Zenabis has entered into an agreement with Starseed, pursuant to which Starseed will advance $10 million to Zenabis in September 2019 in return for Zenabis supplying dried cannabis flower and trim.
Under the terms of the Supply Agreement, Zenabis will deliver a maximum monthly quantity of dried cannabis flower or trim to Starseed, at Starseed’s option, commencing in October 2019. Zenabis expects the prepaid amount to be retired within 18 to 24 months. Zenabis does not expect delivery commitments to Starseed, together with the other prepaid supply agreement Zenabis announced on July 2, 2019, to impact its ability to supply existing customers. The pricing under the supply agreement will vary depending on the product type and format Starseed elects to order.
Andrew Grieve, Chief Executive Officer of Zenabis, said, “We are excited to supply Starseed and its unique sales channels with our high-quality dried cannabis and trim products. Zenabis has successfully obtained $40 million in non-dilutive financing through pre-paid supply agreements, which we estimate to be sufficient to achieve our planned 131,200 kg of cannabis cultivation capacity expected to occur this quarter and, as a result, we no longer intend to draw on the existing $60 million unsecured convertible debenture facility to fund such expansion or working capital. We look forward to delivering on our commitments to Starseed and to fulfilling the needs of all or counterparties and the communities in which we operate.”