Sundial Closes $22M Strategic Investment In Indiva

Sundial Growers Inc. SNDL has invested $22 million in a Canadian producer of cannabis edibles, Indiva Ltd. NDVA NDVAF.

The Calgary, Alberta-based producer of recreational cannabis confirmed Friday the closing of its previously announced strategic investment in Indiva.

Transaction Details: Under the brokered private placement led by ATB Capital Markets Inc., Sundial purchased some 25 million of Indiva's common shares at 44 cents per share.

In exchange, Inidva received $11 million in cash and a non-revolving loan facility of $11 million.

The term loan carries an interest rate of 9% annually and will mature on Feb. 23, 2024.

Pursuant to an investor rights agreement, Sundial said it opted to maintain its rights to participate in future equity financing to hold on to its pro-rata ownership in Indiva.

Indiva disclosed that it will utilize the net proceeds to fund its outstanding debt, as well as for working capital and general corporate purposes.

In addition, ATB received $330,000 in cash and a financial advisory fee of $220,000.

Why It's Important: Sundial CEO Zach George said the company is "pleased to support the development of Indiva's high-quality products.

"This transaction broadens our exposure to the rapidly expanding cannabis edibles category," George said.

Niel Marotta, president and CEO of Indiva, said the company intends to use the additional financing to boost automation to "drive higher throughput and profitability while ensuring our product quality maintains the best-in-class standard our customers and clients depend upon."

Sundial recently took over a Zenabis Global subsidiary, a special purpose vehicle that owns $58.9 million of its senior secured debt. Zenabis opted to pay Sundial a royalty based on sales revenues coming from its medical, recreational and wholesale cannabis line.

SNDL Price Action: Sundial shares were up 8.73% at $1.37 at last check Wednesday.