CALGARY, AB, Dec. 30, 2020 /CNW/ - Sundial Growers Inc.
(Nasdaq: SNDL) ("Sundial" or the "Company") announced today that it
has closed the acquisition of a special purpose vehicle (the
"Investment"). 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 denominated in Canadian dollars
unless otherwise noted.
The special purpose vehicle owns $58.9 million of aggregate principal amount of
senior secured debt (the "Senior Loan") of Zenabis Investments Ltd.
("Zenabis"), a subsidiary of Zenabis Global Inc. (the
"Parent"). 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 including $7.0
million payable on December
31, 2020. The Senior Loan is secured by the assets of
Zenabis and its subsidiaries and is guaranteed by the Parent.
In aggregate the assets represent all the cannabis related
assets of Zenabis.
Pursuant to the terms of the Senior Loan, Zenabis will also pay
Sundial a royalty (the "Royalty") based on quarterly sales revenue
from its medical, recreational and wholesale cannabis lines net of
value added or sales taxes ("Net Cannabis Revenue"), which will be
payable each fiscal quarter as follows:
(i)
|
3.5% of Net Cannabis
Revenue where Net Cannabis Revenue does not exceed $25
million;
|
(ii)
|
3.0% of Net Cannabis
Revenue where Net Cannabis Revenue exceeds $25 million but
not $30 million;
|
(iii)
|
2.5% of Net Cannabis
Revenue where Net Cannabis Revenue exceeds $30 million but
not $37.5 million; and
|
(iv)
|
2.0% of Net Cannabis
Revenue where Net Cannabis Revenue exceeds $37.5
million.
|
The Royalty is payable for 32 fiscal quarters and is
payable for quarters in which Zenabis accomplishes certain Net
Cannabis Rvenue targets and maintains certain debt service
ratios. If those targets are not met, the Royalty is not
payable for the applicable fiscal quarter but the term of the
Royalty is extended another fiscal quarter.
Sundial has a current unrestricted cash balance of approximately
$51 million following the Investment
and approximately 919 million common shares outstanding.
ABOUT SUNDIAL GROWERS INC.
Sundial is a public company with Common Shares traded on Nasdaq
under the symbol "SNDL".
Sundial is a licensed producer that crafts cannabis using
state-of-the-art indoor facilities. Our 'craft-at-scale' modular
growing approach, award-winning genetics and experienced master
growers set us apart.
Our Canadian operations cultivate small-batch cannabis using an
individualized "room" approach, with 448,000 square feet of total
space.
Sundial's brand portfolio includes Top Leaf,
Sundial Cannabis, Palmetto and
Grasslands. Our consumer-packaged goods
experience enables us to not just grow quality cannabis,
but also to create exceptional consumer and customer
experiences.
We are proudly Albertan, headquartered in Calgary, AB, with operations in Olds, AB,
and Rocky View County, AB.
Forward-Looking Information Cautionary
Statement
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable
securities law ("forward-looking statements"), including, but not
limited to, statements regarding the Company's cash balance, debt
position, outstanding shares, anticipated revenue streams and
statements regarding expected principal, interest and royalty
payments from Zenabis and statements regarding the Company's future
strategic initiatives. Forward-looking statements are
frequently characterized by words such as "plan", "continue",
"expect", "project", "intend", "believe", "anticipate",
"estimate", "likely", "outlook", "forecast", "may",
"will", "potential", "proposed" and other similar words, or
statements that certain events or conditions "may" or "will" occur.
These statements are only predictions. Various assumptions were
used in drawing the conclusions or making the projections contained
in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates
of management at the date the statements are made and are subject
to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from
those projected in the forward-looking statements. Please see the
risk factors identified in the Company's filings with the U.S.
Securities and Exchange Commission, including those identified in
the Company's Annual Report on Form 20-F, for a
discussion of the material risks that could cause actual results to
differ materially from the forward-looking information. The Company
is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise, except as expressly required by applicable
law.
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SOURCE Sundial Growers Inc.