The battle is heating up between Sundial Growers Inc. (Nasdaq: SNDL) and Zenabis Investments Ltd. (OTC: ZBSIF) as it seems that Sundial is seeking to seize Zenabis by turning into its creditor. Sundial’s subsidiary particular goal automobile owns $51.9 million of the combination principal quantity of senior secured debt of Zenabis Investments, which is a subsidiary of Zenabis International Inc. Zenabis made a principal fee of $7.0 million on December 31, 2020 in accordance with the phrases of the Senior Mortgage. Regardless of that fee, a discover of default was delivered to Zenabis, and is arguing that it isn’t in default.
Sundial Makes an attempt Compelled Acquisition
The maneuvering started on December 30, 2020, when Sundial stated it had made a strategic funding in Zenabis’ senior lender, which Zenabis stated was an try to coerce Zenabis into being acquired by Sundial. In an announcement, Zenabis stated, “Previous to Sundial’s acquisition of the Senior Lender, the corporate had been in late-stage discussions with the Senior Lender referring to the extension of its obligation to repay $7 million of the principal quantity of debt on December 31, 2020. Opposite to the discussions with the Senior Lender previous to the purpose at which it was acquired by Sundial, the Senior Lender substituted the quickly to be consummated extension with a requirement that the $7 million principal compensation be made on December 31, 2020 accompanied by a forbearance settlement.” Zenabis additionally stated that the forbearance settlement required it to enter into exclusivity preparations with the Senior Lender in relation to any sale of the corporate and likewise required Zenabis to simply accept vital potential monetary penalties in extra of the excellent stability of the debt owed to the Senior Lender.
On December 31, 2020, Zenabis entered right into a letter settlement to promote $7 million of dried cannabis to a different main Canadian licensed producer of cannabis and used that cash to make the $7 million mortgage fee. Zenabis stated that after making the fee it was alleged that there have been a wide range of defaults beneath the phrases of the amended and restated debenture dated June 28, 2020.
The corporate stated that not one of the alleged defaults are for failure to make funds of principal or curiosity. In Zenabis’ assertion, “The corporate believes the Senior Lender’s allegations to be spurious and with out advantage and intends to vigorously defend in opposition to what it considers to be an ill-disguised try to avoid a good and aggressive course of to amass the corporate by improperly foreclosing the fairness of the corporate or compelling Zenabis to enter right into a transaction with Sundial.”
Zenabis Has One other Purchaser
Whereas Zenabis is preventing desperately to maintain Sundial from taking on the corporate, it says it has began talks with one other vital licensed cannabis producer. “There will be no assurance that these discussions will lead to a binding settlement or the completion of a transaction. No additional particulars concerning such discussions, together with the identification of the counterparty, will probably be disclosed right now,” stated the corporate in an announcement.
In June, Zenabis International reported that it had entered into an company settlement with a syndicate of brokers co-led by AltaCorp Capital Inc. and Eight Capital and together with Canaccord Genuity Corp., Haywood Securities Inc. and PI Monetary Corp. for the sale of as much as 157,643,875 Models at a worth of $0.13 per Unit for gross proceeds of as much as $20,493,704. Zenabis stated it deliberate to make use of the web proceeds of the providing for basic working capital and company functions, the partial compensation of subordinated secured notes, the partial compensation of the Firm’s unsecured convertible debentures, the partial or full compensation of it’s $7,000,000 third tranche of senior secured debt and the fee of an extension price on the remaining stability of Tranche 3, if relevant.
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