RE:RE:RE:SUNDIALtruthseeker1 - (12/30/2020 3:54:32 PM)
RE:RE:SUNDIAL bassfishing88 wrote:Hi ,I do not understand the deal with Sundial.Could you please explain how this affects Zena and also Sundial.TIA.Alan
sundails betting zena defaults and they take over Zena
[url=https://https://www.marketwatch.com/story/canadian-cannabis-company-sundial-acquires-special-purpose-vehicle-for-about-86-million-2020-12-30 A 'strategic investment' is almost the same as a joint venture - and Sundial sees an opportunity here for either access to product (and maybe some that unused acreage).
Given that it's a 'secured' loan at 14% (plus a share in net revenue over $20 Million) - it seems Sundial has the best of all worlds:
- potential access to product
- revenue earned from the 14% interest charged
- additional revenue if Zena sales increase
- physical assets (such as a facility) if Zena defaults.
Sundial, as a U.S. company, can import cannabis from Canada - whereas Zena alone cannot legally export or sell to the U.S. as they don't have any infrastructure in the U.S. as required by law.
It would be interesting to know who held the $58 million loan prior to Sundial - and why they sold it. Were they just sour on the cannabis industry? had they lost confidence in Zena's survival and didn't really want to take over the greenhouse/facility used to secure the loan? Are Andrew Grieve or other insiders involved in the original loan - and a getting their money out?
Also, 14% interest IS the going rate in cannabis financing, and Zena should be happy they got it. Cannabis is still an unproven and risky sector - with a lot of start up companies failing in Canada - which is a small market, over supplied, with black market issues and a poor roll out and onerous regulations/licencing by government.
As written in the Deep Dive article - Sundial, unlike a financing instiution has to answer to it's shareholders on the $58 million investment - and if Zena defaults on payments, they won't be as flexible in taking action to recover their money - or acquire the secured asset.
Cash short Zena is walking a pretty fine line - tough to see them meeting all their financial commitments.