Sundial announces strategic investment
CALGARY, AB, Dec. 30, 2020 / PRNewswire / – Sundial Growers Inc. (Nasdaq: SNDL) (“Sundial” or the “Company”) today announced that it has completed the acquisition of a special purpose vehicle (the “Investment”). The consideration for the investment, totaling $ 58.9 million in cash, was funded from Sundial’s available cash reserves, which totaled $ 110 million immediately prior to the closing of the investment. All amounts are in Canadian dollars, unless otherwise indicated.
The SPE holds $ 58.9 million of a total principal amount of senior secured debt (the “Principal Loan”) of Zenabis Investments Ltée. (“Zenabis”), a subsidiary of Zenabis Global Inc. (the “Parent Company”). The Senior Loan bears interest at a rate of 14% per annum and has a maturity date of March 31, 2025, with principal repayments under certain circumstances over time, of which $ 7.0 million is payable on December 31, 2020 The senior loan is guaranteed by the assets of Zenabis and its subsidiaries and is guaranteed by the Parent Company. Overall, assets represent all of Zenabis’s cannabis-related assets.
In accordance with the terms of the Senior Loan, Zenabis will also pay Sundial a royalty (the “Royalty”) based on quarterly sales revenues from its medical, recreational and wholesale cannabis lines, net of value added or sales taxes ( “Net cannabis income”). , which will be payable each fiscal quarter as follows:
(i) 3.5% of net cannabis income when net cannabis income does not exceed $ 25
(ii) 3.0% of net cannabis revenues when net cannabis revenues exceed $ 25 million, but
not $ 30 million;
(iii) 2.5% of net cannabis income when net cannabis income exceeds $ 30 million, but
not $ 37.5 million; and
(iv) 2.0% of net cannabis revenues when net cannabis revenues exceed $ 37.5 million.
The royalty is payable for 32 fiscal quarters and is payable for the quarters in which Zenabis achieves certain net cannabis revenue targets and maintains certain debt service ratios. If these targets are not met, the royalty is not payable for the applicable fiscal quarter, but the term of the royalty is extended for another fiscal quarter.
Sundial currently has an unallocated cash balance of approximately $ 51 million as a result of the investment and approximately 919 million common shares outstanding.
ABOUT SUNDIAL GROWERS INC.
Sundial is a public company whose common shares trade on the Nasdaq under the symbol “SNDL”.
Sundial is a licensed producer who manufactures cannabis using state-of-the-art indoor facilities. Our ‘large-scale artisanal’ modular cultivation approach, award-winning genetics and experienced master growers set us apart.
Our Canadian operations grow cannabis in small batches using an individualized “room” approach, with a total area of 448,000 square feet.
Sundial’s brand portfolio includes Top Leaf, Sundial Cannabis, Palmetto and Grasslands. Our experience with consumer packaged goods allows us not only to grow quality cannabis, but also to create exceptional consumer and customer experiences.
We are proudly Albertans, headquartered in Calgary, AB, with operations in Olds, AB and Rocky View County, AB.
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