" or the "Company") is pleased to announce that, further to its press release dated November 28, 2019 with respect to the completion of the Company's rights offering (the "Rights Offering") on November 27, 2019 (the "Closing Date"), the Company has issued 139,086,624 common shares of the Company ("Common Shares") at a price of $0.15 per Common Share for gross proceeds of $20,862,993.60. As of the Closing Date and after taking into account the Rights Offering, the Company has a total of 347,716,561 Common Shares issued and outstanding.

A total of 117,538,929 Common Shares were issued pursuant to the basic subscription privilege of the Rights Offering. Of these, to the knowledge of Zenabis after reasonable inquiry, 41,907,477 Common Shares were issued to insiders of Zenabis and 75,631,452 Common Shares were issued to all other persons. A total of 21,547,695 Common Shares were issued pursuant to the additional subscription privilege of the Rights Offering. Of these, to the knowledge of Zenabis after reasonable inquiry, no Common Shares were issued to insiders of Zenabis and 21,547,695 Common Shares were issued to all other persons.

To the knowledge of Zenabis after reasonably inquiry, no persons became an insider of Zenabis from the distribution under the Rights Offering.

As the Rights Offering was over-subscribed, no Common Shares were issued under any stand-by commitment.

The net proceeds of the Rights Offering will be used for making additional capital investments in the Zenabis Langley facility beyond those already incurred and for general working capital.

Adjustments to Outstanding Convertible Securities and Warrants

As a result of the Rights Offering, the following adjustments and amendments to the Company's outstanding convertible securities and warrants have occurred.

1. Unsecured Convertible Debentures

The Company currently has outstanding unsecured convertible debentures (the "Unsecured Convertible Debentures") in the aggregate principal amount of $15 million originally issued on March 27, 2019 and maturing on September 27, 2021, previously convertible into Common Shares at a price of $3.62 per Common Share.

Pursuant to the Unsecured Convertible Debentures, the conversion price of the Unsecured Convertible Debentures is adjusted from $3.62 to $2.6087 effective immediately upon the closing of the Rights Offering. As a result of the adjustment to the conversion price of the Unsecured Convertible Debenture, an additional 1,606,344 Common Shares are issuable upon the full conversion of the Unsecured Convertible Debentures.

2. Convertible Debenture Unit Warrants

The Company currently has outstanding 825,000 unlisted warrants (the "Convertible Debenture Unit Warrants"), each exercisable to purchase one (1) Common Share at a price of $3.62 per Common Share at any time on or prior to September 27, 2021. The Convertible Debenture Unit Warrants were issued on March 27, 2019 to the holders of the Unsecured Convertible Debentures. As a result of the Rights Offering, the exercise price of the Convertible Debenture Unit Warrants is adjusted from $3.62 to $2.6788 per Common Share.

3. Secured Convertible Notes

The Company currently has outstanding secured convertible notes (the "Secured Convertible Notes") in the aggregate principal amount of approximately $17.4 million, which were amended and restated in August 2019, and are convertible into Common Shares at a price of $1.54635 per Common Share.

As a result of the Rights Offering, the conversion price of the Secured Convertible Notes is adjusted from $1.54635 to $1.17.  As a result of the adjustment to the conversion price of the Secured Convertible Notes, an additional 3,620,520 Common Shares are issuable upon the full conversion of the Secured Convertible Notes.

4. Unsecured Convertible Notes

The Company currently has outstanding unsecured convertible notes (the "Unsecured Convertible Notes") in the aggregate principal amount of approximately $11.9 million, which were originally issued on October 17, 2018 and maturing on October 17, 2020, and convertible into Common Shares at a price of $2.52 per Common Share. The Company has adjusted the conversion price of the Unsecured Convertible Notes from $2.52 to $1.9067 per Common Share. As a result of the adjustment to the conversion price of the Unsecured Convertible Notes, an additional 1,511,780 Common Shares are issuable upon the full conversion of the Unsecured Convertible Notes.

5. Listed Warrants

The Company currently has outstanding 12,777,777 listed warrants (the "Listed Warrants"), each exercisable to purchase one (1) Common Share at a price of $2.75 per Common Share on or prior to April 17, 2022. In accordance with the warrant indenture governing the Listed Warrants (the "Warrant Indenture"), as a result of the Rights Offering, the exchange rate of the Listed Warrants, being the number of Common Shares a holder is entitled to acquire upon the exercise of one (1) Listed Warrant, is adjusted from one Common Share per Listed Warrant, to 1.3888 Common Shares per Listed Warrant.

Further, the exercise price of the Listed Warrants is adjusted to $2.75 payable per 1.3888 Common Shares. As a result of the foregoing adjustments, an additional 4,967,999 Common Shares are issuable upon the exercise of all the Listed Warrants. The Company has entered into a supplemental warrant indenture with Computershare Trust Company of Canada, as warrant agent under the Warrant Indenture, to reflect such adjustments.

These adjustments and amendments discussed above are summarized in the table below.

Class of Securities

Original
Conversion/Exercise
Price (per Common Share)

Revised
Conversion/Exercise
Price (per Common
Share unless otherwise
indicated)

Number of Additional
Common Shares
Issuable

Unsecured Convertible Debentures

$3.62

$2.6087

1,606,344

Convertible Debenture Unit Warrants

$3.62

$2.6788

N/A

Secured Convertible Notes

$1.54635

$1.17

3,620,520

Unsecured Convertible Notes

$2.52

$1.9067

1,511,780

Listed Warrants

$2.75

$2.75 per 1.3888
Common Shares

4,967,999

 

6. Stock Options

The terms of the Company's omnibus incentive plan do not result in any adjustment to the exercise price or other terms of outstanding stock options.

About Zenabis

Zenabis is a significant Canadian licensed cultivator of medical and recreational cannabis, and a propagator and cultivator of floral and vegetable products. Zenabis employs staff coast-to-coast, across facilities in Atholville, New Brunswick; Delta, Aldergrove, Pitt Meadows and Langley, British Columbia; and Stellarton, Nova Scotia. Zenabis currently has 57,000 kg of licensed annual production capacity across four licensed facilities. Zenabis has 3.5 million square feet of total facility space dedicated to a mix of cannabis production and cultivation and its propagation and floral business.

Zenabis expects its Zenabis Atholville, Zenabis Stellarton and Zenabis Langley facilities to have a licensed annual production capacity of 143,200 kg of dried cannabis by the second quarter of 2020. The Zenabis brand name is used in the cannabis medical market, the Namaste, Blazery, and Re-Up brand names are used in the cannabis adult-use recreational market, and the True Büch brand name is used for Zenabis' kombucha products.

Forward Looking Information

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 statements regarding the future issuance of Common Shares on the conversion of the convertible securities and the exercise of warrants, the grant of Options to certain independent directors, officers, employees and consults of the Company, and other expectations, intentions and plans contained in this press release. 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 in the shelf prospectus dated April 9, 2019, 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.

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For more information, visit: https://www.zenabis.com.

SOURCE Zenabis Global Inc.



News published on 9 december 2019 at 21:00 and distributed by: