OTTAWA and VANCOUVER, British Columbia, February 16, 2021 (GLOBE NEWSWIRE) – HEXO Corp (“HEXO”) (TSX: HEXO; NYSE: HEXO) and Zenabis Global Inc (“Zenabis”) (TSX: ZENA) are pleased to announce that they have entered into a definitive agreement (the “Agreement”) under which HEXO will acquire under a court-approved scheme of the agreement under the Business Corporations Act ( British Columbia), all common shares issued and outstanding by Zenabis in an all-share transaction valued at approx 235 million USD (the “Transaction”) Pursuant to the terms of the Agreement, Zenabis shareholders will receive 001772 one HEXO common share in exchange for each Zenabis common share held (the “Exchange Ratio”). The exchange ratio implies a premium per Zenabis common share of approximately 19%, based on the 20-day volume-weighted average price (“VWAP”) of Zenabis common stock on the TSX and HEXO common stock on the TSX as of Dec. February 2021 Zenabis warrants and incentive securities will be adjusted according to their terms to ultimately become exercisable to receive common shares of HEXO based on the conversion ratio

The transaction was approved by the HEXO and Zenabis boards of directors (in the case of the Zenabis board of directors after receiving the unanimous recommendation of a special committee established for the transaction) and by Zenabis unanimously The Board of Directors unanimously recommends that its shareholders vote in favor of the transaction

We are very excited to welcome the Zenabis team to the HEXO family. Zenabis has built solid relationships and shares HEXO’s vision to bring exceptional branded cannabis experiences to adults across Canada and abroad

We are continuing this transaction because we believe it should be beneficial to our shareholders, and it also positions HEXO for accelerated national and international growth while supporting the near-term requirements for additional licensed capacity in the growth strategy of HEXO includes the expansion of our global presence This acquisition is an important step in this direction

“This is a compelling combination. The strength of our brands and varieties across Canada, coupled with our international presence and state-of-the-art, low-cost, high-quality cultivation facilities complement HEXO’s business and create an industry leader. Like HEXO, Zenabis believes that the The combination of significant synergies, a stronger financial position with greater flexibility and the combined company should be able to meet growing consumer demand on a national and international basis I believe this transaction will benefit our shareholders, customers, partners and employees. We look forward to it look forward to working closely with HEXO to complete this transaction, “added Shai Altman, CEO of Zenabis

The transaction must be approved by at least 66 2/3% of the votes of the Zenabis shareholders present at a special meeting of Zenabis shareholders. HEXO has voting agreements with the directors and officers of Zenabis on all Zenabis held by them. Shares closed

The Agreement contains customary provisions, including non-advertising provisions, which are subject to Zenabis’ right to adopt an overarching proposal in certain circumstances, with HEXO having five business days to exercise a right to comply with such an overarching proposal for Zenabis’s agreement also provides for a $ 6 million termination fee payable by Zenabis to HEXO if the transaction is terminated in certain circumstances, as well as reciprocal reimbursement fees if the transaction is terminated by either party in certain other circumstances. p>

In addition to approval by Zenabis’ shareholders, the Transaction is subject to the receipt of certain regulatory, judicial and publicly traded approvals and the fulfillment of the conditions customary in transactions of this type, as well as the fulfillment of the following additional precedent conditions: (i) termination and unconditional clearance that of Zenabis in favor of the Bank of Montreal in connection with the divestment of Bevo Farms Ltd and his from Zenabis on 4 Subsidiaries announced January 2021 (“Bevo”); (ii) the completion of the Bevo Sale Transaction; and (iii) certain other specified terms set out in the Agreement

After completion of the transaction, the existing HEXO and Zenabis shareholders would each receive approx 87 own 43% and 1257% of HEXO fully diluted on a pro forma basis.In addition, under the Agreement, HEXO has committed to increasing the size of its Board of Directors by one director and appointing one of the members within 90 days of the closing of the Transaction HEXO to initiate selected current board members of Zenabis The board of directors of HEXO in accordance with the founding documents of HEXO

Zenabis today announces that its wholly owned subsidiary Zenabis Ltd has entered into a settlement agreement and release with a customer (the “Settlement Agreement”) under which the parties have agreed to withdraw from the arbitration proceedings between the parties and to indemnify the other party from all past, present and future claims against the parties, resulting from the prepaid supply contract for subsequent deliveries of cannabis products

Simultaneously with the signing of the agreement, Zenabis entered into an agreement with HEXO to issue an unsecured convertible bond to HEXO in the amount of USD 195 million, which is both an advance granted by HEXO to Zenabis in late 2020 and a further advance to Zenabis at the same time documented with the announcement of the transaction in order to enable Zenabis to pay the settlement amount in accordance with the settlement agreement.The unsecured convertible bond has an interest rate of 8% pa and has a term up to the 15th February 2023 The bond can be converted into common shares of Zenabis in whole or in part at the same conversion price at the 5-day VWAP of the common shares on the TSX for the five trading days before at any time after the termination of the arrangement agreement and the then applicable “Outside Date” at the option of HEXO the conversion date The bond may be prepaid by Zenabis at its discretion and without penalty or premium at any time after the earlier date of termination of the agreement and the then applicable “external date”, subject to HEXO’s right to opt for the conversion of the bond decide before prepayment in Zenabis common shares A change of control of Zenabis, with the exception of the transaction with HEXO, will result in the mandatory conversion of the bond into common shares of Zenabis at a conversion price equal to the 5-day VWAP on the last day of the 5-day VWAP of corresponds to The common shares on the TSX sin d the trading day immediately prior to the trading day on which the first of such a change of control transaction is first publicly announced, whether intended by Zenabis or by the person proposing the change of control transaction or declares its consent to it.The unsecured convertible bond also contains a provision that HEXO will prevent HEXO from acquiring more than 99% of the common shares of Zenabis at any given point in time as a result of and after the conversion of the Notes (other than with regard to a mandatory conversion in connection with a change of control transaction). The listing of the Zenabis common shares issued in connection with the subscription is subject to Accepted by the Toronto Stock Exchange

Further information on the transaction, including the key terms and conditions for the unsecured convertible bond to HEXO, will be included in the information circular that Zenabis will prepare, submit and send to its shareholders in connection with its special meeting to be held to discuss the transaction Zenabis will petition the British Columbia Supreme Court in the coming weeks for a preliminary injunction approving various procedural and related matters in order to convene the special meeting of shareholders related to the deal, which will be posted under the SEDAR profiles of Zenabis and HEXO submitted to the SEDAR website at wwwSedarcom

None of the securities to be issued under the Arrangement Agreement have been or will be registered under the United States Securities Act of 1933, as amended (the “US. Securities Act ”) or state securities laws and securities issued under the Agreement are expected to be issued subject to the exemption from these registration requirements under Section 3 (a) (10) of the US Securities Act and applicable exemptions under state securities laws. This press release constitutes neither an offer to sell nor the solicitation of an offer to buy any securities

The transaction was unanimously recommended to Zenabis’ board of directors by a special committee composed of independent directors Daniel Burns and Natascha Kiernan This committee was established to investigate strategic alternatives and to renegotiate and restructure the company’s capital. After receiving the recommendation of the special committee and receiving independent financial and legal advice, the Zenabis Board of Directors has unanimously determined that the transaction is in the best interests of Zenabis and its Securityholders, and the Board of Directors recommends that Zenabis shareholders unanimously vote in favor of the transaction

The Zenabis Board of Directors has appointed Echelon Wealth Partners Inc A fairness opinion is received to the effect that at the time of the agreement and subject to the assumptions, restrictions and qualifications on which this opinion is based, the consideration to be received in the context of the transaction is financially reasonable; to the Zenabis shareholders

Echelon Capital Markets (member of Echelon Wealth Partners Inc) is acting as financial advisor to Zenabis in connection with the transaction. Stikeman Elliott LLP is acting as legal advisor to Zenabis and the Special Committee of the Board of Directors of Zenabis

AGP/ Alliance Global Partners is acting as financial advisor to HEXO and Norton Rose Fulbright Canada LLP is acting as legal advisor to HEXO

HEXO Corp is an award-winning packaged consumer cannabis company that develops and sells innovative products for the global cannabis market.The company serves the Canadian adult markets under the HEXO Cannabis, Up Cannabis and Original Stash brands and the medical market under HEXO Medical Cannabis For more information, please visit hexocorpcom

Zenabis Global Inc is a major Canadian licensed cultivator of medicinal and recreational cannabis. Zenabis employs coast-to-coast workers at various facilities in Atholville, New Brunswick Langley, British Columbia; and Stellarton, Nova Scotia Zenabis currently has 111200 kg of licensed cannabis cultivation area in three licensed facilities in Canada and through the ZenPharm joint venture for the import, export and processing of cannabis, which operates from Birżebbuġa, Malta

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Zenabis Shares

World News – CA – HEXO Acquires Zenabis for $ 235 Million in Stock

Source: https://www.newcannabisventures.com/hexo-to-acquire-zenabis-for-235-million-in-stock/