Sundial announces strategic investment

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CALGARY, AB, Dec. 30 2020 / PRNewswire / – Sundial Growers Inc. (Nasdaq: SNDL) (“Sundial” or the “Company”) today announced that it has completed the acquisition of a special purpose vehicle (the “Investment”). Consideration for the investment, totaling $ 58.9 million in cash, was financed by Sundial’s available cash reserves of $ 110 million immediately before the closing of the investment. All amounts are in Canadian dollars, unless otherwise indicated.

The special purpose vehicle has $ 58.9 million of the total principal amount of senior secured indebtedness (the “Principal Loan”) of Zenabis Investments Ltd. (“Zenabis”), a subsidiary of Zenabis Global Inc. (the “Parent”). The Senior Loan bears interest at the rate of 14% per annum and has a maturity date of March 31, 2025, with principal repayments in certain circumstances over time, including $ 7.0 million payable on the 31st of December, 2020. The Senior Loan is guaranteed by the assets of Zenabis and its subsidiaries and is guaranteed by the Parent Company. Overall, assets represent all of Zenabis’s cannabis-related assets.

In accordance with the terms of the Senior Loan, Zenabis will also pay Sundial a royalty (the “Royalty”) based on quarterly sales revenues from its medical, recreational and wholesale cannabis lines, net of value added or sales taxes. (“Net cannabis income”, which will be payable each fiscal quarter as follows:

(I)

3.5% of net cannabis income when net cannabis income does not exceed $ 25
million;

(ii)

3.0% of net cannabis revenues when net cannabis revenues exceed $ 25 million, but
not $ 30 million;

(iii)

2.5% of net cannabis income when net cannabis income exceeds $ 30 million, but
not $ 37.5 million; and

(iv)

2.0% of net cannabis income when net cannabis income exceeds $ 37.5 million.

The royalty is payable for 32 fiscal quarters and is payable for the quarters in which Zenabis achieves certain net cannabis revenue targets and maintains certain debt service ratios. If these targets are not met, the royalty is not payable for the applicable fiscal quarter, but the term of the royalty is extended for another fiscal quarter.

Sundial has a current unallocated cash balance of approximately $ 51 million after the investment and approximately 919 million common shares outstanding.

ABOUT SUNDIAL GROWERS INC.

Sundial is a public company whose common shares trade on the Nasdaq under the symbol “SNDL”.

Sundial is a licensed producer who manufactures cannabis using state-of-the-art indoor facilities. Our ‘large-scale artisanal’ modular cultivation approach, award-winning genetics and experienced master growers set us apart.

Our Canadian operations grow cannabis in small batches using an individualized “room” approach, with a total area of ​​448,000 square feet.

Sundial’s brand portfolio includes Top sheet, Cannabis Sundial, Dwarf palm and Meadows. Our experience with consumer packaged goods allows us not only to grow quality cannabis, but also to create exceptional experiences for consumers and customers.

We are proudly Albertans, headquartered in Calgary, AB, with operations in Olds, AB, and Rocky View County, AB.

Caution regarding forward-looking information

This press release includes statements containing certain “forward-looking information” within the meaning of applicable securities laws (“forward-looking statements”), including, but not limited to, statements regarding the Company’s cash balance, debt position, outstanding shares, forecasts, revenue streams and statements regarding expected principal, interest and royalty payments from Zenabis and statements regarding future strategic initiatives of the Company. Forward-looking statements are frequently characterized by words such as “plan”, “continue”, “expect”, “plan”, “intend”, “believe”, “anticipate”, “estimate”, “Likely”, “prospect”, “foresee”, “may”, “will”, “potential”, “proposed” and other similar words, or statements that certain events or conditions “may” or “will” happen. These statements are only predictions. Various assumptions have been used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this press release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to various risks and uncertainties and other factors that could cause actual events or results to differ. substantially from those projected in the forward forecast. staring statements. Please refer to the risk factors identified in the documents filed by the Company with the United States Securities and Exchange Commission, including those identified in the Company’s Annual Report on Form 20-F, for a discussion of the risks. material that could cause actual results to differ materially from future results. – seeking information. The Company has no obligation and expressly disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. .

SOURCE Sundial Growers Inc.

Related links

www.sundialgrowers.com



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