Zenabis Global (TSX:ZENA) entered into an agreement with High Park Holdings, a wholly-owned unit of Tilray (NASDAQ:TLRY), for High Park to advance $30- million (Canadian) to Zenabis in return for a supply of dried cannabis from Zenabis.
Under the accord, Zenabis will deliver a monthly quantity of dried cannabis to High Park, beginning in October 2019. The company expects the $30-million to be retired within a year.
Zenabis does not expect delivery commitments to High Park to impact its ability to supply existing customers. The wholesale pricing under the supply agreement will vary depending on the product type and format High Park elects to order.
“Zenabis is well-positioned to supply high-quality cannabis to High Park via this non-dilutive financing arrangement that capitalizes on our rapidly increasing annual cultivation capacity, which we expect to reach 131,200 kg of dried cannabis before deliveries to High Park are scheduled to commence,” Andrew Grieve, CEO of Zenabis, said in a statement.
“This supply agreement demonstrates the confidence of high-quality counterparties in our ability to produce consistent, premium cannabis product and we are looking forward to fulfilling our commitments to High Park, as well as to our provincial counterparties and the communities in which we operate,” he added.
Mr. Grieve also said the arrangement significantly reduces the requirement for potential further draws on Zenabis’ $60-million unsecured convertible debenture facility.
