Canadian Licensed Producer Zenabis to Merge with Publicly Traded Bevo Agro

Sun Pharm and Bevo Agro to Merge as Zenabis

Combined entity will have 3.5 million square feet of available space to produce cannabis for domestic and international markets

Vancouver, British Columbia – October 4, 2018 – Bevo Agro Inc. (TSXV: BVO) is pleased to announce that it has signed an Arrangement Agreement dated October 4, 2018 with Sun Pharm Investments Ltd. (“Sun Pharm”) for a reverse take-over of Bevo (the “Transaction”).

The Transaction

The Transaction involves three main elements:

  • the amalgamation of Sun Pharm with a wholly-owned subsidiary of Bevo (the “Reverse Take-Over”), with Sun Pharm shareholders receiving Bevo shares representing 86% of the outstanding Bevo shares (the expected exchange ratio being one Bevo share for each Sun Pharm share) and the existing Bevo shareholders continuing to hold Bevo shares representing a 14% interest in Bevo.
  • a plan of arrangement under which Bevo will distribute its interest in CubicFarm Systems Corp. (“Cubic”) to the shareholders of Bevo (the “Spin-Out”), with Bevo shareholders expected to receive one common share of Cubic for every Bevo share held. A brief summary of Cubic’s cubic farming business is set out below.
  • Bevo changing its name to Zenabis Global Inc. (“Zenabis,” being one of Sun Pharm’s established brands in the cannabis industry).
    Bevo shareholders will not be granted dissent rights under the plan of arrangement. Instead, Bevo shareholders that do not wish to participate in Zenabis will have the right to exchange their Bevo shares for non-voting preferred shares of Zenabis which mature on the first anniversary of issuance, and are redeemable at any time at Zenabis’ option, in each case at a price of $2.70 per share. The preferred shares are convertible back into Zenabis common shares on the basis of 0.81 of a Zenabis Common Share (representing a price of approximately $3.33 per Zenabis common share) for each preferred share.

The Transaction was unanimously approved by the board of directors of Bevo. Shareholders holding approximately 58% of Bevo’s common shares have entered into voting agreements committing to vote their Bevo common shares in favour of the Transaction.


At the closing of the Transaction, Bevo’s shareholders will hold shares of one of the world’s largest cannabis companies.

Sun Pharm is currently a privately-held cannabis company which has one of the largest, federally licensed indoor medical cultivation footprints in Canada, operating two licensed production facilities in British Columbia and New Brunswick, with a third expected to be coming online shortly in Nova Scotia. These facilities encompass 660,000 square feet of indoor pharmaceutical grade cannabis production space, strategically positioned on Canada’s coasts, facilitating national distribution and access to international markets. Sun Pharm has received purchase agreements for recreational cannabis from each of the British Columbia Liquor Distribution Branch, New Brunswick Liquor Corporation, Nova Scotia Liquor Corporation, and Yukon Liquor Corporation.

Following the completion of the Transaction, Bevo’s greenhouse facilities in Langley are intended to be expanded and retrofitted to integrate advanced propagation technologies and state-of-the-art lighting and ventilation systems. On completion of the expected expansion of these greenhouse facilities, Zenabis will have 660,000 square feet of indoor space and 2.8 million¹ square feet of state-of-the-art greenhouse space in three provinces – British Columbia, New Brunswick and Nova Scotia.

Committed Financings

In connection with the Transaction, Sun Pharm has secured committed or funded financing of ~$57 million, in addition to $72 million secured since the company’s founding. The $57 million financing consists of three components:

  1. $27.5 million of subordinated financing by way of convertible notes. This financing may be converted into shares of Zenabis at a price equal to the lower of $2.62 and a 20% discount to a financing expected to be completed concurrent with completion of the Transactions (the “Concurrent Financing”). The exchange ratio used for the Reverse Take-Over is being calculated on the basis that these convertible notes are converted and form part of 86% of Zenabis that is allocated to the shareholders of Sun Pharm;
  2. $25 million of convertible senior debt financing that can be drawn on an as-needed basis by Zenabis. This financing may also be converted into shares of Zenabis at a price equal to a 20% discount to the Concurrent Financing, but this conversion is not considered in calculating the exchange ratio; and,
  3. $4 million of common shares in Sun Pharm issued at a price of $2.82 per share.

Proposed Management Team

Rick Brar, Chief Executive Officer of Zenabis, and Leo Benne, Chief Growing Officer of Zenabis and former President and General Manager of Bevo Farm pictured in the Bevo Farms facility. (CNW Group/Bevo Agro Inc.)

It is currently anticipated that the management of the resulting issuer will include each of Rick Brar (Chief Executive Officer), Leo Benne (Chief Growing Officer), John Hoekstra (Chief Financial Officer), Mike McGinty (Chief Administrative Officer) and Kevin Coft (Chief Facilities Officer). The following is a brief description of the management team of Zenabis.

Rick Brar – Chief Executive Officer

Mr. Rick Brar is an experienced business leader in the cannabis, nutraceutical, beverage, consumer packaged goods, agriculture, land development and construction sectors. Mr. Brar has international expertise in emerging market sectors, having incubated and grown several companies over his career. He is experienced in sales and marketing, with demonstrated success in corporate sales growth, new market penetration, new product development, and long range planning. Mr. Brar is a proven senior manager with excellent communication, leadership skills, strategic planning, new market development and a reputation for team building, as well as the implementation of tactical sales and marketing initiatives. Mr. Brar was previously the Chief Executive Officer of International Herbs Limited, where he led one of the largest herb companies in North America for nine years.

Leo Benne – Chief Growing Officer

Mr. Leo Benne is currently Vice President and a Director of Bevo, and the General Manager of Bevo Farms Ltd., the Company’s wholly owned subsidiary. Mr. Benne gained advanced knowledge of modern horticultural methods at Rijks Middelbare Tuinbouwschool in Holland. With experience in the application of computer technology to the production of healthy, high-yield plants, he has been a key figure in the development of Bevo Agro. Mr. Benne has overseen every stage of the company’s operations, from planting to shipping, and has led Bevo through unprecedented growth to become the leading propagation company in North America. He has been with Bevo for over 25 years.

John Hoekstra – Chief Financial Officer

Mr. John Hoekstra is the Executive Vice President and Chief Financial Officer of Bevo Agro Inc., where he oversees all finance, administration and accounting activities. He joined Bevo in 2004, shortly after the Company went public. Prior to joining Bevo, Mr. Hoekstra worked as Supply Chain Manager at Air Liquide Canada, and at Unitor Ships Service as Branch Manager. He is a Chartered Professional Accountant (CPA, CGA) and holds a Business Administration degree from Redeemer University.

Mike McGinty – Chief Administrative Officer

Mr. Mike McGinty has extensive experience in large-scale coordination and planning. Previously, he was a post-graduate tutor in leadership and planning for senior government and military staff from Canada and over 25 allied nations worldwide. Mr. McGinty was a senior officer in the British Army and served widely overseas, including in Iraq and Afghanistan, where he was responsible for more than 1,000 people with $2 billion in capital assets. Mike remains an active member of the Canadian Armed Forces. He also served as the Head of Risk and Security for UBC Okanagan.

Kevin Coft – Chief Facilities Officer

Mr. Kevin Coft is an operational and supply chain professional with over 30 years of Canadian and international procurement, facility operations, and managerial experience. His industrial expertise covers a wide range of functions including navigating Health Canada’s regulatory licensing, team development, facility construction, strategic analysis, import/export operations, logistics, warehousing, customer relationship management, benchmarking, and business systems analysis.

“Our primary goal with this merger is to expand Zenabis’ capacity to supply high-quality cannabis for worldwide distribution. We will achieve this by taking advantage of Bevo’s greenhouse growing expertise to cultivate high-quality cannabis,” said Mr. Brar. “This is a unique partnership that gives Zenabis a significant advantage among Canadian producers as we continue to grow our business to meet Canadian and international demand.”

“This transaction represents a positive growth opportunity for Bevo Agro, as Zenabis intends to invest up to $100 million to expand our greenhouse facility to provide state-of-the-art cannabis production capacity, while maintaining our existing propagation and floral business,” said Mr. Benne. “This partnership will bring new jobs and economic opportunities to the communities in which we operate, while we continue to support the local and international food and floral markets.”

Agentis Capital acted as financial advisor to Bevo regarding the RTO and the Greenhouse Transaction (as defined below). Fasken Martineau Dumoulin LLP acted as counsel on behalf of Bevo regarding the RTO and the Greenhouse Transaction (as defined below).

Regulatory Matters

Completion of the Transaction is subject to review and approval by the TSX Venture Exchange (“TSXV”), approval by the Company’s shareholders to be sought at a shareholder meeting expected to be held late this calendar year, and approval of the BC Supreme Court. Prior to the meeting, the Company’s shareholders will receive an information circular providing detailed information about the Transaction and Sun Pharm’s business. While the Transaction is an arm’s length transaction, it does constitute a “reverse take-over” under the TSXV’s rules, with the result that trading in Bevo’s common shares has been halted and will not resume until such time as all required documentation has been filed with the TSXV and permission to resume trading has been granted.

Completion of the transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable, disinterested shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Bevo should be considered highly speculative.

Acquisition of Additional Greenhouse Operations and Land

Bevo is also pleased to announce that it has entered into a purchase agreement with an arm’s length third party to acquire 10.4 acres of greenhouse operations on 50 acres of land in Aldergrove, British Columbia (the “Greenhouse Acquisition”). Post-amalgamation, Zenabis intends to use this greenhouse acreage to ensure continuity for existing Bevo propagation customers. The Greenhouse Acquisition is subject to customary closing conditions and is expected to close prior to December 31, 2018.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this news release.

This press release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.


This news release contains statements that may constitute “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information may include, among others, statements regarding the future plans, costs, objectives or performance of Bevo, or the assumptions underlying any of the foregoing. In this news release, words such as “may”, “would”, “could”, “will”, “likely”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate” and similar words and the negative form thereof are used to identify forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. No assurance can be given that any events anticipated by the forward-looking information will transpire or occur, including the completion of the Reverse Take-Over, Spin-Out and the Greenhouse Acquisition. Forward-looking information is based on information available at the time and/or management’s good-faith belief with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond Bevo’s control. These risks, uncertainties and assumptions include, but are not limited to, those described Bevo’s Management’s Discussion & Analysis for the fiscal year ended June 30, 2018, a copy of which is available on SEDAR at, and could cause actual events or results to differ materially from those projected in any forward-looking statements. Bevo does not intend, nor does Bevo undertake any obligation, to update or revise any forward-looking information contained in this news release to reflect subsequent information, events or circumstances or otherwise, except if required by applicable laws.

About Bevo Agro

Bevo Agro is North America’s leading supplier of propagated agricultural plants, operating approximately 53 acres of state-of-the-art greenhouse facilities on 98 acres of land in Langley, BC and 20 acres of land in Pitt Meadows, BC. The Company’s main products have been the propagation of vegetable plants such as tomatoes, peppers, cucumbers, and other plants such as bedding plants, flowers and grasses. The Company markets its products to established greenhouse growers, nurseries and retail outlets throughout North America.

About Sun Pharm

Sun Pharm is currently a leader in agriculture, technology, pharmaceutical sales, consumer packaged goods, international distribution and brand marketing, with cannabis and cannabis-related purchase orders from the provinces of New Brunswick, British Columbia, Nova Scotia, and Yukon Territory. Sun Pharm is currently a privately-held cannabis company which has one of the largest, federally licensed indoor medical cultivation footprints in Canada, operating two licensed production facilities in British Columbia and New Brunswick, with a third expect to be coming online shortly in Nova Scotia. These facilities encompass 660,000 square feet of indoor pharmaceutical grade cannabis production space, strategically positioned on Canada’s coasts, facilitating national distribution and access to international markets. Sun Pharm is currently working towards globally recognized EU GMP certifications. Sun Pharm has one of the most experienced management teams in the industry, with expertise in retail consumer packaged goods, global pharmaceutical sales and manufacturing, quality assurance, and commercialized cultivation. The growing team has more than two decades of experience in organic cultivation and distribution of herbs and nutraceutical products throughout the Americas, North Africa, and the Middle East. Sun Pharm’s sales team has more than two decades in product development, commercialization, and retail and pharmaceutical sales including international distribution.

About Cubic

CubicFarms® Systems Corp. is an Ag Tech and Vertical Farming technology company that utilizes revolutionary, patented technology to cultivate high-quality produce. Founded in 2015, the company’s mission is to provide farmers around the world with efficient growing systems capable of producing predictable crop yields. Using its unique undulating growing system, CubicFarms® solves the two main challenges within the indoor farming industry: high electricity and labour costs. Currently, CubicFarms® cultivates living lettuce, living basil and microgreens at its own facility in Pitt Meadows, British Columbia and is partnering with other farmers to establish facilities around the world.

¹Square footage includes the acquisition of additional greenhouse operations and land

Original press release

Published by NCV Newswire
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