What changed in this filing

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Item 1. Financial Statements

2021-11-10 compared with 2021-08-13 · 423 added, 188 removed, 892 unchanged (41% of the section changed)

4 unchanged sentences

Successor Predecessor

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

(in thousands, except per share data) Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Sales and other operating revenues $ 394,201 $ 117,834 $ 184,791

2 unchanged sentences

Selling, general, and administrative expenses 37,925 15,684 27,101

Other income (expense), net 162 ( 2,392 )

Other (expense) income, net ( 1,816 ) ( 1,933 ) 1,853

Restructuring and asset impairment charges 6,859 1,217 493

Operating income (loss) 5,454 ( 8,466 ) ( 361 )

Loss on deconsolidation of subsidiaries 2,456 — —

Interest expense, net 28,477 8,149 14,683

Reorganization items, net — — 132,850

(Loss) income before income taxes and other items ( 25,479 ) ( 16,615 ) 117,806

Income tax (benefit) expense ( 14,128 ) ( 10,583 ) 8,460

Income from unconsolidated affiliates 1,328 234 1,538

Net (loss) income ( 10,023 ) ( 5,798 ) 110,884

Net loss attributable to noncontrolling interests ( 342 ) ( 485 ) ( 314 )

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

$ ( 9,681 ) $ ( 5,313 ) $ 111,198

(Loss) earnings per share:

Basic $ ( 0.39 ) $ ( 0.21 ) $ 11.15

Diluted $ ( 0.39 ) $ ( 0.21 ) $ 11.12

Weighted average number of shares outstanding:

Basic 25,000 25,000 9,976

Diluted 25,000 25,000 9,999

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) Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Sales and other operating revenues $ 727,491 $ 117,834 $ 447,600

Cost of goods and services sold 633,317 107,466 402,594

Gross profit 94,174 10,368 45,006

Selling, general, and administrative expenses 71,770 15,684 87,858

Other expense, net ( 1,654 ) ( 1,933 ) ( 539 )

Restructuring and asset impairment charges 7,092 1,217 566

Operating income (loss) 13,658 ( 8,466 ) ( 43,957 )

Loss on deconsolidation of subsidiaries 2,456 — —

Debt retirement expense — — 828

1 unchanged sentence

Reorganization items, net — — 105,984

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

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

(Loss) income before income taxes and other items ( 44,115 ) ( 16,615 ) 16,009

Income tax (benefit) expense ( 22,567 ) ( 10,583 ) 292

(Loss) income from unconsolidated affiliates ( 103 ) 234 2,358

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

Net (loss) income ( 21,651 ) ( 5,798 ) 18,075

Net loss attributable to noncontrolling interests ( 462 ) ( 485 ) ( 962 )

Net loss attributable to Pyxus International, Inc.

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

$ ( 21,189 ) $ ( 5,313 ) $ 19,037

Loss per share:

Basic and diluted $ ( 0.46 ) $ ( 9.24 )

(Loss) earnings per share:

Basic $ ( 0.85 ) $ ( 0.21 ) $ 1.91

Diluted $ ( 0.85 ) $ ( 0.21 ) $ 1.91

Weighted average number of shares outstanding:

Basic and diluted 25,000 9,976

Basic 25,000 25,000 9,976

Diluted 25,000 25,000 9,992

See "Notes to Condensed Consolidated Financial Statements"

1 unchanged sentence

and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

Condensed Consolidated Statements of Comprehensive (Loss) Income

Successor Predecessor

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

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

(in thousands) Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Net (loss) income $ ( 10,023 ) $ ( 5,798 ) $ 110,884

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustment ( 1,591 ) ( 807 ) 4,517

Pension and other postretirement benefit plans ( 512 ) — 240

Cash flow hedges ( 2,896 ) — —

Total other comprehensive (loss) income, net of tax ( 4,999 ) ( 807 ) 4,757

Total comprehensive (loss) income ( 15,022 ) ( 6,605 ) 115,641

Comprehensive loss attributable to noncontrolling interests ( 342 ) ( 464 ) ( 306 )

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

$ ( 14,680 ) $ ( 6,141 ) $ 115,947

Successor Predecessor

(in thousands) Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Net (loss) income $ ( 21,651 ) $ ( 5,798 ) $ 18,075

Other comprehensive income (loss), net of tax:

3 unchanged sentences

Total other comprehensive income (loss), net of tax 18 ( 807 ) 4,580

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

Total comprehensive (loss) income ( 21,633 ) ( 6,605 ) 22,655

Comprehensive loss attributable to noncontrolling interests ( 462 ) ( 464 ) ( 1,030 )

Comprehensive loss attributable to Pyxus International, Inc.

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

$ ( 21,171 ) $ ( 6,141 ) $ 23,685

3 unchanged sentences

Condensed Consolidated Balance Sheets

Successor Predecessor Successor

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

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

Current assets

22 unchanged sentences

Notes payable to banks $ 457,699 $ 457,916 $ 372,174

DIP financing — 131,700 —

Accounts payable 72,138 91,665 125,876

11 unchanged sentences

Pension, postretirement, and other long-term liabilities 65,496 75,088 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 1,443,337 1,349,266 1,285,522

Successor Predecessor Successor

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

Pyxus International, Inc.

and Subsidiaries

Condensed Consolidated Balance Sheets

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

Commitments and contingencies

2 unchanged sentences

Authorized shares ( 250,000 for all periods)

Issued shares ( 25,000 , 9,976 , and 25,000 , respectively)

Issued shares ( 25,000 for all periods)

391,089 391,402 391,089

1 unchanged sentence

Accumulated other comprehensive loss ( 6,715 ) ( 828 ) ( 6,733 )

Total stockholders’ equity (deficit) of Pyxus International, Inc.

Total stockholders’ equity of Pyxus International, Inc.

226,491 385,261 247,670

Noncontrolling interests 5,728 3,772 6,270

Total stockholders’ equity (deficit) 247,329 ( 169,297 ) 253,940

Total stockholders’ equity 232,219 389,033 253,940

Total liabilities and stockholders’ equity $ 1,675,556 $ 1,738,299 $ 1,539,462

12 unchanged sentences

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

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

Net loss attributable to Pyxus International, Inc.

— ( 11,508 ) — — — ( 120 ) ( 11,628 )

Other — ( 8 ) — — — 8 —

2 unchanged sentences

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

Net loss attributable to Pyxus International, Inc.

— ( 9,681 ) — — — ( 342 ) ( 10,023 )

Other — — — — — ( 88 ) ( 88 )

Other comprehensive loss, net of tax — — ( 1,591 ) ( 512 ) ( 2,896 ) — ( 4,999 )

Balance, September 30, 2021

(Successor) $ 391,089 $ ( 157,883 ) $ ( 5,551 ) $ 29 $ ( 1,193 ) $ 5,728 $ 232,219

See "Notes to Condensed Consolidated Financial Statements"

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

Net loss — ( 92,161 ) — — — ( 648 ) ( 92,809 )

Net loss attributable to Pyxus International, Inc.

— ( 92,161 ) — — — ( 648 ) ( 92,809 )

Stock-based compensation 117 — — — — — 117

3 unchanged sentences

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

Net income attributable to Pyxus International, Inc.

— 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 comprehensive income, net of tax — — 4,509 240 — 8 4,757

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 attributable to Pyxus International, Inc.

— ( 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

See "Notes to Condensed Consolidated Financial Statements"

3 unchanged sentences

Successor Predecessor

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

(in thousands) Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Operating Activities:

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

Net (loss) income $ ( 21,651 ) $ ( 5,798 ) $ 18,075

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

Depreciation and amortization 8,170 3,495 16,580

Loss on deconsolidation of subsidiaries 2,456 — —

Debt amortization/interest 11,656 1,527 4,862

Loss (gain) on foreign currency transactions 2,605 4,674 ( 11,077 )

Asset impairment charges 5,689 295 213

(Loss) income from unconsolidated affiliates, net of dividends 9,248 ( 257 ) 2,915

7 unchanged sentences

DIP loan to deconsolidated subsidiary ( 5,229 ) — —

Collection of DIP loan from deconsolidated subsidiary 10,996 — —

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

4 unchanged sentences

Proceeds from DIP facility — — 206,700

Repayment of DIP facility — — ( 213,418 )

Proceeds from DDTL facility 117,600 — —

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

Repayment of revolving loans facilities ( 11,000 ) — ( 44,900 )

Proceeds from long-term borrowings 150 449 2,568

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

Share repurchases — — ( 1,000 )

Debt issuance costs ( 6,300 ) ( 2,452 ) ( 8,486 )

DIP financing fees — — ( 9,344 )

Other debt restructuring costs — — ( 7,574 )

Other, net ( 24 ) ( 123 ) ( 565 )

1 unchanged sentence

Effect of exchange rate changes on cash ( 1,223 ) ( 620 ) 1,628

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

Pyxus International, Inc.

and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Successor Predecessor

(in thousands) Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Increase (decrease) in cash, cash equivalents, and restricted cash 33,340 31,249 ( 55,107 )

Cash and cash equivalents at beginning of period 92,705 93,138 170,208

5 unchanged sentences

Cash paid for reorganization items — — 7,314

Noncash investing activities:

Noncash investing and financing activities:

Purchases of property, plant, and equipment included in accounts payable 283 1,102 1,759

Noncash amounts obtained as a beneficial interest in exchange for transferring trade receivables in a securitization transaction 91,742 12,309 66,821

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

See "Notes to Condensed Consolidated Financial Statements"

10 unchanged sentences

Restructuring and Asset Impairment Charges

Loss Per Share

(Loss) Earnings Per Share

Restricted Cash

26 unchanged sentences

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 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.

The Company evaluated and concluded that the events between the Effective Date 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.

17 unchanged sentences

Related Party Transactions " for additional information.

Interest expense and interest income amounts reported in prior periods have been reclassified to conform to the current year's net presentation of interest expense in the condensed consolidated statements of operations.

Cash paid for interest and cash received from interest as reported under other information in the condensed consolidated statements of cash flows have been reclassified to conform to the current year's net presentation of cash paid for interest.

Asset impairment charges reported as changes in operating assets and liabilities, net in prior periods have been reclassified to conform to the current year's presentation.

New Accounting Standards

9 unchanged sentences

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.

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:

Two months ended August 31, 2020 Five months ended August 31, 2020

Reorganization items, net:

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

Professional fees ( 27,953 ) ( 30,526 )

1 unchanged sentence

Write-off of unamortized debt issuance costs and discount ( 1,283 ) ( 5,303 )

DIP financing fees ( 19,755 )

Issuance of exit facility shares and DIP financing fees ( 188,783 ) ( 208,538 )

Other debt restructuring costs ( 19,442 ) ( 19,442 )

Fresh start reporting adjustments ( 91,541 ) ( 91,541 )

$ 132,850 $ 105,984

Summary Features of the Plan of Reorganization

52 unchanged sentences

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, L.P.

The Shareholders Agreement provides that each of Glendon Capital Management,

(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.

1 unchanged sentence

The Shareholders Agreement provides that the chairperson of the board of directors of the Company is to be elected by a majority of the directors that had been nominated by the Glendon Investor (the “Glendon Directors”) and those that had been nominated by the Monarch Investor (the “Monarch Directors”), with the chairperson of such board to be elected by the board of directors of the Company if the Glendon Directors and Monarch Directors are together fewer than three in number or fail to appoint a chairperson.

respect to the calling and quorum of meetings of the board of directors of the Company, membership of committees of the board of directors of the Company, and compensation and insurance of members of the board of directors of the Company.

The Shareholders Agreement also includes provisions for the removal and replacement of the Glendon Directors at the request of the Glendon Investor and the removal and replacement of the Monarch Directors at the request of the Monarch Director, as well as provisions with respect to the calling and quorum of meetings of the board of directors of the Company, membership of committees of the board of directors of the Company, and compensation and insurance of members of the board of directors of the Company.

The Shareholders Agreement also provides for tag-along rights for Investors beneficially owning 1 % or more of the outstanding shares of the Company's common stock (the “ 1 % Investors”) upon the transfer by an Investor or group of Investors of 20 % or more of the outstanding shares of the Company's common stock, drag-along rights upon the transfer of shares by an Investor or group of Investors of 50 % or more of the outstanding shares of the Company's common stock, rights of first offer with respect to the transfer by an Investor, subject to certain exceptions, of 1 % or more of the outstanding shares of the Company common stock, pre-emptive rights to the 1 % Investors upon issuance of new securities by the Company, and demand and piggyback registration rights.

36 unchanged sentences

The adjustments set forth in the following condensed consolidated balance sheet as of August 31, 2020 reflect the effects of the transactions contemplated by the Plan and executed on the Fresh Start Reporting Date (reflected in the column entitled “Reorganization Adjustments”) as well as the fair value and other required accounting adjustments resulting from the adoption of fresh start reporting (reflected in the column entitled “Fresh Start Reporting Adjustments”).

Pre-petition liabilities that were allowed as claims in the Chapter 11 Cases are classified as liabilities subject to compromise within the condensed consolidated balance sheet.

(in thousands) As of August 31, 2020

148 unchanged sentences

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.

As discussed below, the amount of recovery that the Company may receive from the pending sale of the assets of Figr Norfolk, the completed sale of the outstanding equity of Figr East, and the completed 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

1 unchanged sentence

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.

While the Canadian Cannabis Subsidiaries were at the time of the commencement of the CCAA Proceedings 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 at that time, 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.

5 unchanged sentences

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.

As of September 30, 2021, the Company's adjusted fair value estimate of the related party note receivable was $ 3,519 , which resulted in a loss on the deconsolidation of the Canadian Cannabis Subsidiaries of $ 2,456 recorded within the condensed consolidated statements of operations for the three and six months ended September 30, 2021.

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.

In the event the Company's interests are not 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.

As such, transactions between the Company and the Canadian Cannabis Subsidiaries, during their respective period of ownership by the Company, 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.

Related Party Transactions" for transactions between the Company and the Canadian Cannabis Subsidiaries.

Revenue Recognition

2 unchanged sentences

During processing, ownership remains with the customers.

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.

For the period ended September 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 September 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 June 30, 2021 Three months ended June 30, 2020

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Leaf - North America:

9 unchanged sentences

Total sales and other operating revenues $ 394,201 $ 117,834 $ 184,791

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Leaf - North America:

Product revenue $ 130,010 $ 17,105 $ 51,211

Processing and other revenues 10,279 2,872 6,523

Total sales and other operating revenues 140,289 19,977 57,734

Leaf - Other Regions:

Product revenue 539,447 89,409 355,902

Processing and other revenues 41,077 7,579 24,595

Total sales and other operating revenues 580,524 96,988 380,497

Other Products and Services:

Total sales and other operating revenues 6,678 869 9,369

Total sales and other operating revenues $ 727,491 $ 117,834 $ 447,600

The following summarizes activity in the allowance for expected credit losses:

Successor Predecessor

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

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Balance, beginning of period $ ( 21,133 ) $ ( 15,361 ) $ ( 14,985 )

4 unchanged sentences

Trade receivables, net $ 204,927 $ 155,531 $ 152,309

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Balance, beginning of period $ ( 20,900 ) $ ( 15,361 ) $ ( 15,893 )

Additions ( 2,888 ) — —

Write-offs 147 270 532

Balance, end of period ( 23,641 ) ( 15,091 ) ( 15,361 )

Trade receivables 228,568 170,622 167,670

Trade receivables, net $ 204,927 $ 155,531 $ 152,309

Restructuring and Asset Impairment Charges

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 employee separation and impairment charges are primarily related to the write-off of the Company's remaining industrial hemp cannabidiol ("CBD") extraction equipment and the continued restructuring of certain leaf operations.

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

Successor Predecessor

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

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Employee separation charges $ 1,256 $ 922 $ 313

1 unchanged sentence

Restructuring and asset impairment charges $ 6,859 $ 1,217 $ 493

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Employee separation charges $ 1,403 $ 922 $ 353

Asset impairment and other non-cash charges 5,689 295 213

Restructuring and asset impairment charges $ 7,092 $ 1,217 $ 566

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

Successor Predecessor

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

Three months ended

September 30, 2021 One month ended

September 30, 2020 Two months ended

August 31, 2020

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

Beginning balance $ 1,902 $ 689 $ 659 $ 312 $ 255 $ — $ 321

2 unchanged sentences

Ending balance $ 1,712 $ 497 $ 96 $ 1,174 $ 229 $ 312 $ 255

Successor Predecessor

Six months ended

September 30, 2021 One month ended

September 30, 2020 Five months ended

August 31, 2020

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

Beginning balance $ 2,141 $ 1,406 $ 1,063 $ 312 $ 255 $ — $ 407

Period charges 21 215 1,167 922 — 312 40

Payments ( 450 ) ( 1,124 ) ( 2,134 ) ( 60 ) ( 26 ) — ( 192 )

Ending balance $ 1,712 $ 497 $ 96 $ 1,174 $ 229 $ 312 $ 255

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

Successor Predecessor

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

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Leaf - North America $ — $ — $ ( 8 )

2 unchanged sentences

Total $ 5,603 $ 295 $ 180

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.

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Leaf - North America $ — $ — $ 17

Leaf - Other Regions 65 295 196

Other Products and Services 5,624 — —

Total $ 5,689 $ 295 $ 213

The effective tax rate for the six months ended September 30, 2021, the one month ended September 30, 2020, and the five months ended August 31, 2020 was 51.2 %, 63.7 %, and 1.8 %, respectively.

For the six months ended September 30, 2021, the one month ended September 30, 2020, and the five months ended August 31, 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:

The change in the effective rate for the six months ended September 30, 2021 was primarily due to improved operational results and changes in the U.S.

tax profile resulting from the Company's emergence from the Chapter 11 Cases.

As of September 30, 2021, the Company recorded additional tax benefit to current taxes receivable as it expects the year-to-date loss to offset current taxes payable throughout the remainder of the current year.

(Loss) Earnings Per Share

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

Successor Predecessor

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.

(in thousands, except per share data) Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Basic (loss) earnings per share:

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

$ ( 9,681 ) $ ( 5,313 ) $ 111,198

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

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

Basic (loss) earnings per share $ ( 0.39 ) $ ( 0.21 ) $ 11.15

Diluted (loss) earnings per share:

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

$ ( 9,681 ) $ ( 5,313 ) $ 111,198

Weighted average number of shares outstanding 25,000 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 (1)

Adjusted weighted average number of shares outstanding 25,000 25,000 9,999

Diluted (loss) earnings per share $ ( 0.39 ) $ ( 0.21 ) $ 11.12

(1) 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 0 for the three months ended September 30, 2021.

Successor Predecessor

(in thousands, except per share data) Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Basic (loss) earnings per share:

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

$ ( 21,189 ) $ ( 5,313 ) $ 19,037

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

Basic (loss) earnings per share $ ( 0.85 ) $ ( 0.21 ) $ 1.91

Diluted (loss) earnings per share:

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

$ ( 21,189 ) $ ( 5,313 ) $ 19,037

Weighted average number of shares outstanding 25,000 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 (1)

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

Diluted (loss) earnings per share $ ( 0.85 ) $ ( 0.21 ) $ 1.91

(1) 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 0 for the six months ended September 30, 2021.

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 September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Antidilutive stock options and other awards — — 427

Weighted average exercise price $ — $ — $ 56.86

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Antidilutive stock options and other awards — — 427

Weighted average exercise price $ — $ — $ 56.86

Restricted Cash

The following summarizes the composition of restricted cash:

Successor Predecessor Successor

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

September 30, 2021 September 30, 2020 March 31, 2021

Compensating balance for short-term borrowings $ 2,051 $ 970 $ 1,017

Escrow 493 1,363 3,459

949 22,172 3,459

Other 418 532 $ 532

Total $ 3,418 $ 23,674 $ 5,008

(1) As of September 30, 2020, funds held in escrow was primarily related to professional fees for services rendered during the Chapter 11 Cases.

Inventories, Net

The following summarizes the composition of inventories, net:

Successor Predecessor Successor

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

September 30, 2021 September 30, 2020 March 31, 2021

Processed tobacco $ 605,424 $ 639,698 $ 534,711

4 unchanged sentences

(1) Represents inventory from the Other Products and Services segment.

On December 18, 2017, the Company completed a purchase of a 40.0 % interest in Criticality, a North Carolina-based industrial hemp company that is engaged in CBD extraction and other applications for industrial hemp in accordance with a pilot program authorized under the federal Agriculture Act of 2014 and applicable North Carolina law.

On December 18, 2017, the Company completed a purchase of a 40.0 % interest in Criticality, a North Carolina-based industrial hemp company that was engaged in CBD extraction and other applications for industrial hemp in accordance with a pilot program authorized under the federal Agriculture Act of 2014 and applicable North Carolina law.

On April 22, 2020, the Company acquired the remaining 60.0 % of the equity in Criticality in exchange for consideration consisting of $ 5,000 cash and $ 7,450 for the settlement of the Company's note receivable from Criticality, subject to certain post-closing adjustments.

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 three months ended June 30, 2020.

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

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.

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 Predecessor

One month ended September 30, 2020 Two months ended August 31, 2020

Operating loss ( 1,131 ) ( 2,326 )

Net loss ( 1,170 ) ( 2,408 )

Impact to (loss) earnings per share:

Basic ( 0.05 ) ( 0.24 )

Diluted ( 0.05 ) ( 0.24 )

Successor Predecessor

One month ended September 30, 2020 Five months ended August 31, 2020

Operating loss ( 1,131 ) ( 3,117 )

Net loss ( 1,170 ) ( 3,317 )

Impact to (loss) earnings per share:

Basic ( 0.05 ) ( 0.33 )

Diluted ( 0.05 ) ( 0.33 )

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 CBD products, by Criticality.

Equity Method Investments

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

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

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

12 unchanged sentences

Successor Predecessor

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

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Operations statement:

1 unchanged sentence

Gross profit 2,448 2,248 7,202

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

Net income 3,206 738 3,560

Company's dividends received 18 — 40

Successor Predecessor Successor

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

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Operations statement:

Sales $ 63,945 $ 13,006 $ 67,553

Gross profit 6,114 2,248 14,151

Net income 306 738 5,869

Company's dividends received 8,866 — 5,104

September 30, 2021 September 30, 2020 March 31, 2021

Balance sheet:

7 unchanged sentences

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

Successor Predecessor Successor

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

September 30, 2021 September 30, 2020 March 31, 2021

Investments in variable interest entities $ 80,205 $ 61,432 $ 89,560

3 unchanged sentences

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

Three months ended June 30, 2021

Six months ended September 30, 2021

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

7 unchanged sentences

Total $ 92,433 $ 840 $ ( 7,067 ) $ 86,206

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

(1) Amortization expense across intangible asset classes for the six months ended September 30, 2021 was $ 2,905 .

Seven months ended March 31, 2021

13 unchanged sentences

Relationships Technology Trade Names Total

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

2022 (excluding the six months ended September 30, 2021) $ 1,260 $ 985 $ 404 $ 2,649

2023 2,519 1,970 807 5,296

7 unchanged sentences

Outstanding Lines and Letters Available Interest Rate

Successor Successor Successor

March 31, June 30, June 30,

March 31, September 30, September 30,

(in thousands) 2021 2021 2021

18 unchanged sentences

Total credit available $ 189,162

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

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

(2) Balance of $ 119,263 is net of original issue discount of $ 6,737 .

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

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

(3) Balance of $ 269,007 is net of original issue discount of $ 11,837 .

8 unchanged sentences

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.

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

At September 30, 2021, $ 18,500 was available for borrowing under the ABL Credit Facility, after reducing availability by the aggregate borrowings under the ABL Credit Facility of $ 56,500 outstanding on that date.

Term Loan Credit Facility

1 unchanged sentence

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.

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

Senior Secured First Lien Notes

1 unchanged sentence

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.

At September 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.

(“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 (the "Closing Date"), 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 Credit Agreement established a $ 120,000 delayed-draw term loan credit facility (the “DDTL Facility”) under which the full amount has been drawn (the “DDTL Loans”).

The proceeds of the DDTL Loans were used to provide 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.

The DDTL Loans may be prepaid by Intabex at any time 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 September 30, 2021, the aggregate principal amount outstanding was $ 119,263 , net of original issue discount of $ 6,737 , which includes an estimated $ 6,000 exit fee payable upon repayment.

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

2 unchanged sentences

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

Loan Repayment Date Exit Fee

On or before September 30, 2021 1.00 %

15 unchanged sentences

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.

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

Related Party Transaction

16 unchanged sentences

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:

4 unchanged sentences

• 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:

• tobacco purchased by that African Subsidiary that is financed by TDB;

On August 12, 2021, the Company and certain subsidiaries of the Company, including the Company’s subsidiaries in Malawi, Tanzania, and Zambia (the “African Subsidiary Borrowers”), entered into the Third Amendment and Restatement Agreement (the “Restated TDB Agreement”) with TDB to amend and restate the Second Amendment and Restatement Agreement dated August 24, 2020, as amended by an amendment letter dated December 30, 2020, an amendment letter dated February 19, 2021 and the Amendment Agreement dated as of June 24, 2021.

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

The Restated TDB Agreement provides for a lending commitment with respect to the line of credit of the Company’s Malawi subsidiary of $ 80.0 million, a lending commitment with respect to the line of credit of the Company’s Tanzania subsidiary of $ 85.0 million, and a lending commitment with respect to the line of credit of the Company’s Zambia subsidiary of $ 40.0 million, in each case with current borrowing availability reduced by the amount of outstanding loans borrowed under the respective existing line of credit with TDB.

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

The Restated TDB Agreement terminates on June 30, 2024, unless terminated sooner at TDB’s discretion on June 30, 2022 or June 30, 2023.

The terms of the Restated TDB Agreement may also be modified at TDB’s discretion on those dates.

Borrowings under the Restated TDB Agreement are due upon the termination of the Restated TDB Agreement.

Pursuant to the Restated TDB Agreement, each of the Company and its subsidiaries, Pyxus Parent, Inc., and Pyxus Holdings, guarantee the obligations of the African Subsidiary Borrowers under the Restated TDB Agreement.

In addition, the Restated TDB Agreement provides that obligations of each African Subsidiary Borrower under the Restated TDB Agreement are secured by a first priority pledge of:

• tobacco purchased by that African Subsidiary Borrower that is financed by TDB;

• intercompany receivables arising from the sale of the tobacco financed by TDB;

• customer receivables arising from the sale of the tobacco financed by TDB;

• such African Subsidiary’s local collection account receiving customer payments for purchases of tobacco financed by TDB.

The TDB Facility Agreement also requires Alliance One International, LLC, a subsidiary of the Company, to pledge customer receivables arising from the sale of the tobacco financed by TDB and pledge its collection accounts designated for receiving customer payments for purchases of tobacco financed by TDB.

The Agreement contains affirmative and negative covenants (subject, in each case, to customary and other exceptions and qualifications), including covenants that limit the ability of the African Subsidiaries to, among other things:

• such African Subsidiary Borrower's local collection account receiving customer payments for purchases of tobacco financed by TDB.

The Restated TDB Agreement also requires Alliance One International, LLC, a subsidiary of the Company, to pledge customer receivables arising from the sale of the tobacco financed by TDB and pledge its collection accounts designated for receiving customer payments for purchases of tobacco financed by TDB.

The Restated TDB Agreement contains affirmative and negative covenants (subject, in each case, to customary and other exceptions and qualifications), including covenants that limit the ability of the African Subsidiary Borrowers to, among other things:

• grant liens on assets;

5 unchanged sentences

• effect certain modifications or terminations of customer contracts.

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.

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.

The Restated TDB 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.

At September 30, 2021, the Company and its subsidiaries party to the Restated TDB Agreement were, after giving effect to TDB's consent to certain investments by one of the African Subsidiary Borrowers, in compliance with all such covenants under the Restated TDB Agreement and $ 51,677 was available for borrowing under the Restated TDB Agreement, after reducing availability by the aggregate borrowings under the Restated TDB Agreement of $ 153,323 outstanding on that date.

Short-Term Borrowings

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

In addition to these credit arrangements, 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.

6 unchanged sentences

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

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

As of September 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 $ 4,724 , $ 5,663 , and $ 3,651 as of June 30, 2021 and 2020, and March 31, 2021, respectively.

As a result of the net settlement, trade and other receivables, net in the condensed consolidated balance sheets has been reduced by $ 4,843 , $ 4,185 , and $ 3,651 as of September 30, 2021 and 2020, and March 31, 2021, respectively.

The following summarizes the accounts receivable securitization information:

Successor Predecessor Successor

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

September 30, 2021 September 30, 2020 March 31, 2021

Receivables outstanding in facility $ 119,254 $ 67,016 $ 90,693

2 unchanged sentences

Successor Predecessor

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

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Cash proceeds for the period ended:

8 unchanged sentences

If default occurs, the Company has recourse against its various suppliers and their production assets.

The Company also guarantees bank loans of certain unconsolidated subsidiaries in Asia and South America and a lease obligation for a former unconsolidated subsidiary in North America.

The Company also guarantees bank loans of certain unconsolidated subsidiaries and a lease obligation for a former unconsolidated subsidiary.

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

Successor Predecessor Successor

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

September 30, 2021 September 30, 2020 March 31, 2021

Amounts guaranteed (not to exceed) $ 93,982 $ 84,345 $ 93,489

3 unchanged sentences

Amounts due to local banks on behalf of suppliers and included in accounts payable — — 10,930

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

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

Derivative Financial Instruments

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 .

As of September 30, 2021, accumulated other comprehensive loss includes $ 728 , net of $ 465 of tax, for net unrealized gains related to designated cash flow hedges.

The Company recorded a net gain of $( 647 ) and $( 1,062 ) in cost of goods and services sold for the three and six months ended September 30, 2021, respectively.

The Company recorded a net gain of $( 180 ) in selling, general, and administrative expenses for the three and six months ended September 30, 2021.

The Company recorded current derivative assets of $ 1,523 and current derivative liabilities of $ 634 as of September 30, 2021 included in the condensed consolidated balance sheets.

Dollar notional amount of derivative contracts outstanding as of September 30, 2021 was $ 72,522 .

Fair Value Measurements

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

Successor Predecessor Successor

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

September 30, 2021 September 30, 2020 March 31, 2021

Total Total Total

17 unchanged sentences

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 primary inputs to the discounted cash flow analysis of the expected future cash flows include historical loss rates ranging between 0.6 % to 10.0 % as of September 30, 2021.

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

1 unchanged sentence

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 64 to 81 days and discount rates of 1.6 % to 3.5 % as of June 30, 2021.

The primary inputs to this valuation include payment speeds of 103 to 107 days and discount rates of 1.4 % to 3.5 % as of September 30, 2021.

The discount rate was weighted by the outstanding interest.

6 unchanged sentences

Successor Predecessor

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

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

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

Beginning balance $ 20,271 $ 3,164 $ 1,962 $ 11,159 $ 3,892 $ 1,256 $ 14,949 $ 3,804 $ 3,313

4 unchanged sentences

Ending balance $ 26,056 $ 3,127 $ 343 $ 13,471 $ 3,714 $ 491 $ 11,159 $ 3,892 $ 1,256

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.

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

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

Beginning balance $ 19,370 $ 3,162 $ 1,740 $ 11,159 $ 3,892 $ 1,256 $ 27,021 $ 848 $ 2,791

Issuances of sales of receivables/guarantees 91,741 — 497 12,308 — 147 66,821 — 667

Settlements ( 82,674 ) ( 37 ) ( 1,704 ) ( 9,793 ) ( 178 ) ( 917 ) ( 81,038 ) ( 100 ) ( 2,192 )

Additions — 2 — — — — — 3,144 —

(Losses) gains recognized in earnings ( 2,381 ) — ( 190 ) ( 203 ) — 5 ( 1,645 ) — ( 10 )

Ending balance $ 26,056 $ 3,127 $ 343 $ 13,471 $ 3,714 $ 491 $ 11,159 $ 3,892 $ 1,256

For the six months ended September 30, 2021, one month ended September 30, 2020, and five months ended August 31, 2020, the impact to earnings attributable to the change in unrealized losses on securitized beneficial interests were $ 826 , $ 53 , and $ 263 , respectively.

Pension and Other Postretirement Benefits

2 unchanged sentences

Successor Predecessor

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

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Operating expenses:

4 unchanged sentences

Amortization of prior service cost ( 1 ) — 7

Settlement loss 1

Actuarial loss 4 — 347

Net periodic pension cost $ ( 19 ) $ 18 $ 568

(1) Settlement accounting is triggered if the lump sums paid during a fiscal year exceeds the sum of the plan's service and interest cost.

During the second quarter of fiscal 2022, the Company determined it was probable that a settlement would occur based on the lump sum cash payments activity incurred in the six months ended September 30, 2021.

Settlement losses are recorded in interest expense.

Defined Benefit Plans

Successor Predecessor

Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020

Operating expenses:

Service cost $ 198 $ 36 $ 176

Interest expense:

Interest expense 1,354 226 1,594

Expected return on plan assets ( 1,456 ) ( 244 ) ( 1,234 )

Amortization of prior service cost ( 2 ) — 17

Settlement loss 1

Actuarial loss 8 — 868

Net periodic pension cost $ 32 $ 18 $ 1,421

(1) Settlement accounting is triggered if the lump sums paid during a fiscal year exceeds the sum of the plan's service and interest cost.

Settlement losses are recorded in interest expense.

The following summarizes the net periodic pension cost (income) for the postretirement health and life insurance benefits plans:

1 unchanged sentence

Successor Predecessor

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

Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020

Operating expenses:

5 unchanged sentences

Net periodic benefit cost (income) $ 48 $ 19 $ ( 8 )

What changed 10-Q

Item 1. Financial Statements