research note - Zenabis Global Inc. (TSX: ZENA)Zenabis Global Inc. (TSX: ZENA)
Research note on debt and completing the financing intensive buildout phase
July 31, 2020
Zenabis Global Inc. (TSX: ZENA; OTCMKTS:ZBISF) has all but finalized the expansion of its Atholville facility to attain its' targeted annual dried flower design capacity and the company will now focus on ramping up operations and growing EBITDA aggressivley. Zenabis is achieving steady-state yield for every cultivar at the Zenabis Atholville facility. Furthermore, the company has finalized the construction and licensing of the Zenabis Langley facility, which increases Zenabis' annual cultivation capacity to over 143,200 Kgs of dried cannabis. The over $23 million Offering last month (at $0.13 per unit) is enough for the company to become cash-flow positive without seeking incremental debt financing, issue incremental equity capital, or raise convertible debt.
Concerning the existing senior secured debt, the company has managed to remain flexible and instilled confidence in lenders/partners to move most debt out to 2021. Also, it reviewed the terms of the subordinated secured convertible notes with holders of the Secured Convertible notes and is good shape on this front too. Cash flows for 2020 and the sale of the Delta facility will bring the debt situation into an easily manageable state.
With no further financing required, and a new CEO coming onboard to help the company enter the next phase of becoming a consumer-focused global force, Zenabis at $0.10 on the open market presents an attractive opportunity for new investors. It also provides an opportunity for earlier Zenabis investors to capitalize on their patience and substantiate their long-held beliefs in the potential of Zenabis.