Sundial Growers Inc. announced that, in the context of the initial order pursuant to the companies' Creditors Arrangement Act (Canada) pertaining to the Zenabis Group rendered on June 17, 2022, it entered into a purchase agreement, in the form of a 'stalking horse bid', pursuant to which the shares of Zenabis Global Inc. and the business and assets of its direct and indirectly wholly-owned subsidiaries would be acquired by Sundial. The Bid Agreement is subject to the approval by the Québec Superior Court supervising the CCAA Proceedings, and to potential alternative bids pursuant to bidding procedures that will follow. All amounts are denominated in Canadian dollars unless otherwise noted. Subject to the Court's approval of the Bid Agreement and of bidding procedures that will be sought on July 5, 2022, the Bid Agreement will set the floor, or minimum acceptable bid, in a sale and investment solicitation process, which is designed to achieve the highest and best offer for the Zenabis Group's business and assets and is under the supervision of Ernst & Young, acting as CCAA Monitor.
The assets covered by the Bid Agreement include the 380,000 square foot indoor growing facility located in Atholville, New Brunswick with an annual production capacity of approximately 46,000 kgs of dried cannabis and 15,000 kgs of extraction capacity. The facility received EU GMP certification, providing a license to the facility to export internationally to Israel, Malta, the United Kingdom, and the EU. Zenabis Group also has a joint venture agreement with ZenPharm Limited, based in Malta, allowing for commercial bulk imports into Malta from the facility in Atholville and subsequent exports of finished medicinal cannabis products to countries of the EU and United Kingdom. The Bid Agreement also provides for the acquisition of a decommissioned 255,000 sq. ft. indoor facility in Stellarton, Nova Scotia, that was used as a packaging, processing, and value-added cannabis product manufacturing facility.
Based on HEXO Corp.'s publicly filed financial statements and MD&A, contribution from the Zenabis Group to consolidated net revenue was $11.1 million in the second fiscal quarter of 2022. HEXO's international net revenues increased by 36% to $8.2 million in the second fiscal quarter of 2022 and by 312% relative to the prior year. Zenabis Group's international net revenues consisted of 54% of HEXO's overall international net revenues, increasing by 91% in the second fiscal quarter of 2022 when compared to the prior quarter.
More than 100 employees currently work at the Atholville facility, and Sundial's assessment is that the total capital invested in both the Atholville and Stellarton facilities to date is approximately $108 million. The Atholville facility utilizes state-of-the-art technology, including a fully computerized monitoring system, the latest HPS and LED lighting technology and seed-to-sale tracking systems, and grows several different strains with an extensive library of strains currently under trial which would further enhance Sundial's existing and expanding portfolio.
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