HEXO Corp. ("
HEXO") (TSX: HEXO; NYSE: HEXO) and
Zenabis Global Inc. ("
Zenabis") (TSX: ZENA) are
pleased to announce that they have completed the previously
announced arrangement (the "
Arrangement"),
pursuant to which HEXO has acquired all of the issued and
outstanding common shares of Zenabis ("
Zenabis
Shares") by way of a plan of arrangement under the
Business Corporations Act (British Columbia).
"Today is another great day for HEXO," said HEXO
CEO and co-founder Sebastien St-Louis. "With the acquisition of
Zenabis, we are actively positioning HEXO for future expansion in
Canada, Europe and beyond. This deal will strengthen our domestic
brands, offer a foothold in Europe and provide significant
accretive synergies as we continue towards our goal of becoming EPS
positive and a top-three global cannabis products company."
Under the terms of the Arrangement, each former
Zenabis shareholder is now entitled to receive 0.01772 of a common
share in the capital of HEXO (each whole share, a "HEXO
Share") for each Zenabis Share held immediately prior to
the Arrangement (the "Consideration"). It is
anticipated that the Zenabis Shares will be de-listed from the
Toronto Stock Exchange (the "TSX") as of the close
of trading on or about June 2, 2021.
In order to receive the Consideration,
registered holders of Zenabis Shares will be required to deposit
their share certificate(s) representing Zenabis Shares, together
with a duly completed letter of transmittal, with TSX Trust
Company, the depositary under the Arrangement. Shareholders whose
Zenabis Shares are registered in the name of a broker, dealer,
bank, trust company or other nominee should contact their nominee
regarding the receipt of the Consideration.
Further information about the Arrangement is set
forth in the materials prepared by Zenabis in respect of the
special meeting of Zenabis shareholders held on May 13, 2021
(the "Meeting"), which were mailed to Zenabis
shareholders and filed under Zenabis' profile on the System for
Electronic Document Analysis and Retrieval (SEDAR) at
www.sedar.com.
Warrants
Warrants to purchase Zenabis Shares, other than
those exercised prior to June 1, 2021 (the "Effective
Time"), will continue to remain outstanding as warrants of
Zenabis, which, upon exercise, will entitle the holder thereof to
receive, in lieu of the number of Zenabis Shares to which such
holder was theretofore entitled upon exercise of such Zenabis
warrants, the Consideration in the form of HEXO Shares that such
holder would have been entitled to be issued and receive if,
immediately prior to the Effective Time, such holder had been the
registered holder of the number of Zenabis Shares to which such
holder was theretofore entitled upon exercise of such Zenabis
warrants. All other terms governing the warrants, including, but
not limited to, the expiry term, exercise price and the conditions
to and the manner of exercise, will be the same as the terms that
were in effect immediately prior to the Effective Time, and shall
be governed by the terms of the applicable warrant indenture or the
applicable warrant certificate.
As required by the warrant indenture in respect
of the applicable warrants, HEXO has entered into a supplemental
warrant indenture in respect of such warrant indenture governing
applicable warrants. A copy of the supplemental warrant indenture
will be available on Zenabis' and HEXO's respective SEDAR profiles
at www.sedar.com.
Listed Zenabis Warrants
Prior to the completion of the Arrangement,
Zenabis had outstanding one class of warrants to purchase Zenabis
Shares listed on the TSX under the trading symbol 'ZENA.WT' (the
"Listed Zenabis Warrants"). The Listed Zenabis
Warrants will continue trading on the TSX, but will commence
trading under the symbol 'HEXO.WT' as of June 3, 2021. The Listed
Zenabis Warrants will remain listed on the TSX until the earliest
to occur of their exercise, expiry or de-listing. HEXO has entered
into a supplemental warrant indenture in respect of the Listed
Zenabis Warrants, a copy of which will be available on Zenabis' and
HEXO's respective SEDAR profiles at www.sedar.com.
Options, Deferred Share Units and
Restricted Share Units
Holders of Zenabis options have received
replacement options under the Arrangement, exercisable for HEXO
Shares at the same conversion ratio applicable to the Zenabis
Shares. All other terms and conditions of the replacement options,
including the term of expiry, vesting, conditions to and manner of
exercising, are the same as the Zenabis options for which they were
exchanged.
Holders of Zenabis deferred share units or
restricted share units have received replacement deferred share
units or restricted share units, as applicable, under the
Arrangement, exercisable for HEXO Shares at the same conversion
ratio applicable to the Zenabis Shares. All other terms and
conditions of the replacement deferred share units and restricted
share units, including the term of expiry, vesting, conditions to
and manner of exercising, are the same as the Zenabis deferred
share units or restricted share units for which they were
exchanged.
Other Matters
Zenabis has been granted exemptive relief from
certain continuous disclosure and insider reporting requirements by
the applicable securities regulators. Holders of Listed Zenabis
Warrants are therefore directed to reference, and rely on, the
public disclosure filings of HEXO.
Immediately prior to the completion of the
Arrangement, each of the directors of the boards of directors of
Zenabis and its subsidiaries resigned.
HEXO’s and Zenabis’ operations are subject to a
variety of laws, regulations and guidelines relating to the
marketing, acquisition, manufacture, management, transportation,
storage, sale and disposal of cannabis but also including laws and
regulations relating to health and safety, the conduct of
operations and the protection of the environment. To the knowledge
of HEXO’s management, HEXO and Zenabis have been and, following the
completion of the Arrangement continue to be in compliance with all
such laws. Changes to such laws, regulations and guidelines due to
matters beyond the control of HEXO and Zenabis may cause adverse
effects to HEXO’s and Zenabis’ combined operations.
Advisors and Counsel
A.G.P./Alliance Global Partners is acting as
financial advisor to HEXO and Norton Rose Fulbright Canada LLP is
acting as legal counsel to HEXO.
Echelon Capital Markets (a member of Echelon
Wealth Partners Inc.) is acting as financial advisor to Zenabis in
connection with the Transaction. Stikeman Elliott LLP is acting as
legal counsel to Zenabis and to the special committee of the board
of directors of Zenabis.
About HEXO
HEXO is an award-winning licensed producer of
innovative products for the global cannabis market. HEXO
serves the Canadian recreational market with a
brand portfolio including HEXO, UP Cannabis, Original
Stash, Bake Sale, Namaste, and REUP brands, and the medical
market in Canada, Israel and Malta. The Company also
serves the Colorado market through its Powered by HEXO®
strategy and Truss CBD USA, a joint-venture with
Molson Coors (NYSE: TAP). In the event that the
previously announced transactions to acquire 48North
and Redecan close, HEXO expects to be the
number one cannabis products company in Canada
by recreational market share.
For
more information, please visit www.hexocorp.com.
About Zenabis
Zenabis is a significant Canadian-licensed
cultivator of medical and recreational cannabis. Zenabis employs
staff coast-to-coast, across facilities in Atholville, New
Brunswick; Langley, British Columbia; and Stellarton, Nova Scotia.
Zenabis currently has 111,200 kg of licensed cannabis cultivation
space across three licensed facilities in Canada, together with its
cannabis import, export and processing joint venture, ZenPharm,
operating from Birżebbuġa, Malta.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS:
Certain information in this news release
regarding HEXO and Zenabis and their respective businesses
constitutes forward looking statements under applicable securities
laws. Any statements that are contained in this news release that
are not statements of historical fact are forward-looking
statements. Forward looking statements are often identified by
terms such as "may", "should", "anticipate", "potential",
"believe", "intend", "estimate" or the negative of these terms and
similar expressions and include statements in this press release
concerning the expected timing by which the Zenabis Shares will be
de-listed from the TSX and the continued trading of the Listed
Zenabis Warrants on the TSX. Such forward-looking statements are
based on the current expectations of the management of HEXO and
Zenabis. While HEXO and Zenabis consider these expectations to be
reasonable, based on information currently available, they may
prove to be incorrect. Readers are cautioned not to place undue
reliance on forward-looking statements.
Such forward-looking events and circumstances
may not occur when anticipated or at all and could differ
materially as a result of known and unknown risk factors and
uncertainties affecting HEXO or Zenabis, including risks regarding
the cannabis industry, economic factors, the equity markets
generally, risks associated with growth and competition and those
risk factors referred to in the management information circular of
Zenabis prepared in connection with the Meeting. Although HEXO and
Zenabis have attempted to identify important factors that could
cause actual actions, events or results to differ materially from
those described in this news release, there may be other factors
that cause actions, events or results to differ from those
anticipated, estimated or intended. Forward-looking information
cannot be guaranteed. Readers are cautioned that the foregoing list
is not exhaustive. Readers are further cautioned not to place undue
reliance on forward-looking statements as there can be no assurance
that the plans, intentions or expectations upon which they are
placed will occur. Such information, although considered reasonable
by management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated.
For more information on the risk, uncertainties and assumptions
that could cause anticipated opportunities and actual results to
differ materially, please refer to the public filings of HEXO and
Zenabis which are available on SEDAR at www.sedar.com, including
the "Risk Factors" section in HEXO's Annual Information Form dated
October 29, 2020 and the most recent management's discussion
and analysis filed by each of HEXO and Zenabis.
Except as required by applicable securities
laws, statements in this news release containing forward-looking
information speak only as of the date on which they are made and
HEXO and Zenabis undertake no obligation to publicly update or
revise any forward-looking information, whether as a result of new
information, future events, or otherwise, except as required by
applicable securities laws.
Notice to U.S. Holders. Both
HEXO and Zenabis have been formed outside of the United States. The
Arrangement is subject to disclosure requirements of Canada that
are different from those of the United States. Financial statements
included in the documents, if any, are prepared in accordance with
Canadian accounting standards and may not be comparable to the
financial statements of United States companies. It may be
difficult for a securityholder in the United States to enforce
his/her/its rights and any claim a securityholder may have arising
under U.S. federal securities laws, since the companies are located
in Canada, and some or all of their officers or directors may be
residents of Canada or another country outside of the United
States. A securityholder may not be able to sue a Canadian company
or its officers or directors in a court in Canada or elsewhere
outside of the United States for violations of U.S. securities
laws. It may be difficult to compel a Canadian company and its
affiliates to subject themselves to a U.S. court's judgment.
Neither the TSX, nor NYSE accepts responsibility
for the adequacy or accuracy of this release. Neither the TSX nor
the NYSE has passed upon the merits of the transaction described
herein and has neither approved nor disapproved the content of this
release.
For further information, please
contact:
Investor
Relations:invest@HEXO.comwww.hexocorp.com
Media Relations:(819)
317-0526media@hexo.com
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