Stockwatch PostRegarding the $7 million Private Placement - or maybe cannabis deal with terms that might be negoatiated later. hahahahahaha Yesterday, however, Zenabis made two significant announcements. The first had to do with a rather bizarre agreement under which Zenabis can sell $7-million worth of cannabis to a counterparty -- an unidentified but apparently "major" Canadian cannabis producer -- on "terms to be agreed under a cannabis purchase agreement to be negotiated." Alternatively, at the counterparty's option, it can receive $7-million worth of shares of Zenabis instead. The main thing is that Zenabis is getting $7-million and giving that money straight to Sundial, keeping the above arrangement in good standing. The other announcement was even more cheerful. Zenabis has sold its propagation subsidiary, Bevo Farms, to Langley Propagation for $10-million and the assumption of various liabilities, including Bevo's $42.5-million term debt. The main effect of this deal (plus the above $7-million repayment to Sundial) is to reduce Zenabis's consolidated debt to just $65.1-million, nearly half of what was outstanding as of Sept. 30. Chairman Dan Burns declared himself "very pleased" that Zenabis has been able to "significantly reduce [its] overall leverage."
Investors seemed encouraged as well, if not quite rising to the level of "very pleased." The company's balance sheet woes are far from over. A $65-million debt load is still well above Zenabis's market cap of about $48-million, not to mention its meagre cash balance of just $4.8-million as of Sept. 30, despite a total of $31.1-million in equity financings from June to mid-September. Further financings would come as no surprise. Unfortunately, the current share count is already lofty at 799.9 million.