Zenabis Global (TSX: ZENA) this morning announced that it has entered into a credit agreement with a private debt fund as it works to rid itself of the debt currently held by Sundial Growers (NASDAQ: SNDL). The revolving credit facility, for a total amount of $60.0 million, will be secured based on eligible receivables, inventory, and real estate.
Zenabis’ scramble to get out of its currently outstanding secured debenture follows the $58.9 million of secured debt being acquired by Sundial at the end of December. The company was subsequently issued a notice of default, which Zenabis subsequently publicly blasted Sundial for, with the notice stated to be a means of improperly foreclosing on Zenabis’ assets.
Under the terms of the credit facility, the company is to pay an interest rate to the greater of 10%, and TD Bank’s prime rate plus 7.55%, calculated daily and payable monthly. The debt is for a one year period, having a maturity date of January 21, 2022, while two 180 day extension periods are available as well for an undisclosed fee. Undrawn amounts under the facility are to bear interest at a rate of 2.40% per annum.
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The company is also required to pay to the lenders 6.0 million common shares as a partial commitment fee.
Proceeds from the facility, as stated above, will be used to repay the outstanding debenture currently held by Sundial, which bears interest at 14% per annum, as well as for general corporate purposes and to finance working capital requirements.
Zenabis Global last traded at $0.10 on the TSX.
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.
