What changed in this filing

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Item 1. Financial Statements

2021-08-13 compared with 2021-02-09 · 371 added, 739 removed, 709 unchanged (61% of the section changed)

4 unchanged sentences

Successor Predecessor

(in thousands, except per share data) Three months ended December 31, 2020 Three months ended December 31, 2019

(in thousands, except per share data) Three months ended June 30, 2021 Three months ended June 30, 2020

Sales and other operating revenues $ 333,290 $ 262,809

4 unchanged sentences

Restructuring and asset impairment charges 233 73

Operating income 13,480 8,143

Interest expense (includes debt amortization of $ 3,031 and $ 2,559 , respectively)

24,898 32,200

Interest income 126 442

Operating income (loss) 8,204 ( 43,596 )

Debt retirement expense — 828

Interest expense, net 26,840 30,507

Reorganization items, net — ( 26,866 )

Loss before income taxes and other items ( 18,636 ) ( 101,797 )

Income tax expense (benefit) 4,492 ( 914 )

Income from unconsolidated affiliates 7,564 255

Income tax benefit ( 8,439 ) ( 8,168 )

(Loss) income from unconsolidated affiliates ( 1,431 ) 820

Net loss ( 11,628 ) ( 92,809 )

3 unchanged sentences

Loss per share:

Basic $ ( 0.33 ) $ ( 2.40 )

Diluted $ ( 0.33 ) $ ( 2.40 )

Weighted average number of shares outstanding:

Basic 25,000 9,166

Diluted 25,000 9,166

See "Notes to Condensed Consolidated Financial Statements"

Pyxus International, Inc.

and Subsidiaries

Condensed Consolidated Statements of Operations

Successor Predecessor

(in thousands, except per share data) Four months ended December 31, 2020 Five months ended August 31, 2020 Nine months ended December 31, 2019

Sales and other operating revenues $ 497,394 $ 447,600 $ 1,022,911

Cost of goods and services sold 424,498 402,594 867,852

Gross profit 72,896 45,006 155,059

Selling, general, and administrative expenses 61,627 87,858 142,551

Other income (expense), net 2,736 ( 539 ) 4,061

Restructuring and asset impairment charges 8,991 566 892

Operating income (loss) 5,014 ( 43,957 ) 15,677

Debt retirement expense — 828 —

Interest expense (includes debt amortization of $ 4,307 , $ 4,082 , and $ 7,478 , respectively)

33,101 46,616 101,346

Interest income 180 1,426 2,966

Reorganization items:

Gain on settlement of liabilities subject to compromise — 462,304 —

Professional fees — ( 30,526 ) —

United States trustee fees — ( 970 ) —

Write-off of unamortized debt issuance costs and discount — ( 5,303 ) —

Issuance of exit facility shares and DIP financing fees — ( 208,538 ) —

Other debt restructuring costs — ( 19,442 ) —

Fresh start reporting adjustments — ( 91,541 ) —

(Loss) income before income taxes and other items ( 27,907 ) 16,009 ( 82,703 )

Income tax (benefit) expense ( 6,091 ) 292 25,238

Income from unconsolidated affiliates 7,798 2,358 6,728

Net (loss) income ( 14,018 ) 18,075 ( 101,213 )

Net loss attributable to noncontrolling interests ( 540 ) ( 962 ) ( 905 )

Net (loss) income attributable to Pyxus International, Inc.

$ ( 13,478 ) $ 19,037 $ ( 100,308 )

(Loss) earnings per share:

Basic $ ( 0.54 ) $ 1.91 $ ( 10.98 )

Diluted $ ( 0.54 ) $ 1.91 $ ( 10.98 )

Basic and diluted $ ( 0.46 ) $ ( 9.24 )

Weighted average number of shares outstanding:

Basic 25,000 9,976 9,137

Diluted 25,000 9,992 9,137

Basic and diluted 25,000 9,976

See "Notes to Condensed Consolidated Financial Statements"

1 unchanged sentence

and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

Condensed Consolidated Statements of Comprehensive Loss

Successor Predecessor

(in thousands) Three months ended December 31, 2020 Three months ended December 31, 2019

(in thousands) Three months ended June 30, 2021 Three months ended June 30, 2020

Net loss $ ( 11,628 ) $ ( 92,809 )

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment 689 ( 140 )

Defined benefit pension amounts reclassified to income — 312

Change in pension liability for settlements 47 799

Pension and other postretirement benefit plans — 494

Cash flow hedges 4,328 ( 531 )

Amounts reclassified to income for derivatives — 576

Total other comprehensive (loss) income, net of tax ( 717 ) 3,558

Total other comprehensive income (loss), net of tax 5,017 ( 177 )

Total comprehensive loss ( 6,611 ) ( 92,986 )

2 unchanged sentences

$ ( 6,491 ) $ ( 92,262 )

Successor Predecessor

(in thousands) Four months ended December 31, 2020 Five months ended August 31, 2020 Nine months ended December 31, 2019

Net (loss) income $ ( 14,018 ) $ 18,075 $ ( 101,213 )

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustment ( 952 ) 4,377 ( 474 )

Defined benefit pension amounts reclassified to income — 734 934

Change in pension liability for settlements 47 — ( 1,213 )

Cash flow hedges ( 619 ) ( 531 ) ( 147 )

Amounts reclassified to income for derivatives — — 2,520

Total other comprehensive (loss) income, net of tax ( 1,524 ) 4,580 1,620

Total comprehensive (loss) income ( 15,542 ) 22,655 ( 99,593 )

Comprehensive loss attributable to noncontrolling interests ( 661 ) ( 1,030 ) ( 846 )

Comprehensive (loss) income attributable to Pyxus International, Inc.

$ ( 14,881 ) $ 23,685 $ ( 98,747 )

See "Notes to Condensed Consolidated Financial Statements"

2 unchanged sentences

Condensed Consolidated Balance Sheets

Successor Predecessor

(in thousands) December 31, 2020 December 31, 2019 March 31, 2020

Successor Predecessor Successor

(in thousands) June 30, 2021 June 30, 2020 March 31, 2021

Current assets

3 unchanged sentences

Other receivables 33,711 15,777 27,920

Accounts receivable, related parties 3,344 6,418 5,030

Notes receivable, related parties — 406 406

Inventories, net 854,042 832,223 727,893

5 unchanged sentences

Restricted cash 389 389 389

Long-term notes receivable, related parties 149 7,466 7,450

Investments in unconsolidated affiliates 85,651 57,479 96,356

10 unchanged sentences

Notes payable to banks $ 403,792 $ 524,266 $ 372,174

DIP financing — 131,700 —

Accounts payable 88,807 103,853 125,876

Accounts payable, related parties 28,417 11,077 11,820

Advances from customers 29,631 26,130 12,120

10 unchanged sentences

Pension, postretirement, and other long-term liabilities 66,610 73,869 67,646

Total liabilities not subject to compromise 1,434,499 1,312,858 1,285,522

Liabilities subject to compromise — 649,107 —

Total liabilities 1,434,499 1,961,965 1,285,522

Successor Predecessor Successor

(in thousands) June 30, 2021 June 30, 2020 March 31, 2021

Commitments and contingencies

Successor Predecessor

(in thousands) December 31, 2020 December 31, 2019 March 31, 2020

Stockholders’ equity

18 unchanged sentences

Stock Retained

(Deficit) Earnings Currency Translation Adjustment Pensions,

Deficit Currency Translation Adjustment Pensions,

Net of Tax Derivatives, Net of Tax Noncontrolling

Interests Total Stockholders' Equity

Balance, March 31, 2020 (Predecessor) $ 469,677 $ ( 488,545 ) $ ( 22,509 ) $ ( 37,154 ) $ 531 $ 1,692 $ ( 76,308 )

Balance, March 31, 2021

(Successor) $ 391,089 $ ( 136,686 ) $ ( 4,649 ) $ 541 $ ( 2,625 ) $ 6,270 $ 253,940

Net loss — ( 11,508 ) — — — ( 120 ) ( 11,628 )

Stock-based compensation 117 — — — — — 117

Dividends paid — — — — — ( 120 ) ( 120 )

Other comprehensive (loss) income, net of tax — — ( 64 ) 494 ( 531 ) ( 76 ) ( 177 )

Balance, June 30, 2020 (Predecessor) 469,794 ( 580,706 ) ( 22,573 ) ( 36,660 ) — 848 ( 169,297 )

Net income — 111,198 — — — ( 314 ) 110,884

Stock-based compensation 8 — — — — — 8

Dividends paid — — — — — ( 180 ) ( 180 )

Change in investment in subsidiaries ( 1,655 ) — — — — ( 461 ) ( 2,116 )

Other — ( 8 ) — — — 8 —

Other comprehensive income, net of tax — — 689 — 4,328 — 5,017

Cancellation of Predecessor equity ( 468,147 ) 469,508 18,064 36,420 — 99 55,944

Balance, August 31, 2020 (Predecessor) $ — $ — $ — $ — $ — $ — $ —

Balance, September 1, 2020 (Successor) $ — $ — $ — $ — $ — $ — $ —

Issuance of Successor common stock 391,402 — — — — — 391,402

Fresh start adjustment to noncontrolling interests — — — — — 4,359 4,359

Net loss — ( 5,313 ) — — — ( 485 ) ( 5,798 )

Dividends paid — — — — — ( 123 ) ( 123 )

Other comprehensive (loss) income, net of tax — — ( 828 ) — — 21 ( 807 )

Balance, September 30, 2020 (Successor) 391,402 ( 5,313 ) ( 828 ) — — 3,772 389,033

Net loss — ( 8,165 ) — — — ( 55 ) ( 8,220 )

Fresh start adjustments ( 313 ) — — — — ( 246 ) ( 559 )

Other comprehensive (loss) income, net of tax — — ( 3 ) 47 ( 619 ) ( 142 ) ( 717 )

Balance, December 31, 2020 (Successor) $ 391,089 $ ( 13,478 ) $ ( 831 ) $ 47 $ ( 619 ) $ 3,329 $ 379,537

Pyxus International, Inc.

and Subsidiaries

Condensed Statements of Consolidated Stockholders' Equity

Attributable to Pyxus International, Inc.

Accumulated Other Comprehensive Loss

(in thousands) Common

Stock Retained

(Deficit) Earnings Currency Translation Adjustment Pensions,

Net of Tax Derivatives, Net of Tax Noncontrolling

Interests Total Stockholders' Equity

Balance, June 30, 2021

(Successor) $ 391,089 $ ( 148,202 ) $ ( 3,960 ) $ 541 $ 1,703 $ 6,158 $ 247,329

Balance, March 31, 2020 (Predecessor) $ 469,677 $ ( 488,545 ) $ ( 22,509 ) $ ( 37,154 ) $ 531 $ 1,692 $ ( 76,308 )

1 unchanged sentence

Stock-based compensation 117 — — — — — 117

Other comprehensive (loss) income, net of tax — — ( 430 ) 311 369 30 280

Balance, June 30, 2019 (Predecessor) 469,365 ( 285,681 ) ( 22,409 ) ( 36,438 ) ( 2,245 ) 7,973 130,565

Net loss — ( 16,518 ) — — — ( 86 ) ( 16,604 )

Restricted stock surrender ( 12 ) — — — — — ( 12 )

Stock-based compensation 383 — — — — — 383

Dividends paid — — — — — ( 120 ) ( 120 )

Other comprehensive (loss) income, net of tax — — ( 64 ) 494 ( 531 ) ( 76 ) ( 177 )

Balance, September 30, 2019 (Predecessor) 469,736 ( 302,199 ) ( 24,334 ) ( 38,139 ) ( 817 ) 7,388 111,635

Net loss — ( 21,993 ) — — — ( 453 ) ( 22,446 )

Stock-based compensation 242 — — — — — 242

Purchase of noncontrolling interests in a subsidiary ( 528 ) — 33 — — ( 426 ) ( 921 )

Other comprehensive loss, net of tax — — 1,789 1,111 576 48 3,524

Balance, December 31, 2019 (Predecessor) $ 469,450 $ ( 324,192 ) $ ( 22,512 ) $ ( 37,028 ) $ ( 241 ) $ 6,557 $ 92,034

*Amounts may not equal column totals due to rounding

Balance, June 30, 2020

(Predecessor) $ 469,794 $ ( 580,706 ) $ ( 22,573 ) $ ( 36,660 ) $ — $ 848 $ ( 169,297 )

See "Notes to Condensed Consolidated Financial Statements"

3 unchanged sentences

Successor Predecessor

(in thousands) Four months ended December 31, 2020 Five months ended August 31, 2020 Nine months ended December 31, 2019

(in thousands) Three months ended June 30, 2021 Three months ended June 30, 2020

Operating Activities:

Net (loss) income $ ( 14,018 ) $ 18,075 $ ( 101,213 )

Adjustments to reconcile net (loss) income to net cash used by operating activities:

Net loss $ ( 11,628 ) $ ( 92,809 )

Adjustments to reconcile net loss to net cash used by operating activities:

Depreciation and amortization 4,066 10,026

Debt amortization/interest 6,132 3,434

Gain on foreign currency transactions ( 2,196 ) ( 11,077 ) ( 3,921 )

Asset impairment charges 3,982 213 260

(Income) loss from unconsolidated affiliates, net of dividends ( 7,600 ) 2,915 ( 128 )

Reorganization items — ( 130,215 ) —

Loss (gain) on foreign currency transactions 1,325 ( 5,006 )

(Loss) income from unconsolidated affiliates, net of dividends 10,567 4,359

Reorganization items, net — 15,703

Changes in operating assets and liabilities, net ( 191,944 ) ( 49,285 )

4 unchanged sentences

Collections on beneficial interests on securitized trade receivables 37,681 53,949

Loans to unconsolidated affiliates — — ( 5,250 )

DIP loan to deconsolidated subsidiary ( 5,229 ) —

Payments to acquire businesses, net of cash acquired — ( 4,805 )

2 unchanged sentences

Financing Activities:

Net repayments and proceeds from short-term borrowings ( 37,915 ) ( 99,969 ) 156,784

Net proceeds and repayments from short-term borrowings 29,015 ( 19,517 )

Proceeds from DIP facility — 131,700

Repayment of DIP facility — ( 213,418 ) —

Proceeds from term loan facility — 213,418 —

Proceeds from 10.0 % first lien notes

Repayment of 8.5 % first lien notes

— ( 280,844 ) —

Proceeds from revolving loans facilities 37,500 27,438 —

Proceeds from long-term borrowings 462 2,568 —

Proceeds from DDTL facility 117,600 —

Repayment of revolving loans facilities — ( 44,900 )

Repayment of second lien notes — ( 1,199 ) —

Share repurchases — ( 1,000 ) —

Proceeds from long-term borrowings 129 2,606

Debt issuance costs ( 6,148 ) ( 1,758 )

DIP financing fees — ( 9,085 )

Purchase of noncontrolling interests in a subsidiary — — ( 921 )

Other debt restructuring costs — ( 7,574 ) —

Other, net — ( 384 )

Net cash (used) provided by financing activities ( 2,851 ) 63,669 150,047

Net cash provided by financing activities 140,596 58,662

Effect of exchange rate changes on cash 514 199

Successor Predecessor

(in thousands) Four months ended December 31, 2020 Five months ended August 31, 2020 Nine months ended December 31, 2019

Increase (decrease) in cash, cash equivalents, and restricted cash 9,359 ( 55,107 ) ( 122,832 )

(Decrease) increase in cash, cash equivalents, and restricted cash ( 15,193 ) 2,750

Cash and cash equivalents at beginning of period 92,705 170,208

3 unchanged sentences

Cash paid for income taxes, net $ 4,871 $ 2,173

Cash paid for interest 17,451 54,233 80,191

Cash received from interest ( 406 ) ( 1,356 ) ( 2,839 )

Cash paid for interest, net 15,856 17,900

Cash paid for reorganization items — 2,078

Noncash investing and financing activities:

Purchases of property, plant, and equipment included in accounts payable $ 1,090 $ 1,759 $ 4,590

Sales of property, plant, and equipment included in notes receivable 117 304 662

Noncash investing activities:

Noncash amounts obtained as a beneficial interest in exchange for transferring trade receivables in a securitization transaction 38,498 47,120

Cancellation of second lien notes — ( 634,487 ) —

See "Notes to Condensed Consolidated Financial Statements"

7 unchanged sentences

Fresh Start Reporting

CCAA Proceeding and Deconsolidation of Subsidiaries

Revenue Recognition

Restructuring and Asset Impairment Charges

(Loss) Earnings Per Share

Cash, Cash Equivalents, and Restricted Cash

Loss Per Share

Restricted Cash

Inventories, Net

8 unchanged sentences

Contingencies and Other Information

Other Comprehensive Loss

Related Party Transactions

Segment Information

Subsequent Event

Subsequent Events

Basis of Presentation and Significant Accounting Policies

8 unchanged sentences

Intercompany accounts and transactions have been eliminated.

These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2020 of Old Holdco, Inc.

filed on August 24, 2020.

These condensed consolidated interim financial statements should be read in conjunction with the Company's consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2021 filed on June 29, 2021.

Due to the seasonal nature of the Company’s business, the results of operations for a fiscal quarter are not necessarily indicative of the operating results that may be attained for other quarters or a full fiscal year.

The Company applied Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 852 – Reorganizations (“ASC 852”) in preparing the condensed consolidated financial statements.

For periods subsequent to the Chapter 11 filing, ASC 852 requires distinguishing transactions associated with the reorganization separate from activities related to the ongoing operations of the business.

Upon the effectiveness of the Plan and the emergence of the Debtors from the

Chapter 11 Cases, the Company determined it qualified for fresh start reporting under ASC 852, which resulted in the Company becoming a new entity for financial reporting purposes on the Effective Date (as defined below).

For periods subsequent to the commencement of the Chapter 11 Cases (as defined below), ASC 852 requires distinguishing transactions associated with the reorganization separate from activities related to the ongoing operations of the business.

Upon the effectiveness of the Plan and the emergence of the Debtors (as defined below) from the Chapter 11 Cases, the Company determined it qualified for fresh start reporting under ASC 852, which resulted in the Company becoming a new entity for financial reporting purposes on the

Effective Date (as defined below).

The Company elected to apply fresh start reporting using a convenience date of August 31, 2020 (the “Fresh Start Reporting Date”).

The Company evaluated and concluded that the events between August 24, 2020 and August 31, 2020 were not material to the Company's financial reporting on both a quantitative or qualitative basis.

Refer to “ Note 4.

The Company evaluated and concluded that the events between the Effective Date (as defined below) and the Fresh Start Reporting Date were not material to the Company's financial reporting on both a quantitative or qualitative basis.

See “ Note 4.

Fresh Start Reporting ” for additional information.

1 unchanged sentence

The lack of comparability is emphasized by the use of a “black line” to separate the Predecessor and Successor periods in the condensed consolidated financial statements and footnote tables.

References to “Successor” relate to our financial position and results of operations after August 31, 2020.

References to “Predecessor” relate to our financial position and results of operations on or before August 31, 2020.

References to “Successor” relate to our financial position after August 31, 2020 and results of operations for periods commencing after August 31, 2020.

References to “Predecessor” relate to our financial position on or before August 31, 2020 and results of operations for periods ending on or before August 31, 2020.

Bankruptcy Proceedings

On June 15, 2020, Old Holdco, Inc.

On June 15, 2020 (the "Petition Date"), Old Holdco, Inc.

(then named Pyxus International, Inc.) (“Old Pyxus”) and its then subsidiaries Alliance One International, LLC, Alliance One North America, LLC, Alliance One Specialty Products, LLC, and GSP Properties, LLC (collectively, the “Debtors”) filed voluntary petitions (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code with the Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) to implement a prepackaged Chapter 11 plan of reorganization to effectuate a financial restructuring (the “Restructuring”) of Old Pyxus’ secured debt.

3 unchanged sentences

Pursuant to the Confirmation Order and the Plan, at the effectiveness of the plan all outstanding shares of common stock, and rights to acquire the common stock, of Old Pyxus were cancelled and the shares of common stock of the Company were delivered to certain creditors of Old Pyxus.

Refer to “ Note 3.

See “ Note 3.

Emergence from Voluntary Reorganization under Chapter 11 ” for additional information.

Reorganization Items

Expenditures, gains, and losses that were realized or incurred by the Debtors subsequent to the Petition Date and as a direct result of the Chapter 11 Cases are reported as reorganization items in the condensed consolidated statements of operations.

Reorganization items are primarily composed of write-off of unamortized debt issuance costs and discount, fresh start reporting adjustments, legal, valuation, and consulting professional fees pertaining to the Chapter 11 Cases, United States trustee fees, DIP financing fees, other debt restructuring costs, gain on settlement of liabilities subject to compromise, and the issuance of exit facility shares.

Contract Balances

The Company generally records a receivable when revenue is recognized as the timing of revenue recognition may differ from the timing of payment from customers.

Payment terms and conditions vary by contract, although terms generally include a requirement of payment within 30 to 60 days.

The Company's trade receivables do not bear interest, and they are recorded at the invoiced amount less an estimated allowance for expected credit losses.

In addition to estimating an allowance based on specific identification of certain receivables that have a higher probability of not being paid, the Company also records an estimate for expected credit losses for the remaining receivables in the aggregate using a loss-rate method that considers historical bad debts, age of customer receivable balances, and current customer receivable balances.

Additionally, the Company considers future reasonable and supportable forecasts of economic conditions to adjust historical loss rate percentages as necessary.

Balances are written-off when determined to be uncollectible.

Refer to "Note 5.

Revenue Recognition" for a summary of the activity in the allowance for expected credit losses.

Reclassifications

Prior period amounts have been reclassified to conform to the current year presentation of other noncurrent assets in the condensed consolidated balance sheets and certain items in the condensed consolidated statements of cash flows.

Certain prior period amounts relating to balances with related parties have been reclassified to conform to the current year presentation in the condensed consolidated balance sheets.

See " Note 23.

Related Party Transactions " for additional information.

New Accounting Standards

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update ("ASU") No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

ASU 2016-13 and its related amendments are intended to provide financial statement users with more decision-useful information about the expected credit losses on financial assets held at amortized cost and other commitments to extend credit held by a reporting entity at each reporting date.

Based on the Company's scoping assessment, ASU 2016-13 primarily impacts trade receivables.

This guidance was early adopted by the Company as of April 1, 2020 using the modified retrospective approach.

The adoption of this new accounting standard did not have a material impact on the Company's financial condition, results of operations, or cash flows.

In August 2018, the FASB issued ASU No.

2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20):

Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans .

ASU 2018-14 updates disclosure requirements for defined benefit plans.

This guidance was adopted using a retrospective approach and was effective beginning in the first quarter of fiscal year 2021.

This new accounting standard did not have a material impact on the Company's financial condition, results of operations, or cash flows;

however, expanded disclosures will be required in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

Recent Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU No.

In December 2019, the FASB issued Accounting Standards Update ("ASU") No.

2019-12, Simplifying the Accounting for Income Taxes .

1 unchanged sentence

This guidance also simplifies aspects of the accounting for franchise taxes that are partially based on income, separate financial statements of legal entities not subject to tax, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

The guidance is effective for the Company on April 1, 2021, with early adoption permitted.

The Company is currently evaluating the impact that this new accounting standard will have on its consolidated financial statements and related disclosures.

The guidance became effective for the Company on April 1, 2021.

The adoption of this new accounting standard did not have a material impact on the Company's financial condition, results of operations, cash flows, or disclosures.

Emergence from Voluntary Reorganization under Chapter 11

1 unchanged sentence

On June 15, 2020, the Debtors filed voluntary petitions under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the District of Delaware to implement a prepackaged Chapter 11 plan of reorganization in order to effectuate a financial restructuring of the Debtors’ debt.

On August 21, 2020, the Bankruptcy Court entered the Confirmation Order pursuant to the Bankruptcy Code, which approved and confirmed the Amended Joint Prepackaged Chapter 11 Plan of Reorganization of Pyxus International, Inc.

and Its Affiliated Debtors.

Liabilities Subject to Compromise

Pre-petition liabilities that have been allowed as claims in the Chapter 11 Cases are classified as liabilities subject to compromise within the condensed consolidated balance sheets, and include the following as of June 30, 2020:

Liabilities subject to compromise:

Debt subject to compromise $ 635,686

Accrued interest on debt subject to compromise 13,421

Reorganization Items

Expenditures, gains, and losses that are realized or incurred by the Debtors subsequent to the Petition Date and as a direct result of the Chapter 11 Cases are reported as reorganization items, net in the condensed consolidated statements of operations, and include the following for the three months ended June 30, 2020:

Reorganization Items:

Professional fees $ ( 2,573 )

United States trustee fees ( 518 )

Write-off of unamortized debt issuance costs and discount ( 4,020 )

DIP financing fees ( 19,755 )

Summary Features of the Plan of Reorganization

On August 24, 2020 (the “Effective Date”), the Plan became effective in accordance with its terms, and the Debtors emerged from the Chapter 11 Cases.

On the Effective Date, the Plan became effective in accordance with its terms, and the Debtors emerged from the Chapter 11 Cases.

In connection with the satisfaction of the conditions to effectiveness as set forth in the Confirmation Order and the Plan, Old Pyxus completed a series of transactions pursuant to which the business assets and operations of Old Pyxus were vested in a new Virginia corporation, Pyxus Holdings, Inc.

(“Pyxus Holdings”), which is a subsidiary of the Company.

Under the Plan, all suppliers, vendors, employees, trade partners, foreign lenders, and landlords were unimpaired and were to be satisfied in full in the ordinary course of business, and the existing trade and customer contracts and terms of Old Pyxus were to be maintained by the Company and its subsidiaries.

Commencing upon the Effective Date, the Company, through its subsidiaries, continued to operate the Old Pyxus business in the ordinary course.

Under the Plan, all suppliers, vendors, employees, trade partners, foreign lenders, and landlords were unimpaired and were satisfied in full in the ordinary course of business, and the existing trade and customer contracts and terms of Old Pyxus were maintained by the Company and its subsidiaries.

Commencing upon the Effective Date, the Company, through its subsidiaries, continued to operate in the ordinary course the business formerly operated by Old Pyxus.

Old Pyxus, which retained no assets, has commenced a dissolution process and is being wound down.

15 unchanged sentences

• Pyxus Parent, Inc.

issued all of its equity interests to the Company in exchange for 25.0 million shares of common stock, no par value, of the Company (such common stock is referred to as “New Common Stock” and the 25.0 million shares of which are referred to as the “Equity Consideration”).

issued all of its equity interests to the Company in exchange for 25,000 shares of common stock, no par value, of the Company (such common stock is referred to as “New Common Stock” and the 25,000 shares of which are referred to as the “Equity Consideration”).

Pyxus Holdings then issued all of its equity interests to Pyxus Parent, Inc.

4 unchanged sentences

• The Company and Pyxus Parent, Inc., along with each applicable subsidiary of the Company, guaranteed the Notes, the Term Loan Credit Facility, and the ABL Credit Facility.

• Old Pyxus provided for the distribution of (i) the Notes to the Holders of Allowed First Lien Notes Claims pursuant to the Plan, (ii) approximately 12.5 million shares of New Common Stock to Holders of Allowed Second Lien Notes Claims (as defined in the Plan) that elected to receive New Common Stock under the Second Lien Notes Stock Option (as defined in the Plan) pursuant to the Plan, (iii) cash to the Holders of Allowed Second Lien Notes Claims that elected to take or are deemed to elect to take the Second Lien Notes Cash Option (as defined in the Plan), (iv) cash to the Qualifying Holders (as defined in the Plan) of the common stock of Old Pyxus pursuant to the Plan, (v) the Term Loans under the Term Loan Credit Facility and approximately 11.1 million shares of New Common Stock to the Holders of the DIP Facility Claims pursuant to the Plan, and (vi) approximately 1.4 million shares of New Common Stock in satisfaction of the Second Lien Notes RSA Fee Shares (as defined in the Plan) and in satisfaction of the Backstop Fee Shares (as defined in the Plan) to the persons entitled thereto pursuant to the terms and conditions of the Restructuring Support Agreement, dated June 14, 2020, by and among Old Pyxus and certain of its creditors party thereto, which was filed as Exhibit 10.1 to the Current Report on Form 8-K of Old Pyxus filed on June 15, 2020.

• Old Pyxus provided for the distribution of (i) the Notes to the Holders of Allowed First Lien Notes Claims pursuant to the Plan, (ii) approximately 12,500 shares of New Common Stock to Holders of Allowed Second Lien Notes Claims (as defined in the Plan) that elected to receive New Common Stock under the Second Lien Notes Stock Option (as defined in the Plan) pursuant to the Plan, (iii) cash to the Holders of Allowed Second Lien Notes Claims that elected to take or are deemed to elect to take the Second Lien Notes Cash Option (as defined in the Plan), (iv) cash to the Qualifying Holders (as defined in the Plan) of the common stock of Old Pyxus pursuant to the Plan, (v) the Term Loans under the Term Loan Credit Facility and approximately 11,100 shares of New Common Stock to the Holders of the DIP Facility Claims pursuant to the Plan, and (vi) approximately 1,400 shares of New Common Stock in satisfaction of the Second Lien Notes RSA Fee Shares (as defined in the Plan) and in satisfaction of the Backstop Fee Shares (as defined in the Plan) to the persons entitled thereto pursuant to the terms and conditions of the Restructuring Support Agreement, dated June 14, 2020, by and among Old Pyxus and certain of its creditors party thereto, which was filed as Exhibit 10.1 to the Current Report on Form 8-K of Old Pyxus filed on June 15, 2020.

• Old Pyxus changed its name to Old Holdco, Inc., and the Company changed its name to Pyxus International, Inc.

6 unchanged sentences

On the Effective Date, Pyxus Holdings entered into an Exit ABL Credit Agreement (the “ABL Credit Agreement”), dated as of August 24, 2020 by and among, amongst others, Pyxus Holdings, certain lenders party thereto and Wells Fargo Bank, National Association, as administrative agent and collateral agent to establish an asset-based revolving credit facility (the “ABL Credit Facility”).

The ABL Credit Facility may be used for revolving credit loans and letters of credit from time to time up to an initial maximum principal amount of $ 75.0 million, subject to certain limitations.

The ABL Credit Facility matures on February 24, 2023, subject to potential extension on terms and conditions set forth in the ABL Credit Agreement.

Refer to “Note 15.

Debt Arrangements” for a description of the ABL Credit Agreement and the ABL Credit Facility.

A detailed description of the ABL Credit Agreement and ABL Credit Facility is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

See "Note 16.

Debt Arrangements" for additional information with respect to the ABL Credit Agreement and the ABL Credit Facility.

Term Loan Credit Facility

On the Effective Date, Pyxus Holdings entered into an Exit Term Loan Credit Agreement (the “Term Loan Credit Agreement”), dated as of August 24, 2020 by and among, amongst others, Pyxus Holdings, certain lenders party thereto and Alter Domus (US) LLC, as administrative agent and collateral agent to establish a term loan credit facility in an aggregate principal amount of approximately $ 213.4 million (the “Term Loan Credit Facility”).

The aggregate principal amount of loans outstanding under Debtors’ debtor-in-possession financing facility (the "DIP Facility”), and related fees, were converted into, or otherwise satisfied with the proceeds of, the Term Loan Credit Facility.

The loans made under the Term Loan Credit Facility (the “Term Loans”) and the Term Loan Credit Facility mature on February 24, 2025.

Re fer to “Note 15.

Debt Arrangements” for a description of the Term Loan Credit Agreement, the Term Loan Credit Facility and the Term Loans.

A detailed description of the Term Loan Credit Agreement and Term Loan Credit Facility is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

See "Note 16.

Debt Arrangements" for additional information with respect to the Term Loan Credit Agreement and the Term Loan Credit Facility.

Senior Secured First Lien Notes

On the Effective Date, Pyxus Holdings issued approximately $ 280.8 million in aggregate principal amount of its 10.00 % Senior Secured First Lien Notes due 2024 (the “Notes”) to holders of Allowed First Lien Notes Claims (as defined in the Plan) pursuant to an Indenture (the “Indenture”) dated as of the Effective Date among Pyxus Holdings, the initial guarantors party thereto, and Wilmington Trust, National Association, as trustee, and collateral agent.

The Notes mature on August 24, 2024.

Refer to “Note 15.

Debt Arrangements” for a description of the Notes and the Indenture.

On the Effective Date, Pyxus Holdings issued approximately $ 280,800 in aggregate principal amount of its 10.00 % Senior Secured First Lien Notes due 2024 (the “Notes”) to holders of Allowed First Lien Notes Claims (as defined in the Plan) pursuant to an Indenture (the “Indenture”) dated as of the Effective Date among Pyxus Holdings, the initial guarantors party thereto, and Wilmington Trust, National Association, as trustee, and collateral agent.

A detailed description of the Notes and the Indenture is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

See "Note 16.

Debt Arrangements" for additional information with respect to the Notes and the Indenture.

Shareholders Agreement

On August 24, 2020, the Company entered into a Shareholders Agreement (the “Shareholders Agreement”), among the Company and the investors listed therein, each other beneficial owner of the Company's common stock as of the date of the Shareholder Agreement deemed to be a party thereto pursuant to the Plan and other persons that may from time to time become parties thereto (collectively, the “Investors”).

The Shareholders Agreement provides that each of Glendon Capital Management LP (together with its affiliates, the “Glendon Investor”) and Monarch Alternative Capital LP (together with its affiliates, the “Monarch Investor”) shall be entitled to nominate two individuals to serve on the seven -member board of directors of the Company so long as it beneficially owns at least 20 % of the outstanding shares of the Company's common stock, or one individual to serve as such a director if it beneficially owns fewer than 20 % of the outstanding shares but at least 10 % of the outstanding shares.

The Shareholders Agreement provides that each of Glendon Capital Management, L.P.

(together with its affiliates, the “Glendon Investor”) and Monarch Alternative Capital LP (together with its affiliates, the “Monarch Investor”) shall be entitled to nominate two individuals to serve on the seven -member board of directors of the Company so long as it beneficially owns at least 20 % of the outstanding shares of the Company's common stock, or one individual to serve as such a director if it beneficially owns fewer than 20 % of the outstanding shares but at least 10 % of the outstanding shares.

The Shareholders Agreement provides that the Investors shall take all necessary action to elect such nominees of each of the Glendon Investor and the Monarch Investor as directors, as well as the election of the chief executive officer of the Company as a director and other individuals qualifying as independent directors to be selected by Investors that beneficially own 5 % or more of the outstanding shares of common stock of the Company, as determined by a majority of the shares of the Company's common stock beneficially owned by such Investors.

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With the assistance of financial advisors, the Company determined the estimated enterprise value and the corresponding estimated equity value of the Successor by considering various valuation methods, including (i) discounted cash flow method, (ii) guideline public company method, and (iii) selected transaction analysis method.

The use and reliability of each approach is dependent on the facts and circumstances of the business being valued.

In order to estimate the enterprise value using the discounted cash flow analysis approach, the Company’s estimated future cash flow projections through 2024, plus a terminal value calculated using a capitalization rate applied to normalized cash flows were discounted to an assumed present value using our estimated weighted average cost of capital ( 12 %), which represents the internal rate of return.

The identified intangible assets of $ 70,999 , which principally consisted of trade names, technology, licenses, and customer relationships, were also valued with the assistance of financial advisors and were estimated based on either the relief-from-royalty or multi-period excess earnings methods.

Significant assumptions included discount rates and certain assumptions that form the basis of the forecasted results such as revenue growth rates, margins, customer attrition, and royalty rates.

Some of these estimates are inherently uncertain and may be affected by future economic and market conditions.

Condensed Consolidated Balance Sheet

126 unchanged sentences

(26) Represents the derecognition of accumulated other comprehensive loss as a result of reorganization pension adjustments, and the elimination of Predecessor's foreign currency translation adjustments.

CCAA Proceeding and Deconsolidation of Subsidiaries

On January 21, 2021, Figr Norfolk Inc.

(“Figr Norfolk”) and Figr Brands, Inc.

(“Figr Brands”), which are indirect subsidiaries of the Company, and Canada’s Island Garden Inc.

(“Figr East,” and together with Figr Norfolk and Figr Brands, the “Canadian Cannabis Subsidiaries”), which, prior to its sale on June 28, 2021 was an indirect subsidiary of the Company, applied for relief from their respective creditors pursuant to Canada’s Companies’ Creditors Arrangement Act (the “CCAA”) in the Ontario Superior Court of Justice (Commercial List) (the “Canadian Court”) in Ontario, Canada as Court File No.

CV-21-00655373-00CL (the “CCAA Proceeding”).

On January 21, 2021 (the “Order Date”), upon application by the Canadian Cannabis Subsidiaries, the Canadian Court issued an order for creditor protection of the Canadian Cannabis Subsidiaries pursuant to the provisions of the CCAA and the appointment of FTI Consulting Canada Inc.

to serve as the Canadian Court-appointed monitor of the Canadian Cannabis Subsidiaries during the pendency of the CCAA Proceeding (the “Monitor”).

The order issued by the Canadian Court in the CCAA Proceeding on the Order Date included the following relief:

• approval for the Canadian Cannabis Subsidiaries to borrow under a debtor-in-possession financing facility (the “Canadian DIP Facility”) from another non-U.S.

subsidiary of Pyxus (the "DIP Lender") in an initial amount of up to Cdn.$ 8,000 , which following approval by the Canadian Court was increased to Cdn.$ 16,000 ;

• a stay of proceedings in respect of the Canadian Cannabis Subsidiaries and the directors and officers of the Canadian Cannabis Subsidiaries (the “Canadian Directors and Officers”) and the Monitor;

• the granting of super priority charges against the property of the Canadian Cannabis Subsidiaries in favor of:

(a) certain administrative professionals;

(b) the Canadian Directors and Officers;

and (c) the DIP Lender for amounts borrowed under the Canadian DIP Facility.

On January 29, 2021, the Canadian Court issued an order permitting the Canadian Cannabis Subsidiaries to initiate a sale and investment solicitation process to be conducted by the Monitor and its affiliate to solicit interest in, and opportunities for, a sale of, or investment in, all or substantially all, or one or more components, of the assets and/or the business operations of the Canadian Cannabis Subsidiaries.

On May 10, 2021, a definitive agreement for the sale of the assets of Figr Norfolk was entered into for a purchase price of Cdn.$ 5,000 .

On June 10, 2021, the Canadian Court approved the sale agreement.

The consummation of the sale under this agreement is subject to approval of the buyers by Health Canada and the satisfaction of certain other conditions.

On May 25, 2021, a definitive agreement was entered into with a separate buyer for the sale of the outstanding equity of Figr East and certain intangible assets of Figr Brands for an aggregate purchase price of Cdn.$ 24,750 .

On June 10, 2021, the Canadian Court approved the sale agreement.

On June 25, 2021, Health Canada approved the buyers of Figr East and certain intangible assets of Figr Brands.

The sale of Figr East and certain intangible assets of Figr Brands was completed on June 28, 2021.

As discussed below, the amount of recovery that the Company may receive from the sale of the assets of Figr Norfolk, the sale of the outstanding equity of Figr East, and the sale of certain intangible assets of Figr Brands will be impacted by the amount of claims against the Canadian Cannabis Subsidiaries submitted in the CCAA Proceeding, the extent to which such claims are approved by the Canadian Court, and the extent to which the Company's interest in the Canadian Cannabis Subsidiaries are determined by the Canadian Court to be debt claims entitled to recovery on the same basis as other unsecured creditor claims with respect to the Canadian Cannabis Subsidiaries.

Canadian DIP Financing

Pursuant to the Canadian DIP Facility, the DIP Lender provided Figr Brands with secured debtor-in-possession financing to permit Figr Brands, the parent entity of Figr East and Figr Norfolk, to fund the working capital needs of the Canadian Cannabis Subsidiaries in accordance with the cash flow projections approved by the Monitor and the DIP Lender.

These payments also funded fees and expenses to be paid to the DIP Lender, professional fees and expenses incurred by the Canadian Cannabis Subsidiaries and the Monitor in respect of the CCAA Proceeding, and such other costs and expenses of the Canadian Cannabis Subsidiaries as may be agreed to by the DIP Lender.

The outstanding balance of the Canadian DIP Facility was $ 11,082 as of June 30, 2021.

On July 8, 2021, the loans under the Canadian DIP Facility were fully repaid to the DIP Lender.

Deconsolidation of Subsidiaries

While the Canadian Cannabis Subsidiaries are majority owned by the Company, the administration of the CCAA Proceeding, including the Canadian Court’s appointment of the Monitor and the related authority of the Monitor, including approval rights with respect to significant actions of the Canadian Cannabis Subsidiaries during the pendency of the CCAA Proceeding, resulted in the Company losing control (in accordance with U.S.

GAAP) of the Canadian Cannabis Subsidiaries, and the deconsolidation of the Canadian Cannabis Subsidiaries’ assets and liabilities and elimination of their equity components from the Company’s consolidated financial statements as of January 21, 2021.

The Canadian Cannabis Subsidiaries’ financial results are included in the Company’s consolidated results through January 20, 2021, which is the day prior to the Order Date.

Prior to the deconsolidation of the Canadian Cannabis Subsidiaries, they comprised an operating segment within the Other Products and Services reportable segment.

Upon deconsolidation, the Company accounts for its investment in the Canadian Cannabis Subsidiaries using the cost method of accounting.

Prior to the deconsolidation, the carrying value of the Company's related party note receivable from the Canadian Cannabis Subsidiaries was $ 153,860 .

The Company fully impaired its equity investment in the Canadian Cannabis Subsidiaries, effective as of the Order Date, based on the Canadian Cannabis Subsidiaries carrying a retained deficit of $ 77,518 and based on offers the Company received to buy the Canadian Cannabis Subsidiaries or certain assets and the allocation of consideration among the assets to be sold, as reflected in the sales agreements approved by the Canadian Court.

Following consummation of the contemplated sales of the Canadian Cannabis Subsidiaries, and after repayment of the Canadian DIP Facility and satisfaction of administrative expenses from the CCAA Proceeding, the Company estimated recovering aggregate net cash consideration of $ 6,100 , which represents the fair value of the related party note receivable retained by the Company as of March 31, 2021.

As a result, the Company recorded a net loss of $ 70,242 for the year ended March 31, 2021 associated with the deconsolidation of the Canadian Cannabis Subsidiaries.

As of June 30, 2021, there have been no significant changes in the fair value estimate of the related party note receivable.

The amount of recovery with respect to the related party note receivable is dependent on the actual amount of administrative claims in the CCAA Proceeding, the amount of claims of unsecured creditors against the Canadian Cannabis Subsidiaries submitted in the CCAA Proceeding, the extent to which such claims are approved by the Canadian Court, and the extent to which the Company’s interest in the Canadian Cannabis Subsidiaries are determined by the Canadian Court to be debt claims entitled to recovery on the same basis as other unsecured creditor claims with respect to the Canadian Cannabis Subsidiaries, all of which matters are presently uncertain.

In the event the Company's interests are not so treated as debt claims by the Canadian Court, the Company may be unable to recover a substantial portion or all of the estimated fair value of the related-party note receivable and may incur additional impairment with respect thereto.

Related Party Relationship

The commencement of the CCAA Proceeding, the appointment of the Monitor, and the subsequent deconsolidation of the Canadian Cannabis Subsidiaries results in transactions with the Canadian Cannabis Subsidiaries no longer being eliminated in consolidation.

As such, transactions between the Company and the Canadian Cannabis Subsidiaries are treated as related-party transactions.

See "Note 23.

Related Party Transactions" for transactions between the Company and the Canadian Cannabis Subsidiaries from April 1, 2021 to June 30, 2021.

Revenue Recognition

2 unchanged sentences

During processing, ownership remains with the customers.

Other products and services revenue is primarily composed of revenue from the sale of legal cannabis in Canada and e-liquids product revenue.

For the period ended June 30, 2020, the other products and services revenue was primarily composed of revenue from the sale of legal cannabis in Canada and e-liquids product revenue.

For the period ended June 30, 2021, the other products and services revenue was primarily composed of e-liquids product revenue.

The following disaggregates sales and other operating revenues by major source:

Successor Predecessor

Three months ended December 31, 2020 Three months ended December 31, 2019

Leaf - North America:

Product revenue $ 46,588 $ 39,148

Processing and other revenues 13,956 13,868

Total sales and other operating revenues 60,544 53,016

Leaf - Other Regions:

Product revenue 298,376 293,564

Processing and other revenues 12,007 12,936

Total sales and other operating revenues 310,383 306,500

Other Products and Services:

Total sales and other operating revenues 8,633 3,744

Total sales and other operating revenues $ 379,560 $ 363,260

Successor Predecessor

Four months ended December 31, 2020 Five months ended August 31, 2020 Nine months ended December 31, 2019

Three months ended June 30, 2021 Three months ended June 30, 2020

Leaf - North America:

11 unchanged sentences

Successor Predecessor

Three months ended December 31, 2020 Three months ended December 31, 2019

Balance, beginning of period $ ( 15,091 ) $ ( 7,242 )

Additions ( 2,187 ) ( 5 )

Write-offs — —

Balance, end of period $ ( 17,278 ) $ ( 7,247 )

Trade receivables 194,834 187,651

Trade receivables, net $ 177,556 $ 180,404

Successor Predecessor

Four months ended December 31, 2020 Five months ended August 31, 2020 Nine months ended December 31, 2019

Three months ended June 30, 2021 Three months ended June 30, 2020

Balance, beginning of period $ ( 20,900 ) $ ( 15,893 )

5 unchanged sentences

Restructuring and Asset Impairment Charges

In December 2020, the Company commenced actions to exit operations of the industrial hemp businesses, including the production and sale of products containing extracts of industrial hemp, including cannabidiol ("CBD") products, by its Criticality LLC subsidiary (“Criticality”).

In addition, the Company continued its focus on cost saving initiatives.

The employee separation and impairment charges are primarily related to continued restructuring of certain U.S.

operations, which included Criticality, and certain African operations.

The Company continued its focus on cost saving initiatives.

The employee separation and impairment charges are primarily related to continued restructuring of certain African operations.

The following summarizes the Company's restructuring and asset impairment charges:

Successor Predecessor

Three months ended December 31, 2020 Three months ended December 31, 2019

Employee separation charges $ 4,087 $ 531

Asset impairment and other non-cash charges 3,687 141

Restructuring and asset impairment charges $ 7,774 $ 672

Successor Predecessor

Four months ended December 31, 2020 Five months ended August 31, 2020 Nine months ended December 31, 2019

Three months ended June 30, 2021 Three months ended June 30, 2020

Employee separation charges $ 147 $ 40

1 unchanged sentence

Restructuring and asset impairment charges $ 233 $ 73

The following summarizes the activity in the restructuring accrual for employee separation and other cash charges for the Company's Leaf - North America, Leaf - Other Regions, and Other Products and Services segments:

The following summarizes the activity in the restructuring accrual for employee separation and other cash charges by reportable segment:

Successor Predecessor

Three months ended December 31, 2020 Three months ended December 31, 2019

Three months ended June 30, 2021 Three months ended June 30, 2020

Other Products and Services Leaf - North America Leaf - Other Regions Leaf - North America Leaf - Other Regions

3 unchanged sentences

Ending balance $ 1,902 $ 689 $ 659 $ — $ 321

Successor Predecessor

Four months ended December 31, 2020 Five months ended August 31, 2020 Nine months ended December 31, 2019

Other Products and Services Leaf - North America Leaf - Other Regions Leaf - North America Leaf - Other Regions Leaf - North America Leaf - Other Regions

Beginning balance $ — $ 312 $ 255 $ — $ 407 $ 1,621 $ 222

Period charges 2,105 1,506 1,398 312 40 8 624

Payments — ( 627 ) ( 948 ) — ( 192 ) ( 1,614 ) ( 747 )

Ending balance $ 2,105 $ 1,191 $ 705 $ 312 $ 255 $ 15 $ 99

The following summarizes the asset impairment and other non-cash charges for the Company's Leaf - North America, Leaf - Other Regions, and Other Products and Services segments:

Successor Predecessor

Three months ended December 31, 2020 Three months ended December 31, 2019

Leaf - North America $ — $ —

Leaf - Other Regions 733 141

Other Products and Services 2,954 —

Total 3,687 $ 141

The following summarizes the asset impairment and other non-cash charges by reportable segment:

Successor Predecessor

Four months ended December 31, 2020 Five months ended August 31, 2020 Nine months ended December 31, 2019

Three months ended June 30, 2021 Three months ended June 30, 2020

Leaf - North America $ — $ 26

2 unchanged sentences

Total $ 86 $ 33

As described in “ Note 3.

Emergence from Voluntary Reorganization under Chapter 11 ”, on August 24, 2020, as part of the Chapter 11 plan of reorganization, Old Pyxus completed a series of transactions pursuant to which the business assets and operations of Old Pyxus were vested in a new Virginia corporation, Pyxus Holdings, which is an indirect subsidiary of the Company.

Under the Plan, all suppliers, vendors, employees, trade partners, foreign lenders and landlords were unimpaired and were to be satisfied in full in the ordinary course of business, and the existing trade and customer contracts and terms of Old Pyxus were to be maintained by the Company and its subsidiaries.

Commencing upon the Effective Date, the Company, through its subsidiaries, continued to operate the Old Pyxus business in the ordinary course.

Old Pyxus, which retained no assets, has commenced a dissolution and is being wound down.

The tax attributes generated by Old Pyxus’ foreign subsidiaries (net operating loss carryforwards and income tax credits) survived the Chapter 11 proceedings and we expect, to the extent that a valuation allowance is not applicable, to use these tax attributes to reduce future tax liabilities.

tax purposes, tax attributes not utilized as part of the Chapter 11 proceedings or asset sale to Pyxus Holdings pursuant to the Plan will expire unutilized.

The Company entered into a transfer agreement with Old Pyxus to transfer and assume the liability for unpaid installments payments of Old Pyxus under Internal Revenue Code Section 965(h) (i.e.

transition tax) in the amount of $ 8,543 .

Valuation allowances have been established against deferred tax assets if, based on the available positive and negative evidence, it is more likely than not such assets will not be realized.

The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law of each applicable tax jurisdiction.

The Company and Old Pyxus have considered the following possible sources of taxable income when assessing the realization of our and Old Pyxus’ deferred tax assets:

• future reversals of existing taxable temporary differences;

• future taxable income exclusive of reversing temporary differences and carryforwards;

• tax income in prior carryback years;

• tax-planning strategies.

If, in the future, the Company overcomes negative evidence in tax jurisdictions where it has established valuation allowances, then the conclusions regarding the need for valuation allowances in these tax jurisdictions could change, resulting in the reversal of some or all of such valuation allowances.

If the Company generates taxable income in tax jurisdictions prior to overcoming negative evidence, then it would reverse a portion of the valuation allowances related to the corresponding realized tax benefit for that period, without changing its conclusions on the need for the valuation allowance against the remaining net deferred tax assets.

For interim tax reporting, the Company estimates its annual effective tax rate and applies it to year-to-date ordinary income/loss pursuant to FASB ASC 740-270, “ Accounting for Income Taxes in Interim Periods .” The Company reports the tax effect of unusual or infrequently occurring items, including changes in judgement about valuation allowances, uncertain tax positions, and effects of changes in tax laws or rates in the interim period in which they occur.

The Company excludes tax jurisdictions where it has projected a year to date loss for which a tax benefit cannot be realized in accordance with FASB ASC 740, “ Accounting for Income Taxes ”.

Old Pyxus reported on a discrete basis for the period April 1, 2020 through August 31, 2020.

The effective rate differs from the US statutory rate of 21% due to the impact of net foreign exchange effects, increases in non-deductible interest, foreign income taxed in the U.S., variations in the expected jurisdictional mix of earnings, and variations in included/excluded entities per adherence to FASB ASC 240-270.

The Company has allocated $ 4,814 of the year-to-date tax benefit to a current tax receivable as it expects the year-to-date loss to offset current taxes payable throughout the remainder of the current year.

As of December 31, 2020, the Company’s unrecognized tax benefits totaled $ 15,958 , of which $ 12,371 would impact the Company’s effective tax rate, if recognized.

The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense.

As of December 31, 2020, accrued interest and penalties totaled $ 1,353 and $ 669 , respectively.

The Company expects to continue accruing interest expense related to the unrecognized tax benefits described above.

The Company may be subject to fluctuations in the unrecognized tax benefit due to currency exchange rate movements.

The Company does not expect significant changes in the amount of its unrecognized tax benefits in the next twelve months but acknowledges circumstances can change due to unexpected developments in the law.

In certain jurisdictions, tax authorities have challenged positions taken by the Company that resulted in recognizing benefits that are material to its financial statements.

The Company believes it is more likely than not that it will prevail in these situations and accordingly has not

recorded liabilities for these positions.

The Company expects the challenged positions to be settled at a time greater than twelve months from its balance sheet date.

The Company and its subsidiaries file a U.S.

federal consolidated income tax return as well as returns in several U.S.

states and a number of foreign jurisdictions.

As of December 31, 2020, the Company’s earliest open tax year for U.S.

federal income tax purposes is its fiscal year ended March 31, 2017.

The Company's tax attributes from prior periods remain subject to adjustment.

Open tax years in state and foreign jurisdictions generally range from three to six years.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic.

The CARES Act contains numerous corporate income tax provisions, some of which affect our calculation of income taxes, including providing for the carryback of certain net operating losses, modifications to the net interest deduction limitations, refundable payroll tax credits, and deferment of employer social security payments.

However, the provisions did not have a material impact on our Predecessor or Successor financial statements.

(Loss) Earnings Per Share

The following summarizes the computation of (loss) earnings per share:

The effective tax rate for the three months ended June 30, 2021 and 2020 was 45.3 % and 8.0 %, respectively.

For the three months ended June 30, 2021 and 2020, the difference between the Company’s effective rate and the U.S.

statutory rate of 21% is primarily due to the impact of net foreign exchange effects, non-deductible interest and variations in the expected jurisdictional mix of earnings.

The higher effective rate for the three months ended June 30, 2021 was primarily due to improved operational results in the period and changes in the Company’s U.S.

tax profile resulting from emergence from the Chapter 11 Cases.

The Company allocated $ 5,323 of the year-to-date tax benefit to a current tax receivable as it expects the year-to-date loss to offset current taxes payable throughout the remainder of the current year.

Loss Per Share

The following summarizes the computation of loss per share:

Successor Predecessor

(in thousands, except per share data) Three months ended December 31, 2020 Three months ended December 31, 2019

Basic loss per share:

Net loss attributable to Pyxus International, Inc.

$ ( 8,165 ) $ ( 21,993 )

Weighted average number of shares outstanding (1)

Basic loss per share $ ( 0.33 ) $ ( 2.40 )

Diluted loss per share:

Three months ended June 30, 2021 Three months ended June 30, 2020

Basic and diluted loss per share:

Net loss attributable to Pyxus International, Inc.

1 unchanged sentence

Weighted average number of shares outstanding 25,000 9,976

Restricted shares issued and shares applicable to stock options and restricted stock units, net of shares assumed to be purchased from proceeds at average market price (2)

Adjusted weighted average number of shares outstanding 25,000 9,166

Diluted loss per share $ ( 0.33 ) $ ( 2.40 )

(1) 0 and 785 shares of common stock were owned by a wholly owned subsidiary as of December 31, 2020 and 2019, respectively.

(2) Outstanding restricted shares, shares applicable to stock options, and restricted stock units are excluded because their inclusion would have an antidilutive effect on the loss per share.

The dilutive shares would have been 10 for the three months ended December 31, 2019.

Successor Predecessor

(in thousands, except per share data) Four months ended December 31, 2020 Five months ended August 31, 2020 Nine months ended December 31, 2019

Basic (loss) earnings per share:

Net (loss) income attributable to Pyxus International, Inc.

$ ( 13,478 ) $ 19,037 $ ( 100,308 )

Weighted average number of shares outstanding (1)

25,000 9,976 9,137

Basic (loss) earnings per share $ ( 0.54 ) $ 1.91 $ ( 10.98 )

Diluted (loss) earnings per share:

Net (loss) income attributable to Pyxus International, Inc.

$ ( 13,478 ) $ 19,037 $ ( 100,308 )

Weighted average number of shares outstanding (1)

25,000 9,976 9,137

Restricted shares issued and shares applicable to stock options and restricted stock units, net of shares assumed to be purchased from proceeds at average market price (2)

Adjusted weighted average number of shares outstanding 25,000 9,992 9,137

Diluted (loss) earnings per share $ ( 0.54 ) $ 1.91 $ ( 10.98 )

(1) 0 , 0 , and 785 shares of common stock were owned by a wholly owned subsidiary as of December 31, 2020, August, 31, 2020, and December 31, 2019, respectively.

(2) Outstanding restricted shares, shares applicable to stock options, and restricted stock units are excluded because their inclusion would have an antidilutive effect on the loss per share.

The dilutive shares would have been 28 for the nine months ended December 31, 2019.

Certain potentially dilutive options were not included in the computation of loss per diluted share because their effect would be antidilutive.

Potential common shares are also considered antidilutive in the event of a net loss.

The number of potential shares outstanding that were considered antidilutive and that were excluded from the computation of diluted loss per share, weighted for the portion of the period they were outstanding were as follows:

Successor Predecessor

Three months ended December 31, 2020 Three months ended December 31, 2019

Antidilutive stock options and other awards — 452

Weighted average exercise price $ — $ 56.66

Successor Predecessor

Four months ended December 31, 2020 Five months ended August 31, 2020 Nine months ended December 31, 2019

Antidilutive stock options and other awards — 427 450

Weighted average exercise price $ — $ 56.86 $ 56.98

Cash, Cash Equivalents, and Restricted Cash

Basic and diluted loss per share, net of tax $ ( 0.46 ) $ ( 9.24 )

Restricted Cash

The following summarizes the composition of restricted cash:

Successor Predecessor

December 31, 2020 December 31, 2019 March 31, 2020

Successor Predecessor Successor

June 30, 2021 June 30, 2020 March 31, 2021

Compensating balance for short-term borrowings $ 1,932 $ 900 $ 1,017

4 unchanged sentences

The following summarizes the composition of inventories, net:

Successor Predecessor

December 31, 2020 December 31, 2019 March 31, 2020

Successor Predecessor Successor

June 30, 2021 June 30, 2020 March 31, 2021

Processed tobacco $ 584,791 $ 534,833 $ 534,711

7 unchanged sentences

The acquisition of Criticality was a business combination achieved in stages, which required the Company to remeasure its previously held equity interest in Criticality at its acquisition date fair value.

This remeasurement resulted in a loss of approximately $ 2,667 being recorded in other income (expense), net within the condensed consolidated statements of operations for the five months ended August 31, 2020.

The assets and liabilities were recorded at their fair value.

15 unchanged sentences

Fair value of equity interest $ 8,333

The following summarizes the revenue, operating loss, and net loss for Criticality as well as the resulting impact to basic and diluted (loss) earnings per share:

Successor Successor Predecessor

Three months ended December 31, 2020 Four months ended December 31, 2020 Five months ended August 31, 2020

Revenue 16 19 —

Operating loss ( 3,619 ) ( 4,750 ) ( 3,117 )

Net loss ( 9,897 ) ( 11,067 ) ( 3,317 )

Impact to (loss) earnings per share:

Basic ( 0.40 ) ( 0.44 ) ( 0.33 )

Diluted ( 0.40 ) ( 0.44 ) ( 0.33 )

Revenue, operating loss, and net loss of Criticality in the consolidated statements of operations from and including April 22, 2020 to June 30, 2020 were $ 17 , $( 791 ), and $( 910 ), respectively.

As a result, the impact to basic and diluted earnings per share was $( 0.09 ) and $( 0.09 ), respectively.

Unaudited pro forma information was not separately stated due to the close proximity o f the acquisition date to the beginning of the Company's fiscal year.

Refer to “Note 6.

Restructuring and Asset Impairment” for additional information.

Equity Method Investments

The following summarizes the Company's equity method investments as of December 31, 2020:

The following summarizes the Company's equity method investments as of June 30, 2021:

Location Primary Purpose The Company's Ownership Percentage Basis Difference (1)

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Siam Tobacco Export Company Thailand purchase and process tobacco 49 % ( 6,098 )

(1) The basis difference for the Company's equity method investments is primarily due to $ 30,531 of fair value adjustments from fresh start reporting that were recorded in the fiscal year-ended March 31, 2021.

The following summarizes financial information for these equity method investments:

Successor Predecessor

Three months ended December 31, 2020 Three months ended December 31, 2019

Operations statement:

Sales $ 121,873 $ 61,515

Gross profit 30,154 9,462

Net income 16,577 1,506

Company's dividends received 317 267

Successor Predecessor

Four months ended December 31, 2020 Five months ended August 31, 2020 Nine months ended December 31, 2019

Three months ended June 30, 2021 Three months ended June 30, 2020

Operations statement:

1 unchanged sentence

Gross profit 3,666 6,949

Net income 17,315 5,869 16,599

Net (loss) income ( 2,900 ) 2,309

Company's dividends received 8,848 5,064

Successor Predecessor

December 31, 2020 December 31, 2019 March 31, 2020

Successor Predecessor Successor

June 30, 2021 June 30, 2020 March 31, 2021

Balance sheet:

3 unchanged sentences

Long-term obligations and other liabilities 3,400 6,107 3,937

Of the amounts presented above, the following summarizes financial information for China Brasil Tobacos Exportadora SA ("CBT"):

Successor Predecessor

Three months ended December 31, 2020 Three months ended December 31, 2019

Operations statement:

Sales $ 94,057 $ 22,521

Gross profit 25,170 3,338

Net income 13,598 1,041

Net income attributable to CBT 6,663 510

Successor Predecessor

Four months ended December 31, 2020 Five months ended August 31, 2020 Nine months ended December 31, 2019

Operations statement:

Sales $ 98,730 $ 26,675 $ 158,955

Gross profit 26,207 6,423 25,359

Net income 13,864 3,216 11,929

Net income attributable to CBT 6,793 1,576 5,845

Variable Interest Entities

2 unchanged sentences

The following summarizes the Company's financial relationships with its unconsolidated variable interest entities:

Successor Predecessor

December 31, 2020 December 31, 2019 March 31, 2020

Successor Predecessor Successor

June 30, 2021 June 30, 2020 March 31, 2021

Investments in variable interest entities $ 78,903 $ 51,509 $ 89,560

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The following summarizes the changes in the Company's goodwill and other intangible assets, net:

Four months ended December 31, 2020

Weighted Average Remaining Useful Life Beginning Gross Carrying Amount Fresh start Adjustment (2)

Additions Accumulated Amortization Ending Intangible Assets, Net

Three months ended June 30, 2021

Weighted Average Remaining Useful Life Beginning Gross Carrying Amount Additions Accumulated Amortization (1)

Ending Intangible Assets, Net

Intangibles subject to amortization:

Customer relationships 10.86 years $ 29,200 $ — $ ( 2,100 ) $ 27,100

11.67 years — 19,000 — ( 445 ) 18,555

Technology 6.50 years 15,080 — ( 2,873 ) 12,207

3 unchanged sentences

Total $ 92,433 $ — $ ( 5,646 ) $ 86,787

(1) Certain of the Company's license intangibles are subject to annual renewal.

(2) Refer to " Note 4.

Fresh Start Reporting " for additional details regarding fresh start reporting adjustments as reported at September 30, 2020 and as adjusted at December 31, 2020.

Five months ended August 31, 2020

Beginning Gross Carrying Amount Additions Accumulated Amortization (1)

Impact of Foreign Currency Translation Fresh Start Adjustment (4)

Ending Intangible Assets, Net

Intangibles subject to amortization:

Customer relationships $ 63,980 $ — $ ( 34,724 ) $ — $ ( 29,256 ) $ —

Production and supply contracts 7,000 — ( 3,395 ) — ( 3,605 ) —

Internally developed software (5)

22,385 — ( 19,579 ) 41 ( 2,847 ) —

30,886 — ( 4,202 ) 2,183 ( 28,867 ) —

Trade names 500 — ( 151 ) — ( 349 ) —

Intangibles not subject to amortization:

— 6,120 — — ( 6,120 ) —

Total $ 124,751 $ 6,120 $ ( 62,051 ) $ 2,224 $ ( 71,044 ) $ —

(1) Amortization expense across intangible asset classes for the five months ended August 31, 2020 was $ 3,160 .

(2) Certain of the Company's license intangibles are subject to annual renewal.

(3) Goodwill of $ 6,120 relates to the Other Products and Services segment.

(4) Refer to “ Note 4.

Fresh Start Reporting ” for additional details regarding fresh start reporting adjustments.

(6) Internally developed software was adjusted to $ 2,847 by Fresh Start Adjustments and has been reclassified to Successor's property, plant, and equipment.

Year ended March 31, 2020

(1) Amortization expense across intangible asset classes for the three months ended June 30, 2021 was $ 1,483 .

Seven months ended March 31, 2021

Weighted Average Remaining Useful Life Beginning Gross Carrying Amount Additions Accumulated Amortization (1)

Impact of Foreign Currency Translation Ending Intangible Assets, Net

Deconsolidation of Canadian Cannabis Subsidiaries Impairment Ending Intangible Assets, Net

Intangibles subject to amortization:

Customer relationships 11.10 years $ 29,200 $ — $ ( 1,470 ) $ — $ — $ 27,730

Production and supply contracts 3.00 years 14,893 — ( 11,217 ) — 3,676

Internally developed software 3.96 years 19,917 2,468 ( 19,082 ) — 3,303

16.95 years 33,330 195 ( 3,310 ) ( 2,551 ) 27,664

Technology 6.66 years 11,000 4,080 ( 2,222 ) — — 12,858

Licenses 0.00 years 19,000 — ( 924 ) ( 18,076 ) — —

Trade names 13.42 years 11,800 — ( 497 ) ( 474 ) — 10,829

Intangibles not subject to amortization:

Goodwill 37,935 — — — ( 1,082 ) 36,853

Total $ 108,935 $ 4,080 $ ( 5,113 ) $ ( 18,550 ) $ ( 1,082 ) $ 88,270

(1) Amortization expense across intangible asset classes for the fiscal year ended March 31, 2020 was $ 6,991 .

(2) Certain of the Company's license intangibles are subject to annual renewal.

(1) Amortization expense across intangible asset classes for the seven months ended March 31, 2021 was $ 5,113 .

The following summarizes the estimated intangible asset amortization expense for the next five years and beyond:

Years Ended Customer

Relationships Licenses Technology Trade Names Total

2021 (excluding the nine months ended December 31, 2020) $ 630 $ 396 $ 344 $ 213 $ 1,583

Years Ended March 31 Customer

Relationships Technology Trade Names Total

2022 (excluding the three months ended June 30, 2021) $ 1,890 $ 1,583 $ 605 $ 4,078

2023 2,519 1,970 807 5,296

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Outstanding Lines and Letters Available Interest Rate

Predecessor Successor Successor

March 31, December 31, December 31,

Successor Successor Successor

March 31, June 30, June 30,

(in thousands) 2021 2021 2021

Senior secured credit facility:

ABL facility $ 44,900 $ — $ — 4.1 %

Senior secured credit facilities:

ABL Credit Facility $ 67,500 $ 67,500 $ 7,500 5.8 % (1)

Senior notes:

8.5 % senior secured first lien notes (2)

272,871 — — 8.5 %

9.875 % senior secured second lien notes (3)

DDTL Facility (2)

— 117,353 — 10.5 % (1)

Senior secured notes:

10.0 % senior secured first lien notes (3)

267,353 268,168 — 10.0 %

Term Loans (5)

Term Loan Credit Facility (4)

215,594 216,533 — 9.6 % (1)

9 unchanged sentences

Total credit available $ 234,840

(1) Weighted average rate for the trailing twelve months ended December 31, 2020.

(2) Upon emergence from Chapter 11 bankruptcy on the Effective Date, the prepetition 8.5 % senior secured first lien notes were cancelled and replaced with the 10.0 % senior secured first lien notes due 2024.

(3) Upon emergence from Chapter 11 bankruptcy on the Effective Date, the prepetition 9.875 % senior secured second lien notes were cancelled through the exchange of common stock in the Successor or cash.

(4) Repayment of $ 266,561 is net of original issue discount of $ 14,283 .

(1) Weighted average rate for the trailing twelve months ended June 30, 2021.

(2) Balance of $ 117,353 is net of original issue discount of $ 8,647 .

Total repayment will be $ 126,000 , which includes an estimated $ 6,000 exit fee payable upon any repayment or termination.

(3) Balance of $ 268,168 is net of original issue discount of $ 12,676 .

Total repayment will be $ 280,844 .

(5) Upon emergence from Chapter 11 bankruptcy on the Effective Date, the DIP Facility entered into at the petition date converted into the Term Loan Credit Facility.

The aggregate balance of the Term Loans of $ 214,643 includes $ 1,225 of accrued paid in kind interest.

(4) Upon emergence from the Chapter 11 Cases on the Effective Date, the DIP Facility entered into at the Petition Date converted into the Term Loan Credit Facility.

The aggregate balance of the Term Loan Credit Facility of $ 216,533 includes $ 3,115 of accrued paid-in-kind interest.

The 9.6 % interest rate does not include the paid-in-kind interest which is (a) 1.0 % per annum from and after the first anniversary of the Effective Date until the second anniversary of the Effective Date, (b) 2.0 % per annum from and after the second anniversary of the Effective Date until the third anniversary of the Effective Date, (c) 3.0 % per annum from and after the third anniversary of the Effective Date until the fourth anniversary of the Effective Date and (d) from and after the fourth anniversary of the Effective Date, 4.0 % per annum.

(5) Primarily foreign seasonal lines of credit.

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On the Effective Date, Pyxus Holdings entered into the ABL Credit Agreement, dated as of August 24, 2020 by and among, amongst others, Pyxus Holdings, certain lenders party thereto and Wells Fargo Bank, National Association, as administrative agent and collateral agent to establish the ABL Credit Facility.

The ABL Credit Facility may be used for revolving credit loans and letters of credit from time to time up to an initial maximum principal amount o f $ 75,000 , subject to the limitations described below in this paragraph.

Under certain conditions, Pyxus Holdings may solicit the ABL Lenders to provide additional revolving loan commitments under the ABL Credit Facility in an aggregate amount not to exceed $ 15,000 .

The ABL Credit Facility is required to be drawn at all times in an amount greater than or equal to the lesser of (i) 25 % of total commitments under the ABL Credit Facility and (ii) $ 18,750 .

The amount available under the ABL Credit Facility is limited by a borrowing base consisting of eligible accounts receivable and inventory as follows:

• 85 % of eligible accounts receivable, plus

• the lesser of (i) 70 % of eligible inventory valued at the lower of cost (based on a first-in first-out basis) and market value thereof (net of intercompany profits) or (ii) 85 % of the appraised net-orderly-liquidation value of eligible inventory.

At December 31, 2020, $ 7,500 was available for borrowing under the ABL Credit Facility, after reducing availability by the aggregate borrowings under the ABL Credit Facility of $ 67,500 outstanding on that date.

The ABL Credit Facility permits both base rate borrowings and LIBOR borrowings.

Borrowings under the ABL Credit Facility bear interest at an annual rate equal to LIBOR plus 475 basis points or 375 basis points above base rate, as applicable, with a fee on unutilized commitments at an annual rate of 100 basis points.

The ABL Credit Facility matures on February 24, 2023 , subject to extension on terms and conditions set forth in the ABL Credit Agreement.

The ABL Credit Facility may be prepaid from time to time, in whole or in part, without prepayment or premium, subject to a termination fee of 50 basis points upon the permanent reduction of commitments under the ABL Credit Facility, including maturity.

In addition, customary mandatory prepayments of the loans under the ABL Credit Facility are required upon the occurrence of certain events including, without limitation, certain dispositions of assets outside of the ordinary course of business in respect of certain collateral securing the ABL Credit Facility and certain casualty and condemnation events.

With respect to base rate loans, accrued interest is payable monthly in arrears on the last business day of each calendar month and, with respect to LIBOR loans, accrued interest is payable monthly and on the last day of any applicable interest period.

Pyxus Holdings’ obligations under the ABL Credit Facility (and certain related obligations) are (a) guaranteed by Pyxus Parent, Inc.

and the Company and all of Pyxus Holdings’ material domestic subsidiaries, and each of Pyxus Holdings’ future material domestic subsidiaries is required to guarantee the ABL Credit Facility on a senior secured basis (including Pyxus Holdings, collectively, the “ABL Loan Parties”) and (b) secured by the Collateral, as described below, which is owned by the ABL Loan Parties.

The liens and other security interests granted by the ABL Loan Parties on the Collateral for the benefit of the lenders under the ABL Credit Facility (and certain related secured parties) are, subject to certain permitted liens, secured by first-priority security interests on ABL Priority Collateral (as defined in the ABL/Term Loan/Intercreditor Agreement described below) with the security interests securing the Term Loan Credit Facility and the Senior Secured First Lien Notes junior thereto, each as described below.

The obligations of Pyxus Holdings and each other ABL Credit Party under the ABL Credit Facility and any related guarantee have respective priorities in a waterfall with respect to portions of the Collateral as set forth in the ABL/Term Loan/Notes Intercreditor Agreement and the Term Loan/Notes Intercreditor Agreement described below.

Cash Dominion

Under the terms of the ABL Credit Facility, if (i) an event of default has occurred and is continuing or (ii) excess borrowing availability under the ABL Credit Facility (based on the lesser of the commitments thereunder and the borrowing base) (the “Excess Availability”) falls below the greater of (x) $ 7,500 and (y) 10 % of the lesser of (A) the commitments under the ABL Credit Facility at such time and (B) the borrowing base at such time (such greater amount being the “Cash Dominion Threshold”), the ABL Loan Parties will become subject to cash dominion, which will require daily prepayment of loans under the ABL Credit Facility with the cash deposited in certain deposit accounts of the ABL Loan Parties, including concentration accounts, and will restrict the ABL Loan Parties’ ability to transfer cash from their concentration accounts to their disbursement accounts.

Such cash dominion period (a “Dominion Period”) shall end when (i) if arising as a result of a continuing event of default, such event of default ceases to exist, or (ii) if arising as a result of non-compliance with the Excess Availability threshold, Excess Availability shall be equal to or greater than the Cash Dominion Threshold for a period of 30 consecutive days.

No Dominion Period existed as of December 31, 2020.

Financial, Affirmative, and Restrictive Covenants

The ABL Credit Agreement governing the ABL Credit Facility contains a covenant requiring that the Company’s fixed charge coverage ratio be no less than 1.00 to 1.00 during any Dominion Period.

The ABL Credit Agreement governing the ABL Credit Facility also contains customary representations and warranties, affirmative and negative covenants (subject, in each case, to exceptions and qualifications) and events of defaults, including covenants that limit the Company's and its restricted subsidiaries' ability to, among other things:

• incur additional indebtedness or issue disqualified stock or preferred stock;

• make investments;

• pay dividends and make other restricted payments;

• sell certain assets;

• create liens;

• consolidate, merge, sell or otherwise dispose of all or substantially all of their assets;

• enter into transactions with affiliates;

• designate subsidiaries as Unrestricted Subsidiaries (as defined in the ABL Credit Agreement).

At December 31, 2020, Pyxus Holdings was in compliance with all such covenants under the ABL Credit Agreement.

The ABL Credit Facility may be used for revolving credit loans and letters of credit from time to time up to an initial maximum principal amount o f $ 75,000 , subject to certain limitations.

A detailed description of the ABL Credit Agreement and ABL Credit Facility is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

At June 30, 2021, Pyxus Holdings was in compliance with the covenants under the ABL Credit Agreement.

At June 30, 2021, $ 7,500 was available for borrowing under the ABL Credit Facility, after reducing availability by the aggregate borrowings under the ABL Credit Facility of $ 67,500 outstanding on that date.

Term Loan Credit Facility

On the Effective Date, Pyxus Holdings entered into the Term Loan Credit Agreement, dated as of August 24, 2020 by and among, amongst others, Pyxus Holdings, certain lenders party thereto and Alter Domus (US) LLC, as administrative agent and collateral agent to establish the Term Loan Credit Facility in an aggregate principal amount of approximately $ 213,418 .

The aggregate principal amount of loans outstanding under Debtors’ debtor-in-possession financing facility, and related fees, were converted into, or otherwise satisfied with the proceeds of, the Term Loan Credit Facility.

The Term Loan Credit Facility permits both base rate borrowings and LIBOR borrowings.

Borrowings under the Term Loan Credit Facility bear interest at an annual rate equal to LIBOR plus 800 basis points or 700 basis points above base rate, as applicable.

In addition to the cash interest payments, from and after the first anniversary of the Term Loan Credit Agreement, the term loans (the “Term Loans”) under the Term Loan Credit Facility bear “payment in kind” interest in an annual rate equal to 100 basis points, which rate increases by an additional 100 basis points on each of the second, third and fourth anniversaries of the Term Loan Credit Agreement.

The Term Loans and the Term Loan Credit Facility mature on February 24, 2025.

The Term Loans may be prepaid from time to time, in whole or in part, without prepayment or penalty.

In addition, customary mandatory prepayments of the Term Loans are required upon the occurrence of certain events including, without limitation, certain dispositions of assets outside of the ordinary course of business in respect of certain collateral securing the Term Loan Credit Facility and certain casualty and condemnation events.

At December 31, 2020, the aggregate principal amount of the Term Loans outstanding was $ 214,643 .

Pyxus Holdings’ obligations under the Term Loan Credit Facility (and certain related obligations) are (a) guaranteed by Pyxus Parent, Inc.

and the Company, all of Pyxus Holdings’ material domestic subsidiaries and certain of Pyxus Holdings’ foreign subsidiaries (the “Foreign Guarantors”), and each of Pyxus Holdings’ future material domestic subsidiaries is required to guarantee the Term Loan Credit Facility on a senior secured basis (including Pyxus Holdings, collectively, the “Term Facility Loan Parties”) and (b) secured by the Collateral, as described below, which is owned by the Term Facility Loan Parties.

The liens and other security interests granted by the Term Facility Loan Parties on the Collateral for the benefit of the lenders under the Term Loan Credit Facility (and certain related secured parties) are, subject to certain permitted liens, secured by first-priority security interests on the Term Loan Priority Collateral and a junior lien on the ABL Priority Collateral and the Notes Priority Collateral (in each case as defined in the ABL/Term Loan/Notes Intercreditor Agreement and the Term Loan/Notes Intercreditor Agreement (together, the “Intercreditor Agreements”).

The obligations of Pyxus Holdings and each other Term Facility Loan Party under the Term Loan Credit Facility and any related guarantee have respective priorities as set forth in the Intercreditor Agreements described below.

Affirmative and Restrictive Covenants

The Term Loan Credit Agreement governing the Term Loan Credit Facility contains customary representations and warranties, affirmative and negative covenants (subject, in each case, to exceptions and qualifications) and events of defaults, including covenants that limit the Company's and its restricted subsidiaries' ability to, among other things:

• incur additional indebtedness or issue disqualified stock or preferred stock;

• make investments;

• pay dividends and make other restricted payments;

• sell certain assets;

• create liens;

• consolidate, merge, sell or otherwise dispose of all or substantially all of their assets;

• enter into transactions with affiliates;

• designate subsidiaries as Unrestricted Subsidiaries.

At December 31, 2020, Pyxus Holdings was in compliance with all such covenants under the Term Loan Credit Agreement.

The aggregate principal amount of loans outstanding under Debtors’ debtor-in-possession financing facility, and related fees, was converted into, or otherwise satisfied with the proceeds of, the Term Loan Credit Facility.

A detailed description of the Term

Loan Credit Agreement and Term Loan Credit Facility is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

At June 30, 2021, Pyxus Holdings was in compliance with the covenants under the Term Loan Credit Agreement.

Senior Secured First Lien Notes

On the Effective Date, Pyxus Holdings issued approximately $ 280,844 in aggregate principal amount of the Notes to holders of Allowed First Lien Notes Claims (as defined in the Plan) pursuant to the Indenture dated as of the Effective Date among Pyxus Holdings, the initial guarantors party thereto, and Wilmington Trust, National Association, as trustee and collateral agent.

The Notes bear interest at a rate of 10.00 % per year, payable semi-annually in arrears in cash on February 15 and August 15 of each year, beginning February 15, 2021, to holders of record at the close of business on the preceding February 1 and August 1, respectively.

The Notes mature on August 24, 2024 .

The Notes are initially guaranteed on a senior secured basis by the Company, all of the Company’s material domestic subsidiaries (other than Pyxus Holdings) and the Foreign Guarantors, on a subordinated basis to the guarantees securing the Term Loan Facility, and each of its future material domestic subsidiaries are required to guarantee the Notes on a senior secured basis.

Optional Redemption

At any time prior to August 24, 2022, Pyxus Holdings may redeem the Notes, in whole or in part, at a redemption price equal to the “make-whole” amount as set forth in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the redemption date.

On or after August 24, 2022, Pyxus Holdings may on any one or more occasions redeem all or a part of the Notes at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest on the Notes redeemed, to the applicable date of redemption, if redeemed during the periods specified below, subject to the rights of holders of Notes on the relevant record date to receive interest on the relevant interest payment date:

Period Percentage

From August 24, 2022 to August 23, 2023 105.0 %

From August 24, 2023 to August 23, 2024 102.5 %

On or after February 24, 2024 100.0 %

Mandatory Repurchase Offers

Upon a “Change of Control” (as defined in the Indenture), Pyxus Holdings will be required to make an offer to repurchase the Notes at a price in cash equal to 101 % of the principal amount thereof.

Upon certain asset sales, Pyxus Holdings may be required to make an offer to repurchase the Notes at a price in cash equal to 100 % of the principal amount thereof.

Certain Covenants

The Indenture contains covenants that impose restrictions on Pyxus Holdings, the Company and the Company’s subsidiaries (other than subsidiaries that may in the future be designated as “Unrestricted Subsidiaries” under the Indenture), including on their ability to, among other things:

A detailed description of the Notes and the Indenture is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

At June 30, 2021, Pyxus Holdings was in compliance with the covenants under the Indenture.

DDTL Facility

On April 23, 2021, Intabex Netherlands B.V.

(“Intabex”), an indirect wholly owned subsidiary of the Company, entered into a Term Loan Credit Agreement (the “DDTL Facility Credit Agreement”), dated as of April 23, 2021, by and among (i) Intabex, as borrower, (ii) the Company, Pyxus Parent, Inc., Pyxus Holdings, Inc., Alliance One International, LLC, Alliance One International Holdings, Ltd, as guarantors (collectively, the “Parent Guarantors”), (iii) certain funds managed by Glendon Capital Management, L.P.

and Monarch Alternative Capital LP, as lenders (collectively and, together with any other lender that is or becomes a party thereto as a lender, the “DDTL Facility Lenders”), and (iv) Alter Domus (US) LLC, as administrative agent and collateral agent.

The DDTL Facility Credit Agreement establishes a $ 120,000 delayed-draw term loan credit facility (the “DDTL Facility”) permitting borrowings by Intabex in up to four draws on or prior to June 30, 2021 in a minimum amount of $ 30,000 each (or, if less than $ 30,000 remains available under the DDTL Facility, the remaining commitments under the DDTL Facility) (the “DDTL Loans”).

The proceeds of the DDTL Loans are to be used to provide ongoing working capital and for other general corporate purposes of Intabex, the Guarantors (as defined below) and their subsidiaries.

The DDTL Facility and all DDTL Loans made thereunder mature on July 31, 2022.

The DDTL Loans may be prepaid and undrawn commitments may be reduced or terminated by Intabex at any time, in each case without premium or penalty other than the Exit Fee described below and, in the case of any prepayment of LIBOR loans, subject to customary breakage.

At June 30, 2021, the DDTL Facility was fully drawn and the aggregate principal amount outstanding was $ 117,353 , net of original issue discount of $ 8,647 , which includes an estimated $ 6,000 exit fee payable upon any repayment or termination.

Amounts prepaid or repaid in respect of DDTL Loans may not be reborrowed under the DDTL Facility.

Interest on the aggregate principal amount of outstanding DDTL Loans accrues at an annual rate of LIBOR plus 9.00 %, subject to a LIBOR floor of 1.50 %, for LIBOR loans or, for loans that are not LIBOR loans, at an annual rate of an alternative base rate (as specified in the DDTL Facility Credit Agreement) plus 8.00 %.

Interest is to be paid in arrears in cash upon prepayment, acceleration, maturity, and on the last day of each interest period (and every three months in the case of interest periods in excess of three months) for LIBOR loans and on the last day of each calendar month for loans that are not LIBOR loans.

Pursuant to the DDTL Facility Credit Agreement, the DDTL Facility Lenders received a non-refundable commitment fee equal to 2.00 % of the aggregate commitments under the DDTL Facility, paid in cash in full on the Closing Date and netted from the proceeds of the DDTL Loan borrowed on the Closing Date.

The DDTL Facility Credit Agreement provides for the payment by Intabex to the DDTL Facility Lenders of a non-refundable exit fee (the “Exit Fee”) in the amounts set forth in the table below in respect of (x) any DDTL Loans repaid (whether prepaid voluntarily or paid following acceleration or at maturity) and (y) any unused commitments remaining under the DDTL Facility upon its termination (whether such termination is voluntary or automatic).

The Exit Fee is deemed to have been earned on the Closing Date, and is due and payable in cash on each date of repayment or termination, as applicable, in respect of the DDTL Loans or commitments repaid or terminated on such date, as applicable.

Loan Repayment/Commitment Termination Date Exit Fee

On or before September 30, 2021 1.00 %

After September 30, 2021 and on or before December 31, 2021 2.50 %

After December 31, 2021 and on or before March 31, 2022 3.50 %

After March 31, 2022 5.00 %

The obligations of Intabex under the DDTL Facility Credit Agreement (and certain related obligations) are (a) guaranteed by the Parent Guarantors and Alliance One International Tabak B.V., an indirect subsidiary of the Company, and each of the Company’s domestic and foreign subsidiaries that is or becomes a guarantor of borrowings under the Term Loan Credit Agreement (which subsidiaries are referred to collectively, together with the Parent Guarantors, as the “Guarantors”), and (b) are secured by the pledge of all of the outstanding equity interests of (i) Alliance One Brasil Exportadora de Tabacos Ltda.

(“AO Brazil”), which principally operates the Company’s leaf tobacco operations in Brazil, and (ii) Alliance One International Tabak B.V., which owns a 0.001 % interest of AO Brazil.

Affirmative and Restrictive Covenants

The DDTL Facility Credit Agreement contains representations and warranties, affirmative and negative covenants (subject, in each case, to exceptions and qualifications) and events of defaults applicable to the Company and its subsidiaries similar to those included in the Exit Term Loan Credit Agreement, including covenants that limit the Company’s ability to, among other things:

• incur additional indebtedness or issue disqualified stock or preferred stock;

• make investments;

• pay dividends and make other restricted payments;

• make certain investments and other restricted payments;

• enter into limitations on its ability to pay dividends, make loans or otherwise transfer assets to its immediate parent entity or to its subsidiaries;

• sell certain assets;

• create liens;

• enter into sale and leaseback transactions;

• consolidate, merge, sell, or otherwise dispose of all or substantially all of the Company’s assets;

• consolidate, merge, sell or otherwise dispose of all or substantially all of its assets;

• enter into transactions with affiliates;

At December 31, 2020, each of Pyxus Holdings and each guarantor of the Notes was in compliance with all such covenants under the Indenture.

The liens and other security interests granted by Pyxus Holdings and the guarantors on the Collateral for the benefit of the holders of the Notes are, subject to certain permitted liens, secured by first-priority security interests on the Notes Priority Collateral and a junior lien on the ABL Priority Collateral and the Term Loan Priority Collateral (in each case as defined in the Intercreditor Agreements).

The obligations of Pyxus Holdings and each other guarantor have respective priorities with respect to the guarantees and the Collateral as set forth in the Intercreditor Agreements described below.

Intercreditor Agreements

The priority of the obligations under each of the Notes, the ABL Credit Facility, and the Term Loan Credit Facility are set forth in the two intercreditor agreements entered into in connection with consummation of the transactions contemplated by the Plan, including the issuance of the Notes and the establishment of the ABL Credit Facility and the Term Loan Credit Facility.

ABL/Term Loan/Notes Intercreditor Agreement

The intercreditor relationship between, (i) on one hand, the holders of obligations under the ABL Credit Facility, the guarantees thereof and certain related obligations and (ii) on the other hand, (A) the holders of obligations under the Term Loan Credit Facility, the guarantees thereof and certain related obligations and (B) the holders of obligations under the Notes, the guarantees thereof and certain related obligations, is governed by the ABL/Term Loan/Notes Intercreditor Agreement.

Pursuant to the terms of the ABL/Term Loan/Notes Intercreditor Agreement, Pyxus Holdings’ obligations under the ABL Credit Facility, the guarantees thereof and certain related obligations have first priority liens on the Collateral consisting of ABL Priority Collateral (as defined therein), including certain accounts receivable and inventory and certain related intercompany notes, cash, deposit accounts, related general intangibles and instruments, certain other related assets of the foregoing entities and proceeds of the foregoing (other than identifiable cash proceeds of the Term Loan Priority Collateral or the Notes Priority Collateral, each as defined below), with the obligations under the Notes and the Term Loan Facility having junior priority liens on the ABL Priority Collateral.

Pursuant to the ABL/Term Loan/Notes Intercreditor Agreement, Pyxus Holdings’ collective obligations under the Term Loan Credit Facility and the Notes, the guarantees thereof and certain related obligations have first priority liens on the Notes Priority Collateral which consists of the Collateral that is not ABL Priority Collateral, including owned material real property in the United States, capital stock of subsidiaries owned directly by Pyxus Holdings or a guarantor, existing and after acquired intellectual property rights, equipment, related general intangibles and instruments and certain other assets related to the foregoing and proceeds of the foregoing, with the obligations under the ABL Credit Facility having junior priority liens on the Notes Priority Collateral.

Term Loan/Notes Intercreditor Agreement

The intercreditor relationship between and among the holders of obligations under the Term Loan Credit Facility, the guarantees thereof and certain related obligations and the holders of obligations under the Notes, the guarantees thereof and certain related obligations is governed by the Term Loan/Notes Intercreditor Agreement.

Pursuant to the terms of the Term Loan/Notes Intercreditor Agreement, Pyxus Holdings’ obligations under the Term Loan Credit Facility, the guarantees thereof and certain related obligations have senior priority liens on the Term Loan Priority Collateral consisting of (i) all assets and property of Pyxus Holdings and any domestic guarantor constituting ABL Priority Collateral up to (A) $ 125,000 minus (B) the aggregate principal amount of loans and the aggregate face amount of letters of credit outstanding under the ABL Credit Agreement, and (ii) all assets and property of any Foreign Guarantor constituting Collateral securing the Term Loan Agreement, with the obligations under the Notes having junior priority liens on the Term Loan Priority Collateral (the "ABL Priority Collateral Cap").

The liens securing the Notes and the Term Loan Facility on the ABL Priority Collateral in excess of the ABL Priority Collateral Cap are secured on a pari passu basis.

Further, the guarantees of the Foreign Guarantors in respect of the Notes are subordinated in right of payments to the guarantees of the Foreign Guarantors in respect of the Term Loan Facility.

Pursuant to the Term Loan/Notes Intercreditor Agreement, Pyxus Holdings’ obligations under the Notes, the guarantees thereof and certain related obligations have first priority liens on all Notes Priority Collateral, with the obligations under the Term Loan Facility having junior priority liens on the Notes Priority Collateral.

• engage directly or indirectly in any business other than the businesses engaged in by it and its subsidiaries are currently engaged.

In addition, the DDTL Facility Credit Agreement includes a customary “passive holding company” covenant that contains certain additional restrictions on Intabex and its subsidiaries’ activities and requirements for Intabex to provide to the DDTL Facility Lenders certain periodic financial and operating reports for the Guarantors and their subsidiaries on a consolidated basis.

At June 30, 2021, Intabex and each Guarantor was in compliance with the covenants under the DDTL Facility Credit Agreement.

Related Party Transaction

Based on a Schedule 13D filed with the SEC on September 3, 2020 by Glendon Capital Management, L.P., Glendon Opportunities Fund, L.P.

and Glendon Opportunities Fund II, L.P., Glendon Capital Management, L.P.

reported beneficial ownership of 7,939 shares of the Company’s common stock, representing approximately 31.8 % of the outstanding shares of the Company’s common stock.

Based on a Schedule 13D filed with the SEC on September 3, 2020 by Monarch Alternative Capital LP, MDRA GP LP and Monarch GP LLC, Monarch Alternative Capital LP reported beneficial ownership of 6,033 shares of the Company’s common stock, representing approximately 24.1 % of the outstanding shares of the Company’s common stock.

Pursuant to the Shareholders Agreement, Holly Kim and Patrick Fallon were designated to serve as directors of Pyxus and each continues to serve as a director of Pyxus.

Kim is a Partner at Glendon Capital Management, L.P.

Fallon is a Managing Principal at Monarch Alternative Capital LP.

The DDTL Facility Credit Agreement, any and all borrowings thereunder and the guaranty transactions described above were approved, and determined to be on terms and conditions at least as favorable to the Company and its subsidiaries as could reasonably have been obtained in a comparable arm’s-length transaction with an unaffiliated party, by a majority of the disinterested members of the Board of Directors of Pyxus.

African Seasonal Lines of Credit

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(“AOI Holdings”) and the subsidiaries in Kenya, Malawi, Tanzania, Uganda, and Zambia (collectively, the “African Subsidiaries”) entered into an Amendment and Restatement Agreement (the “Initial TDB Facility Agreement”) with Eastern and Southern African Trade and Development Bank (“TDB”).

On August 24, 2020, AOI Holdings, the African Subsidiaries, the Company, Pyxus Parent, Inc., Pyxus Holdings and TDB entered into a Second Amendment and Restatement Agreement (the “TDB Facility Agreement”) to amend and restate the Initial TDB Facility Agreement to add the Company, Pyxus Parent, Inc.

and Pyxus Holdings as guarantors thereunder and to otherwise amend provisions thereof to permit the consummation of the transactions contemplated by the Plan.

On August 24, 2020, AOI Holdings, the African Subsidiaries, the Company, Pyxus Parent, Inc., Pyxus Holdings, and TDB entered into a Second Amendment and Restatement Agreement (the “TDB Facility Agreement”) to amend and restate the Initial TDB Facility Agreement to add the Company, Pyxus Parent, Inc., and Pyxus Holdings as guarantors thereunder and to otherwise amend provisions thereof to permit the consummation of the transactions contemplated by the Plan.

The TDB Facility Agreement sets forth the terms that govern the foreign seasonal lines of credit of each of the African Subsidiaries with TDB and supersedes the prior terms in effect.

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Subject to certain conditions, the TDB Facility Agreement increased the maximum aggregate borrowing capacity to $ 285,000 , less the amount of outstanding loans borrowed under the existing foreign seasonal lines of credit with TDB.

Loans under the TDB Facility Agreement bear

interest at LIBOR plus 6 %.

The TDB Facility Agreement terminates on June 30, 2021 and may be renewed at TDB’s discretion.

Each of AOI Holdings, the Company, Pyxus Parent, Inc.

and Pyxus Holdings guarantees the obligations of the African Subsidiaries under the TDB Facility Agreement.

Loans under the TDB Facility Agreement bear interest at LIBOR plus 6 %.

On June 24, 2021, the Company, and certain of its subsidiaries, including the African Subsidiaries, entered into an Amendment Agreement (the “Amendment Agreement”) with TDB to amend the TDB Facility Agreement, which governs the terms of the

separate foreign seasonal lines of credit of each of the African Subsidiaries with TDB.

The Amendment Agreement became effective on June 28, 2021 and amended the TDB Facility Agreement as follows:

• It extended the term of the separate lines of credit of each of the Company’s subsidiaries in Malawi, Tanzania, and Zambia to June 25, 2022;

• It decreased the lending commitment with respect to the line of credit of the Company’s Malawi subsidiary from $ 120,000 to $ 80,000 , effective from and including June 28, 2021;

• It includes provisions allowing for an increase in the lending commitment with respect to the line of credit of the Company’s Tanzania subsidiary from $ 70,000 to $ 85,000 , subject to the satisfaction of certain documentation requirements;

• It terminated the separate lines of credit of the Companies’ subsidiaries in Kenya and Uganda, effective from and including June 30, 2021 (with outstanding borrowings thereunder to be repaid by June 30, 2021);

• It required the Company and such subsidiaries to enter into an agreement to amend and restate the TDB Agreement by August 13, 2021 to reflect items specified in the Amendment Agreement.

Each of AOI Holdings, the Company, Pyxus Parent, Inc., and Pyxus Holdings guarantees the obligations of the African Subsidiaries under the TDB Facility Agreement.

The obligations of each African Subsidiary under the TDB Facility Agreement are required to be secured by a first priority pledge of:

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The TDB Facility Agreement contains events of default including, but not limited to, nonpayment of principal or interest, violation of covenants, breaches of representations and warranties, cross-default to other debt, bankruptcy and other insolvency events, invalidity of loan documentation, certain changes of control of the Company and the other loan parties, termination of material licenses and material adverse changes.

The Company’s subsidiary in Tanzania failed to satisfy a loan-to-value ratio requirement during November and December of 2020 under the TDB Facility Agreement.

As a result, TDB was permitted to declare an event of default with respect to the Tanzania subsidiary’s borrowings under its credit facility under the TDB Facility Agreement and demand repayment of that subsidiary’s borrowings, which were approximately $ 50,417 at December 31, 2020.

TDB entered into a First Amendment and Waiver Letter to the TDB Facility Agreement dated December 30, 2020 (the “TDB Waiver”) in which TDB waived the Tanzania subsidiary’s defaults and adjusted the required loan-to-value ratio for the Tanzania subsidiary for each month through June 2021.

The existence of these defaults by the Tanzania subsidiary under the TDB Facility Agreement (the “Tanzania Default”) resulted in defaults and events of default arising under the ABL Credit Facility and the Term Loan Credit Facility, which would have permitted the respective lenders thereunder to demand repayment of the amounts outstanding under the respective facility.

In December 2020, the required lenders under each of the ABL Credit Facility and the Term Loan Credit Facility entered into agreements with the Company waiving the defaults and events of default arising under the respective facility as a result of the Tanzania Default.

At December 31, 2020, the Company and its subsidiaries party to the TDB Facility Agreement were in compliance with all such covenants under the TDB Facility Agreement, as amended by the TDB Waiver, and $ 130,028 was available for borrowing under the TDB Facility Agreement, after reducing availability by the aggregate borrowings under the TDB Facility Agreement of $ 154,972 outstanding on that date.

At June 30, 2021, the Company and its subsidiaries party to the TDB Facility Agreement were in compliance with all such covenants under the TDB Facility Agreement, as amended by a First Amendment and Waiver Letter dated as of December 30, 2020, and $ 81,644 was available for borrowing under the TDB Facility Agreement, after reducing availability by the aggregate borrowings under the TDB Facility Agreement of $ 108,356 outstanding on that date.

See "Note 25.

Subsequent Events" for a description of the amendment and restatement of the TDB Facility Agreement completed on August 12, 2021.

Short-Term Borrowings

Excluding all long-term credit agreements, the Company has typically financed its non-U.S.

operations with uncommitted unsecured short-term seasonal lines of credit arrangements with a number of banks.

These operating lines are generally seasonal in nature, typically extending for a term of 180 to 270 days corresponding to the tobacco crop cycle in that location.

These facilities are typically uncommitted in that the lenders have the right to cease making loans and demand repayment of loans at any time.

These loans are typically renewed at the outset of each tobacco season.

Certain of the foreign seasonal lines of credit are secured by inventories as collateral.

Securitized Receivables

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Under the first facility, the Company continuously sells a designated pool of trade receivables to a special purpose entity, which sells 100 % of the receivables to an unaffiliated financial institution.

As of December 31, 2020, the investment limit under the first facility was $ 125,000 of trade receivables.

As of June 30, 2021, the limit under the first facility was $ 125,000 of trade receivables.

Under the second facility, the Company offers receivables for sale to unaffiliated financial institutions, which are then subject to acceptance by the unaffiliated financial institutions.

As of December 31, 2020, the investment limit under the second facility was $ 125,000 of trade receivables.

As of June 30, 2021, the limit under the second facility was $ 125,000 of trade receivables.

As the servicer of these facilities, the Company may receive funds that are due to the unaffiliated financial institutions, which are net settled on the next settlement date.

As a result of the net settlement, trade and other receivables, net in the condensed consolidated balance sheets has been reduced by $ 4,078 , $ 7,504 , and $ 9,586 as of December 31, 2020 and 2019, and March 31, 2020, respectively.

As a result of the net settlement, trade and other receivables, net in the condensed consolidated balance sheets has been reduced by $ 4,724 , $ 5,663 , and $ 3,651 as of June 30, 2021 and 2020, and March 31, 2021, respectively.

The following summarizes the accounts receivable securitization information:

Successor Predecessor

December 31, 2020 December 31, 2019 March 31, 2020

Successor Predecessor Successor

June 30, 2021 June 30, 2020 March 31, 2021

Receivables outstanding in facility $ 66,671 $ 60,324 $ 90,693

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Successor Predecessor

Four months ended December 31, 2020 Five months ended August 31, 2020 Nine Months Ended December 31, 2019

Three Months Ended June 30, 2021 Three Months Ended June 30, 2020

Cash proceeds for the period ended:

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The following summarizes amounts guaranteed and the fair value of those guarantees:

Successor Predecessor

December 31, 2020 December 31, 2019 March 31, 2020

Successor Predecessor Successor

June 30, 2021 June 30, 2020 March 31, 2021

Amounts guaranteed (not to exceed) $ 95,272 $ 110,712 $ 93,489

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Amounts due to local banks on behalf of suppliers and included in accounts payable 12,216 14,206 10,930

(1) Of the guarantees outstanding at December 31, 2020, most expire within one year .

(1) Of the guarantees outstanding at June 30, 2021, most expire within one year .

Derivative Financial Instruments

As of December 31, 2020 and 2019, accumulated other comprehensive loss includes $ 619 and $ 241 , net of tax of $ 168 and $ 64 , for unrealized losses related to designated cash flow hedges, respectively.

The Company recorded losses of $ 0 and $ 66 in cost of goods and services sold for the three and four months ended December 31, 2020, respectively and $ 164 for the five months ended August 31, 2020.

The Company recorded losses of $ 729 and $ 3,189 in cost of goods and services sold for the three and nine months ended December 31, 2019, respectively.

The Company recorded current derivative assets of $ 1,652 and $ 0 as of December 31, 2020 and December 31, 2019, respectively, included in the condensed consolidated balance sheets.

Dollar notional amount of derivative contracts outstanding as of December 31, 2020 was $ 44,123 .

As of June 30, 2021, accumulated other comprehensive loss includes $ 3,104 , net of $( 1,401 ) of tax, for net unrealized gains related to designated cash flow hedges, respectively.

The Company recorded a net gain of $( 415 ) in cost of goods and services sold for the three months ended June 30, 2021.

The Company recorded current derivative assets of $ 4,896 as of June 30, 2021 included in the condensed consolidated balance sheets.

Dollar notional amount of derivative contracts outstanding as of June 30, 2021 was $ 53,436 .

Fair Value Measurements

The following summarizes the financial assets and liabilities measured at fair value on a recurring basis:

Successor Predecessor

December 31, 2020 December 31, 2019 March 31, 2020

Successor Predecessor Successor

June 30, 2021 June 30, 2020 March 31, 2021

Total Total Total

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Financial Assets:

Derivative financial instruments $ 4,896 $ — $ 4,896 $ — $ — $ — $ 917 $ — $ 917

Securitized beneficial interests — 20,271 20,271 — 14,949 14,949 — 19,370 19,370

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The primary inputs to the valuation include market expectations, the Company's credit risk, and the contractual terms of the debt instrument.

• Derivatives:

The fair value of derivatives is based on the discounted cash flow analysis of the expected future cash flows.

The primary inputs to the valuation include forward yield curves, implied volatilities, LIBOR rates, and credit valuation adjustments.

Level 3 measurements

• Guarantees:

The fair value of guarantees is based on the discounted cash flow analysis of the expected future cash flows or historical loss rates.

The primary inputs to the discounted cash flow analysis include historical loss rates ranging between 0.1 % to 8.9 % as of December 31, 2020.

The fair value of guarantees is based the discounted cash flow analysis of the expected future cash flows or historical loss rates.

The primary inputs to the discounted cash flow analysis of the expected future cash flows include historical loss rates ranging between 0.1 % to 10.0 % as of June 30, 2021.

The historical loss rate was weighted by the principal balance of the loans.

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The fair value of securitized beneficial interests is based on using the present value of future expected cash flows.

The primary inputs to this valuation include payment speeds of 107 days and a discount rate of 3.6 % as of December 31, 2020.

The primary inputs to this valuation include payment speeds of 64 to 81 days and discount rates of 1.6 % to 3.5 % as of June 30, 2021.

The discount rate was weighted by the outstanding interest.

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Successor Predecessor

Three months ended December 31, 2020 Three months ended December 31, 2019

Three months ended June 30, 2021 Three months ended June 30, 2020

Securitized Beneficial Interests Long-Term Debt Guarantees Securitized Beneficial Interests Long-Term Debt Guarantees

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Ending balance $ 20,271 $ 3,164 $ 1,962 $ 14,949 $ 3,804 $ 3,312

Successor Predecessor

Four months ended December 31, 2020 Five months ended August 31, 2020 Nine months ended December 31, 2019

Securitized Beneficial Interests Long-Term Debt Guarantees Securitized Beneficial Interests Long-Term Debt Guarantees Securitized Beneficial Interests Long-Term Debt Guarantees

Beginning balance $ 11,159 $ 3,892 $ 1,256 $ 27,021 $ 848 $ 2,791 $ 40,332 $ — $ 3,714

Issuances of sales of receivables/guarantees 59,501 — 262 66,821 — 667 151,150 — 1,323

Settlements ( 48,555 ) ( 126 ) ( 1,228 ) ( 81,038 ) ( 100 ) ( 2,192 ) ( 174,000 ) — ( 3,937 )

Additions — 31 — — 3,144 — — — —

(Losses) gains recognized in earnings ( 1,573 ) — 15 ( 1,645 ) — ( 10 ) ( 3,097 ) — 12

Ending balance $ 20,532 $ 3,797 $ 305 $ 11,159 $ 3,892 $ 1,256 $ 14,385 $ — $ 1,112

For the four months ended December 31, 2020, five months ended August 31, 2020, and nine months ended December 31, 2019, the impact to earnings attributable to the change in unrealized losses on securitized beneficial interests was $ 726 , $ 263 and $ 691 , respectively.

For the three months ended June 30, 2021 and 2020, the impact to earnings attributable to the change in unrealized losses on securitized beneficial interests was $ 319 and $ 468 , respectively.

Pension and Other Postretirement Benefits

The following summarizes the components of net periodic benefit cost:

Defined Benefit Plans

Successor Predecessor

Three months ended December 31, 2020 Three months ended December 31, 2019

Operating expenses:

Service cost $ 108 $ 117

Interest expense:

Interest expense 678 1,029

Expected return on plan assets ( 731 ) ( 1,121 )

Amortization of prior service cost — 10

Settlement loss ( 8 ) 271

Actuarial loss — 456

Net periodic pension cost $ 47 $ 762

The following summarizes the net periodic pension cost for the defined benefit pension plans:

Defined Benefit Plans

Successor Predecessor

Four months ended December 31, 2020 Five months ended August 31, 2020 Nine months ended December 31, 2019

Three months ended June 30, 2021 Three months ended June 30, 2020

Operating expenses:

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Amortization of prior service cost ( 1 ) 10

Settlement loss ( 8 ) — 819

Actuarial loss 4 521

Net periodic pension cost $ 51 $ 854

What changed 10-Q

Item 1. Financial Statements