Zenabis, based in Vancouver, British Columbia, said it wouldn’t disclose further details.
Zenabis’ announcement in a Wednesday morning news release also included a swipe at competing producer Sundial Growers, which made a “strategic investment” on Dec. 30 to buy the senior secured debt of Zenabis subsidiary Zenabis Investments.
In a news release issued 30 minutes before Zenabis’ announcement, Sundial said it had issued a notice of default to Zenabis on that debt, despite receiving a principal repayment on Dec. 31 worth 7 million Canadian dollars ($5.5 million).
“Zenabis is disputing said defaults,” Sundial noted.
Zenabis characterized Sundial’s December investment as “an attempt to coerce Zenabis into being acquired by Sundial” and said it had been negotiating an extension of the principal repayment with its senior lender just before Sundial bought the debt.
“None of the alleged defaults are for failure to make payments of principal or interest,” according to Zenabis’ release.
“(Zenabis) believes the senior lender’s allegations to be spurious and without merit and intends to vigorously defend against what it considers to be an ill-disguised attempt to circumvent a fair and competitive process to acquire (Zenabis) by improperly foreclosing the equity of the company or compelling Zenabis to enter into a transaction with Sundial.”
Zenabis said it plans to “to actively explore a broad range of alternatives to maximize shareholder value” as it undergoes a strategic review.
The Vancouver company laid off roughly a quarter of its workforce in March and sold a production facility for much less than the original asking price in November.
In September, Zenabis appointed its fourth chief executive within the span of two years.
Sundial’s net loss for the first three quarters of fiscal 2020 exceeded CA$140 million.
Sundial shares trade on the Nasdaq as SNDL. Zenabis shares trade on the Toronto Stock Exchange as ZENA.