PYXUS INTERNATIONAL, INC. 10-Q

Item 1. Financial Statements Pyxus International, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) Successor Predecessor (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 Cost of goods and services sold 342,147 107,466 159,411 Gross profit 52,054 10,368 25,380 Selling, general, and administrative expenses 37,925 15,684 27,101 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" -3- Pyxus International, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) 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 Interest expense, net 55,317 8,149 45,190 Reorganization items, net — — 105,984 (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) income ( 21,651 ) ( 5,798 ) 18,075 Net loss attributable to noncontrolling interests ( 462 ) ( 485 ) ( 962 ) Net (loss) income attributable to Pyxus International, Inc. $ ( 21,189 ) $ ( 5,313 ) $ 19,037 (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 25,000 25,000 9,976 Diluted 25,000 25,000 9,992 See "Notes to Condensed Consolidated Financial Statements" -4- Pyxus International, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) Successor Predecessor (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: Foreign currency translation adjustment ( 902 ) ( 807 ) 4,377 Pension and other postretirement benefit plans ( 512 ) — 734 Cash flow hedges 1,432 — ( 531 ) Total other comprehensive income (loss), net of tax 18 ( 807 ) 4,580 Total comprehensive (loss) income ( 21,633 ) ( 6,605 ) 22,655 Comprehensive loss attributable to noncontrolling interests ( 462 ) ( 464 ) ( 1,030 ) Comprehensive (loss) income attributable to Pyxus International, Inc. $ ( 21,171 ) $ ( 6,141 ) $ 23,685 See "Notes to Condensed Consolidated Financial Statements" -5- Pyxus International, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) Successor (in thousands) September 30, 2021 September 30, 2020 March 31, 2021 Assets Current assets Cash and cash equivalents $ 127,636 $ 125,551 $ 92,705 Restricted cash 3,028 23,285 4,619 Trade receivables, net 204,927 155,531 175,912 Other receivables 18,757 14,685 27,920 Inventories, net 802,428 844,693 727,893 Advances to tobacco suppliers, net 36,140 48,068 43,569 Recoverable income taxes 34,090 15,524 4,781 Prepaid expenses 32,718 39,456 29,532 Other current assets 15,895 15,024 15,569 Total current assets 1,275,619 1,281,817 1,122,500 Restricted cash 389 389 389 Investments in unconsolidated affiliates 87,420 67,859 96,356 Goodwill 36,853 54,876 36,853 Other intangible assets, net 49,353 66,024 51,417 Deferred income taxes, net 7,063 11,313 7,063 Long-term recoverable income taxes 4,166 3,468 4,133 Other noncurrent assets 38,487 44,699 40,355 Right-of-use assets 38,967 34,677 40,259 Property, plant, and equipment, net 137,239 173,177 140,137 Total assets $ 1,675,556 $ 1,738,299 $ 1,539,462 Liabilities and Stockholders’ Equity Current liabilities Notes payable to banks $ 457,699 $ 457,916 $ 372,174 Accounts payable 72,138 91,665 125,876 Advances from customers 33,520 21,962 12,120 Accrued expenses and other current liabilities 72,574 81,129 71,656 Income taxes payable — 7,166 8,254 Operating leases payable 8,418 10,088 9,529 Current portion of long-term debt 121,926 123 2,122 Total current liabilities 766,275 670,049 601,731 Long-term taxes payable 6,703 7,623 7,623 Long-term debt 543,233 550,196 551,235 Deferred income taxes 16,285 10,885 12,944 Liability for unrecognized tax benefits 15,850 12,677 14,835 Long-term leases 29,495 22,748 29,508 Pension, postretirement, and other long-term liabilities 65,496 75,088 67,646 Total liabilities 1,443,337 1,349,266 1,285,522 -6- Pyxus International, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) Successor (in thousands) September 30, 2021 September 30, 2020 March 31, 2021 Commitments and contingencies Stockholders’ equity Common Stock— no par value: Authorized shares ( 250,000 for all periods) Issued shares ( 25,000 for all periods) 391,089 391,402 391,089 Retained deficit ( 157,883 ) ( 5,313 ) ( 136,686 ) Accumulated other comprehensive loss ( 6,715 ) ( 828 ) ( 6,733 ) Total stockholders’ equity of Pyxus International, Inc. 226,491 385,261 247,670 Noncontrolling interests 5,728 3,772 6,270 Total stockholders’ equity 232,219 389,033 253,940 Total liabilities and stockholders’ equity $ 1,675,556 $ 1,738,299 $ 1,539,462 See "Notes to Condensed Consolidated Financial Statements" -7- Pyxus International, Inc. and Subsidiaries Condensed Statements of Consolidated Stockholders' Equity (Unaudited) Attributable to Pyxus International, Inc. Accumulated Other Comprehensive Loss (in thousands) Common Stock Retained Deficit Currency Translation Adjustment Pensions, Net of Tax Derivatives, Net of Tax Noncontrolling Interests Total Stockholders' Equity Balance, March 31, 2021 (Successor) $ 391,089 $ ( 136,686 ) $ ( 4,649 ) $ 541 $ ( 2,625 ) $ 6,270 $ 253,940 Net loss attributable to Pyxus International, Inc. — ( 11,508 ) — — — ( 120 ) ( 11,628 ) Other — ( 8 ) — — — 8 — Other comprehensive income, net of tax — — 689 — 4,328 — 5,017 Balance, June 30, 2021 (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" -8- Pyxus International, Inc. and Subsidiaries Condensed Statements of Consolidated Stockholders' Equity (Unaudited) 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 attributable to Pyxus International, Inc. — ( 92,161 ) — — — ( 648 ) ( 92,809 ) 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 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" -9- Pyxus International, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) Successor Predecessor (in thousands) Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020 Operating Activities: 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 Reorganization items, net — — ( 130,215 ) Changes in operating assets and liabilities, net ( 243,504 ) ( 17,875 ) ( 67,544 ) Other, net ( 5,813 ) ( 2,990 ) ( 15,870 ) Net cash used by operating activities ( 231,144 ) ( 16,929 ) ( 182,061 ) Investing Activities: Purchases of property, plant, and equipment ( 8,568 ) ( 1,331 ) ( 7,757 ) Collections on beneficial interests on securitized trade receivables 82,649 10,926 74,328 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 ) Other, net 386 374 ( 109 ) Net cash provided by investing activities 80,234 9,969 61,657 Financing Activities: Net proceeds and repayments from short-term borrowings 85,047 3,455 ( 99,969 ) 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 — — 280,844 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 ) Net cash provided by financing activities 185,473 38,829 63,669 Effect of exchange rate changes on cash ( 1,223 ) ( 620 ) 1,628 -10- Pyxus International, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) 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 Restricted cash at beginning of period 5,008 24,838 2,875 Cash, cash equivalents, and restricted cash at end of period $ 131,053 $ 149,225 $ 117,976 Other information: Cash paid for income taxes, net $ 12,030 $ 2,990 $ 5,560 Cash paid for interest, net 41,838 3,716 52,877 Cash paid for reorganization items — — 7,314 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" -11- Pyxus International, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (in thousands, except per share data) Note 1 Basis of Presentation and Significant Accounting Policies 13 Note 2 New Accounting Standards 14 Note 3 Emergence from Voluntary Reorganization under Chapter 11 14 Note 4 Fresh Start Reporting 17 Note 5 CCAA Proceeding and Deconsolidation of Subsidiaries 22 Note 6 Revenue Recognition 24 Note 7 Restructuring and Asset Impairment Charges 25 Note 8 Income Taxes 26 Note 9 (Loss) Earnings Per Share 27 Note 10 Restricted Cash 28 Note 11 Inventories, Net 28 Note 12 Acquisitions 28 Note 13 Equity Method Investments 30 Note 14 Variable Interest Entities 31 Note 15 Goodwill and Other Intangible Assets, Net 31 Note 16 Debt Arrangements 32 Note 17 Securitized Receivables 36 Note 18 Guarantees 37 Note 19 Derivative Financial Instruments 37 Note 20 Fair Value Measurements 38 Note 21 Pension and Other Postretirement Benefits 39 Note 22 Contingencies and Other Information 41 Note 23 Related Party Transactions 41 Note 24 Segment Information 42 Note 25 Subsequent Events 44 -12- 1. Basis of Presentation and Significant Accounting Policies The accompanying condensed consolidated financial statements represent the consolidation of Pyxus International, Inc. (the "Company" or "Pyxus") and all companies that Pyxus directly or indirectly controls, either through majority ownership or otherwise. The terms the “Company,” “Pyxus,” “we,” or “us” when used with respect to periods commencing prior to the effectiveness of the Plan (as defined below), refer to Old Pyxus (as defined below), unless the context would indicate otherwise. These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of management, the normal and recurring adjustments necessary for fair statement of financial position, results of operations, and cash flows at the dates and for the periods presented have been included. Intercompany accounts and transactions have been eliminated. 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 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 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. Due to the application of fresh start reporting, the pre-emergence and post-emergence periods are not comparable. 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 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 (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. On August 21, 2020, the Bankruptcy Court issued an order (the “Confirmation Order”) confirming the Amended Joint Prepackaged Chapter 11 Plan of Reorganization (the “Plan”) filed by the Debtors in the Chapter 11 Cases. 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. 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., which is a subsidiary of the Company. 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. See “ Note 3. Emergence from Voluntary Reorganization under Chapter 11 ” for additional information. Reclassifications 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. 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. -13- 2. New Accounting Standards Recently Adopted Accounting Pronouncements In December 2019, the FASB issued Accounting Standards Update ("ASU") No. 2019-12, Simplifying the Accounting for Income Taxes . ASU 2019-12 eliminates certain exceptions related to the approach for intra-period tax allocations, the methodology for calculating income taxes during interim periods when there are changes in tax laws or when year-to-date losses exceed anticipated losses, and the recognition of deferred tax liabilities for outside basis differences in foreign investments. 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 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. 3. Emergence from Voluntary Reorganization under Chapter 11 Bankruptcy Proceedings 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. 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: Predecessor 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 ) United States trustee fees ( 452 ) ( 970 ) Write-off of unamortized debt issuance costs and discount ( 1,283 ) ( 5,303 ) 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 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 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. Treatment of Claims and Interests The Plan treated claims against and interest in Old Pyxus upon the effectiveness of the Plan as follows: • Other Secured Claims (as defined in the Plan) were either (i) paid in full in cash, (ii) satisfied by delivery of collateral securing any such Claim (as defined in the Plan) and payment of any required interest, or (iii) reinstated. • Other Priority Claims (as defined in the Plan) were paid in full in cash. -14- • Holders of First Lien Notes Claims (as defined in the Plan) received (i) payment in full in cash of all accrued and unpaid interest on such First Lien Notes, and (ii) the Notes (as defined below). • Holders (as defined in the Plan) of Second Lien Notes Claims (as defined in the Plan) received, at the Holder’s election, (i) their pro rata share of the Company's common stock distributed in connection with the effectiveness of the Plan or (ii) cash equal to 2.00 % of the principal amount of all Second Lien Notes beneficially owned by such Holder. • Lenders under Foreign Credit Lines (as defined in the Plan) were paid in the ordinary course of business in accordance with the terms of the relevant agreement. • General Unsecured Claims (as defined in the Plan) were paid in the ordinary course of business. • The existing common stock, and rights to acquire common stock, of Old Pyxus was discharged, cancelled, released, and extinguished and of no further force or effect. Third-Party Releases Upon the effectiveness of the Plan, certain Holders of Claims and Interests (as such terms are defined in the Plan) with respect to the Debtors, except as otherwise specified in the Plan or Confirmation Order, were deemed to release and discharge the Released Parties (as defined in the Plan) from certain claims, obligations, rights, suits, damages, causes of action and liabilities in connection with the Chapter 11 Cases. Transactions in Connection with Emergence As contemplated by the Plan, certain transactions were effected on or prior to the effectiveness of the Plan, including the following: • Three new Virginia corporations (i.e., the Company (then known as “Pyxus One, Inc.”), Pyxus Parent, Inc. and Pyxus Holdings) were organized. • Pyxus Parent, Inc. 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. in exchange for the Equity Consideration. • Pyxus Holdings entered into the ABL Credit Agreement (as defined below) to borrow cash under the ABL Credit Facility (as defined below) which together with cash on-hand was sufficient to fund (1) the distributions to holders of Allowed Second Lien Notes Claims (as defined in the Plan) that elected to take the Second Lien Notes Cash Option (as defined in the Plan) and (2) the Existing Equity Cash Pool (as defined in the Plan) (collectively such amount of cash is referred to as the “Cash Consideration”). • Pursuant to an Asset Purchase Agreement, Old Pyxus transferred to Pyxus Holdings all of its assets (including by assuming and assigning all of Old Pyxus’ Executory Contracts and Unexpired Leases (as such terms are defined in the Plan) to Pyxus Holdings in accordance with the Plan, other than those Executory Contracts and Unexpired Leases that were rejected) and Pyxus Holdings assumed all of Old Pyxus’ obligations that are not discharged under the Plan (including all of Old Pyxus’ obligations to satisfy Allowed Administrative Claims, Allowed Professional Fee Claims, Allowed Other Secured Claims, Allowed Other Priority Claims, Allowed Foreign Credit Line Claims, Allowed General Unsecured Claims, Allowed Debtor Intercompany Claims, and Allowed Debtor Intercompany Claims as set forth in the Plan (as such terms are defined in the Plan)) in exchange for (i) Pyxus Holdings transferring the Equity Consideration to Old Pyxus, (ii) Pyxus Holdings transferring the Cash Consideration to Old Pyxus, (iii) Pyxus Holdings issuing the Notes (as defined below) under the Indenture (as defined below) which, on behalf of Old Pyxus, was issued to the Holders of Allowed First Lien Notes Claims (as defined in the Plan) as set forth in the Plan, and (iv) Pyxus Holdings issuing the Term Loans (as defined below) under the Term Loan Credit Facility (as defined below) which, on behalf of Old Pyxus, was issued to the holders of the DIP Facility Claims (as defined in the Plan) as set forth in the Plan. In addition to the transfer of assets to Pyxus Holdings, Pyxus Holdings made an offer of employment to all employees of Old Pyxus and all such employees became employed by Pyxus Holdings, or a designated subsidiary, upon the effectiveness of the Plan on the same terms and conditions existing immediately prior to the effectiveness of the Plan. -15- • 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 12,500 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. • The Company elected a board of directors, initially comprising J. Pieter Sikkel, Holly Kim, and Patrick Fallon, and appointed as its officers the individuals serving as officers of Old Pyxus to the same offices held immediately prior to the effectiveness of the Old Plan. The Company as Successor Issuer As a result of these transactions, the Company is deemed to be the successor issuer to Old Pyxus under Rule 12g‑3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As a result, the shares of New Common Stock were deemed to be registered under Section 12(g) of the Exchange Act and the Company was thereby deemed to be subject to the informational requirements of the Exchange Act, and the rules and regulations promulgated thereunder and, in accordance therewith, is required to file reports and other information with the Securities and Exchange Commission. ABL Credit Facility 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”). 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 $ 213,400 (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. 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 $ 280,800 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, -16- 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. 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. 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. The Shareholders Agreement includes the agreement of the Investors not to transfer shares of common stock of the Company (i) in violation of federal and state securities laws, (ii) in a transfer that would cause the Company to be regarded as an “investment company” under the Investment Company Act of 1940, as amended, (iii) in a transfer, at any time that the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, that would cause the number of holders of the Company's common stock to exceed specified thresholds, or (iv) in a transfer that is, to the knowledge of the transferor after reasonable inquiry, (A) to any specified competitor of the Company (B) or to a person that would become either a beneficial owner of 5 % of the outstanding common stock of the Company or a “5-percent shareholder” within the meaning of Section 382 of the Internal Revenue Code and the regulations promulgated thereunder (collectively, a “ 5 % Holder”). The Shareholders Agreement provides that the board of directors may waive these restrictions, provided that any waiver of the restriction with respect to a person that would become a 5 % Holder upon such transfer may be waived only if the transferee enters into a joinder agreeing to be bound by the Shareholders Agreement. 4. Fresh Start Reporting In connection with the emergence from Chapter 11 Cases, the Company qualified for fresh start reporting as (i) the holders of existing voting shares of the Predecessor received less than 50% of the voting shares of the Successor Company and (ii) the preliminary reorganization value of the Company's assets immediately prior to confirmation of the Plan was less than the post-petition liabilities and allowed claims. In accordance with ASC 852, with the application of fresh start reporting, the Company allocated the preliminary reorganization value to its individual assets and liabilities based on their estimated fair values. The Effective Date estimated fair values of certain of the Company's assets and liabilities differed materially from their recorded values as reflected on the historical balance sheets. Reorganization Value The reorganization value represents the fair value of the Company’s total assets before considering liabilities and is intended to approximate the amount a willing buyer would pay for the Company’s assets immediately after restructuring. The reorganization value was derived from the enterprise value, which represents the estimated fair value of an entity’s long-term debt and equity. As set forth in the Plan, the enterprise value (excluding cash) of the Company was estimated to be in the range of $ 1,251,000 to $ 1,524,000 with a midpoint of $ 1,388,000 . The Company estimated its enterprise value to be $ 1,252,379 , which is near the low point of the range. The Company believes utilizing an estimated enterprise value near the low point of the range is appropriate due to the identification of Level 1 trading activity that indicated the estimated enterprise value was near the low point of the range, the Company's performance lagging behind plan (due in part to the continued impact of the COVID-19 pandemic), and the utilization of an increased discount rate for the Other Products and Services long-term projections. -17- The estimated enterprise value is not necessarily indicative of actual value or financial results. Changes in the economy or the financial markets could result in a different estimated enterprise value. The calculated enterprise value relies on the three methodologies listed below collectively. The actual value of the business is subject to certain uncertainties and contingencies that are difficult to predict and will fluctuate with changes in various factors affecting the financial conditions and prospects of the business. The following reconciles the estimated enterprise value to the estimated fair value of the Successor common stock as of the Fresh Start Reporting Date: Enterprise value, excluding cash $ 1,252,379 Plus: cash, cash equivalents, and restricted cash 117,587 Less: fair value of debt ( 974,205 ) Fair value of Successor stockholders’ equity $ 395,761 Shares issued upon emergence 25,000 Per share value $ 15.83 The following reconciles estimated enterprise value to the reorganization value of the Successor assets to be allocated to individual assets as of the Fresh Start Reporting Date: Enterprise value, excluding cash $ 1,252,379 Plus: cash, cash equivalents, and restricted cash 117,587 Plus: working capital liabilities 170,905 Plus: other operating liabilities 54,700 Plus: non-operating liabilities 113,954 Reorganization value of Successor assets $ 1,709,525 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. 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 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. -18- (in thousands) As of August 31, 2020 Fresh Start Reporting Adjustments Predecessor Reorganization Adjustments As Reported at September 30, 2020 As Adjusted at December 31, 2020 Successor Assets Current assets Cash and cash equivalents $ 111,427 $ ( 18,289 ) (1) $ — $ — $ 93,138 Restricted cash 2,949 21,500 (2) — — 24,449 Trade receivables, net 152,309 — — — 152,309 Other receivables 13,227 — — — 13,227 Accounts receivable, related parties 2,780 — — — 2,780 Inventories, net 861,851 — — — 861,851 Advances to tobacco suppliers, net 44,061 — — — 44,061 Recoverable income taxes 5,830 — — — 5,830 Prepaid expenses 34,350 — — — 34,350 Other current assets 15,059 — — — 15,059 Total current assets 1,243,843 3,211 — — 1,247,054 Restricted cash 389 — — — 389 Investments in unconsolidated affiliates 54,460 — 13,291 30,531 (13) 84,991 Goodwill 6,120 — 48,756 31,815 (14) 37,935 Other intangible assets, net 64,924 — 1,596 6,075 (15) 70,999 Deferred income taxes, net 125 — 9,638 7,484 (16) 7,609 Long-term recoverable income taxes 3,130 — — — 3,130 Other noncurrent assets 45,821 3,139 (3) ( 310 ) ( 310 ) (17) 48,650 Right-of-use assets 39,576 — ( 4,281 ) ( 4,281 ) (18) 35,295 Property, plant, and equipment, net 299,293 — ( 124,965 ) ( 125,820 ) (19) 173,473 Total assets $ 1,757,681 $ 6,350 $ ( 56,275 ) $ ( 54,506 ) $ 1,709,525 Liabilities and Stockholders’ Equity Current liabilities Notes payable to banks $ 461,783 $ — $ — $ — $ 461,783 DIP financing 206,700 ( 206,700 ) (4) — — — Accounts payable 58,813 334 (5) 25 25 59,172 Accounts payable, related parties 26,125 — — — 26,125 Advances from customers 23,967 — — — 23,967 Accrued expenses and other current liabilities 113,118 ( 31,853 ) (6) ( 1,792 ) ( 1,792 ) (20) 79,473 Income taxes payable 8,319 — — — 8,319 Operating leases payable 11,083 — ( 992 ) ( 992 ) (21) 10,091 Current portion of long-term debt 90 — — — 90 Total current liabilities 909,998 ( 238,219 ) ( 2,759 ) ( 2,759 ) 669,020 Long-term taxes payable 7,623 — — — 7,623 Long-term debt 277,090 250,546 (7) ( 15,304 ) ( 15,304 ) (22) 512,332 Deferred income taxes 20,749 91 (8) ( 10,070 ) ( 7,742 ) (23) 13,098 Liability for unrecognized tax benefits 13,420 — — — 13,420 Long-term leases 25,728 — ( 2,263 ) ( 2,263 ) (21) 23,465 Pension, postretirement, and other long-term liabilities 71,898 — 3,467 3,467 (24) 75,365 Total liabilities not subject to compromise 1,326,506 12,418 ( 26,929 ) ( 24,601 ) 1,314,323 Liabilities subject to compromise Debt subject to compromise 635,686 ( 635,686 ) (9) — — — -19- Accrued interest on debt subject to compromise 26,156 ( 26,156 ) (9) — — — Total liabilities subject to compromise 661,842 ( 661,842 ) — — — Total liabilities 1,988,348 ( 649,424 ) ( 26,929 ) ( 24,601 ) 1,314,323 Stockholders’ equity Common Stock— no par value: Predecessor common stock (shares) 9,976 ( 9,976 ) — — — Successor common stock (shares) — 25,000 — — 25,000 Predecessor additional paid-in capital 468,147 ( 468,147 ) (10) — — — Successor additional paid-in capital — 391,402 (11) — ( 313 ) 391,089 Retained deficit ( 644,250 ) 728,160 (12) ( 83,910 ) ( 83,910 ) (25) — Accumulated other comprehensive loss ( 54,484 ) — 54,484 54,484 (26) — Total stockholders’ equity (deficit) of Pyxus International, Inc. ( 230,587 ) 651,415 ( 29,426 ) ( 29,739 ) 391,089 Noncontrolling interests ( 80 ) 4,359 80 ( 166 ) 4,113 Total stockholders’ equity (deficit) ( 230,667 ) 655,774 ( 29,346 ) ( 29,905 ) 395,202 Total liabilities and stockholders’ equity $ 1,757,681 $ 6,350 $ ( 56,275 ) $ ( 54,506 ) $ 1,709,525 (1) The following summarizes the change in cash and cash equivalents: Proceeds from ABL Credit Facility, net of debt issuance costs $ 26,861 Repayment of DIP Facility ( 213,418 ) Proceeds from Term Loan Credit Facility 213,418 Proceeds from 10.0 % first lien notes 280,844 Repayment of 8.5 % first lien notes ( 280,844 ) Payment to fund professional fee escrow account ( 21,500 ) Payment of other professional and administrative fees ( 11,828 ) Payment of accrued interest on DIP Facility ( 494 ) Payment to holders of Predecessor second lien notes that elected the cash option ( 1,199 ) Payment to holders of Predecessor common stock ( 1,000 ) Payment of accrued interest on prepetition Predecessor first lien notes ( 9,129 ) $ ( 18,289 ) (2) Represents the funding of an escrow account for professional fees associated with the Chapter 11 Cases. (3) Represents the capitalization of debt issuance costs related to the ABL Credit Facility. (4) Represents the conversion of the DIP Facility that was exchanged for the Term Loans, and accordingly reclassified to long-term debt. (5) Reflects the recognition of payables for professional fees to be paid subsequent to the Company's emergence from Chapter 11 Cases. (6) The following summarizes the net change in accrued expenses and other current liabilities: Payment of accrued interest on the DIP Facility $ ( 494 ) Payment of accrued interest on the Predecessor first lien notes ( 9,129 ) Settlement of accrued backstop fee through the issuance of common stock ( 18,000 ) Reclassification of DIP Facility exit fee to long-term debt ( 6,718 ) Recognition of accrued interest from the Effective Date to the Convenience Date 1,044 Accrual for professional fees 1,444 $ ( 31,853 ) -20- (7) The following summarizes the changes in long-term debt: Draw on the ABL Credit Facility $ 30,000 Issuance of the Term Loans (1) 213,418 Conversion of redemption fee on Predecessor first lien notes to Successor Notes 5,843 Derecognition of the original issue discount and the debt issuance costs on Predecessor first lien notes 1,285 $ 250,546 (1) Includes $ 6,718 related to the DIP Facility exit fee (8) Represents the recognition of deferred tax liabilities as a result of the cumulative tax impact of the reorganization adjustments herein. (9) Represents the settlement of liabilities subject to compromise in accordance with the Plan, which resulted in a gain on the discharge of the Predecessor second lien notes as follows: Debt subject to compromise $ 635,686 Accrued interest on debt subject to compromise 26,156 Total second lien notes discharged 661,842 Payment to holders of second lien notes electing cash option ( 1,199 ) Value of common stock issued to holders of second lien notes ( 198,339 ) Gain on discharge of second lien notes $ 462,304 (10) Represents the cancellation of Predecessor common stock. (11) The changes in Successor additional paid-in capital were as follows: Value of Successor common stock, second lien notes $ 198,339 Value of Successor common stock, other 193,063 $ 391,402 (12) Represents $ 260,013 of cumulative impact to Predecessor retained deficit as a result of the reorganization adjustments described above and $ 468,147 for the elimination of Predecessor common stock. (13) Represents fair value adjustments to the Company's equity method investments. (14) Represents reorganization value in excess of value allocable to tangible and intangible assets. (15) Represents the fair value adjustments to recognize the customer relationships, licenses, technology (inclusive of patents and know how), trade names, and internally developed software intangible assets. (16) Represents the recognition of deferred tax assets as a result of the cumulative tax impact of the fresh start adjustments herein. (17) Represents an adjustment to pension assets of ($ 352 ), partially offset by other adjustments of $ 42 . (18) Represents the fair value adjustments to right-of-use lease assets. (19) Represents the following fair value adjustments to property, plant, and equipment, net: Predecessor Historical Value Fair Value Adjustment Successor Fair Value Land $ 33,562 $ ( 104 ) $ 33,458 Buildings 259,255 ( 195,797 ) 63,458 Machinery and equipment 198,708 ( 122,151 ) 76,557 Total 491,525 ( 318,052 ) 173,473 Less: Accumulated Depreciation ( 192,232 ) 192,232 — Total property, plant, and equipment, net $ 299,293 $ ( 125,820 ) $ 173,473 (20) Represents the revaluation of the current pension liability of ($ 1,800 ), partially offset by an adjustment to financing leases of $ 8 . -21- (21) Represents the Company's recalculation of lease obligations using a higher incremental borrowing rate applicable upon emergence from Chapter 11 Cases and commensurate with the new capital structure. (22) Represents the fair value adjustment to the first lien notes. (23) Represents the adjustment of deferred tax liabilities as a result of the cumulative tax impact of the fresh start valuation adjustments herein. (24) Represents the recalculation of the present value of the Company's pension liability. (25) Represents the cumulative impact of the remeasurement of assets and liabilities from fresh start reporting, $ 7,631 of tax effect of reorganization items, and the elimination of Predecessor's accumulated other comprehensive losses for the five months ended August 31, 2020. (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. 5. 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; and • 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 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. -22- 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. 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 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. 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 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 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, 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. -23- 6. Revenue Recognition Product revenue is primarily processed tobacco sold to the customer. Processing and other revenues are mainly contracts to process customer-owned green tobacco. During processing, ownership remains with the customers. 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 September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020 Leaf - North America: Product revenue $ 83,726 $ 17,105 $ 25,293 Processing and other revenues 6,795 2,872 2,544 Total sales and other operating revenues 90,521 19,977 27,837 Leaf - Other Regions: Product revenue 273,990 89,409 137,546 Processing and other revenues 26,444 7,579 15,212 Total sales and other operating revenues 300,434 96,988 152,758 Other Products and Services: Total sales and other operating revenues 3,246 869 4,196 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 -24- The following summarizes activity in the allowance for expected credit losses: Successor Predecessor 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 ) Additions ( 2,508 ) — — Write-offs — 270 ( 376 ) 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 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 7. Restructuring and Asset Impairment Charges The Company continued its focus on cost saving initiatives. 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 September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020 Employee separation charges $ 1,256 $ 922 $ 313 Asset impairment and other non-cash charges 5,603 295 180 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 -25- The following summarizes the activity in the restructuring accrual for employee separation and other cash charges by reportable segment: Successor Predecessor 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 Period charges 7 215 1,034 922 — 312 — Payments ( 197 ) ( 407 ) ( 1,597 ) ( 60 ) ( 26 ) — ( 66 ) 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 September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020 Leaf - North America $ — $ — $ ( 8 ) Leaf - Other Regions ( 21 ) 295 188 Other Products and Services 5,624 — — Total $ 5,603 $ 295 $ 180 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 8. Income Taxes 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 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. -26- 9. (Loss) Earnings Per Share The following summarizes the computation of (loss) earnings per share: Successor Predecessor (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 Shares: Weighted average number of shares outstanding 25,000 25,000 9,976 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 Shares: Weighted average number of shares outstanding 25,000 25,000 9,976 Plus: 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) — — 23 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 Shares: 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 Shares: Weighted average number of shares outstanding 25,000 25,000 9,976 Plus: 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) — — 16 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. -27- 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 10. Restricted Cash The following summarizes the composition of restricted cash: Successor September 30, 2021 September 30, 2020 March 31, 2021 Compensating balance for short-term borrowings $ 2,051 $ 970 $ 1,017 Escrow (1) 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. 11. Inventories, Net The following summarizes the composition of inventories, net: Successor September 30, 2021 September 30, 2020 March 31, 2021 Processed tobacco $ 605,424 $ 639,698 $ 534,711 Unprocessed tobacco 162,676 147,128 156,915 Other tobacco related 21,374 18,123 25,979 Other (1) 12,954 39,744 10,288 Total $ 802,428 $ 844,693 $ 727,893 (1) Represents inventory from the Other Products and Services segment. 12. Acquisitions 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 -28- 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. Following the acquisition, the Company recorded certain post-closing purchase price adjustments. The intent of the acquisition was to allow the Company to expand its industrial hemp production and product portfolio. The following summarizes the fair values of the assets acquired and liabilities assumed as of April 22, 2020: Cash and cash equivalents $ 195 Accounts receivable 1,528 Advances to suppliers 1,043 Inventories 3,823 Other current assets 181 Property, plant, and equipment 5,060 Goodwill 6,120 Total assets acquired 17,950 Accounts payable 1,654 Notes payable 7,450 Other current liabilities 513 Total liabilities 9,617 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 Predecessor One month ended September 30, 2020 Two months ended August 31, 2020 Revenue 3 — 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 Revenue 3 — 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. -29- 13. Equity Method Investments 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) Adams International Ltd. Thailand purchase and process tobacco 49 % $ ( 4,526 ) Alliance One Industries India Private Ltd. India purchase and process tobacco 49 % ( 5,770 ) China Brasil Tobacos Exportadora SA Brazil purchase and process tobacco 49 % 46,326 Oryantal Tütün Paketleme Sanayi ve Ticaret A.Ş. Turkey process tobacco 50 % ( 416 ) Purilum, LLC U.S. produce flavor formulations and consumable e-liquids 50 % 4,589 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 September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020 Operations statement: Sales $ 32,513 $ 13,006 $ 31,841 Gross profit 2,448 2,248 7,202 Net income 3,206 738 3,560 Company's dividends received 18 — 40 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 Successor September 30, 2021 September 30, 2020 March 31, 2021 Balance sheet: Current assets $ 280,561 $ 246,852 $ 224,106 Property, plant, and equipment and other assets 43,675 42,544 43,648 Current liabilities 214,321 185,187 138,833 Long-term obligations and other liabilities 3,144 4,185 3,937 -30- 14. Variable Interest Entities The Company holds variable interests in multiple entities that primarily procure or process inventory or are securitization entities. These variable interests relate to equity investments, receivables, guarantees, and securitized receivables. The following summarizes the Company's financial relationships with its unconsolidated variable interest entities: Successor September 30, 2021 September 30, 2020 March 31, 2021 Investments in variable interest entities $ 80,205 $ 61,432 $ 89,560 Receivables with variable interest entities 7,721 1,541 13,497 Guaranteed amounts to variable interest entities (not to exceed) 55,991 56,040 56,067 15. Goodwill and Other Intangible Assets, Net The following summarizes the changes in the Company's goodwill and other intangible assets, net: Successor Six months ended September 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 10.61 years $ 29,200 $ — $ ( 2,729 ) $ 26,471 Technology 6.23 years 15,080 840 ( 3,464 ) 12,456 Trade names 12.92 years 11,300 — ( 874 ) 10,426 Intangibles not subject to amortization: Goodwill 36,853 — — 36,853 Total $ 92,433 $ 840 $ ( 7,067 ) $ 86,206 (1) Amortization expense across intangible asset classes for the six months ended September 30, 2021 was $ 2,905 . Successor Seven months ended March 31, 2021 Weighted Average Remaining Useful Life Beginning Gross Carrying Amount Additions Accumulated Amortization (1) 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 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 seven months ended March 31, 2021 was $ 5,113 . -31- The following summarizes the estimated intangible asset amortization expense for the next five years and beyond: For Fiscal Years Ended March 31 Customer Relationships Technology Trade Names Total 2022 (excluding the six months ended September 30, 2021) $ 1,260 $ 985 $ 404 $ 2,649 2023 2,519 1,970 807 5,296 2024 2,519 2,138 807 5,464 2025 2,519 1,987 807 5,313 2026 2,519 1,713 807 5,039 Thereafter 15,135 3,663 6,794 25,592 $ 26,471 $ 12,456 $ 10,426 $ 49,353 16. Debt Arrangements The following summarizes debt and notes payable: Successor Outstanding Lines and Letters Available Interest Rate March 31, September 30, September 30, (in thousands) 2021 2021 2021 Senior secured credit facilities: ABL Credit Facility $ 67,500 $ 56,500 $ 18,500 5.8 % (1) DDTL Facility (2) — 119,263 — 10.6 % (1) Senior secured notes: 10.0 % senior secured first lien notes (3) 267,353 269,007 — 10.0 % Term Loan Credit Facility (4) 215,594 217,510 — 9.6 % (1) Other long-term debt 2,910 2,879 314 2.3 % (1) Notes payable to banks (5) 372,174 457,699 167,016 6.2 % (1) Total debt $ 925,531 $ 1,122,858 $ 185,830 Short-term $ 372,174 $ 457,699 Long-term: Current portion of long-term debt $ 2,122 $ 121,926 Long-term debt 551,235 543,233 $ 553,357 $ 665,159 Letters of credit $ 2,468 $ 9,244 $ 3,332 Total credit available $ 189,162 (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 repayment. (3) Balance of $ 269,007 is net of original issue discount of $ 11,837 . Total repayment will be $ 280,844 . (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 $ 217,510 includes $ 4,092 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. -32- ABL Credit Facility 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 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 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 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, 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 September 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. 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 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 (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 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 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. 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 any DDTL Loans repaid (whether prepaid voluntarily or paid following acceleration or at maturity). 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. -33- Loan Repayment 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 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; • consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; • enter into transactions with affiliates; and • 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 September 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. Ms. Kim is a Partner at Glendon Capital Management, L.P. and Mr. 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. -34- African Seasonal Lines of Credit On August 13, 2020, certain then subsidiaries of Old Pyxus, which are now subsidiaries of the Company, Alliance One International Holdings, Ltd. (“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. 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. These lines of credit provide borrowings to fund the purchase of leaf tobacco in the respective jurisdictions to be repaid upon the sale of that tobacco. The original aggregate maximum borrowing availability under these separate existing foreign seasonal lines of credit was $ 255,000 , and the aggregate borrowings were $ 240,485 as of August 13, 2020. 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 %. 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); and • 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. 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; and • such African Subsidiary Borrower's local collection account receiving customer payments for purchases of tobacco financed by TDB. -35- 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; • incur additional indebtedness (including guarantees and other contingent obligations); • sell or otherwise dispose of property or assets; • maintain a specified amount of pledged accounts receivable and inventory; • make changes in the nature of its business; • enter into burdensome contracts; and • effect certain modifications or terminations of customer contracts. 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 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. 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. 17. Securitized Receivables The Company sells trade receivables to unaffiliated financial institutions under two accounts receivable securitization facilities. 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 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 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 $ 4,843 , $ 4,185 , and $ 3,651 as of September 30, 2021 and 2020, and March 31, 2021, respectively. -36- The following summarizes the accounts receivable securitization information: Successor September 30, 2021 September 30, 2020 March 31, 2021 Receivables outstanding in facility $ 119,254 $ 67,016 $ 90,693 Beneficial interests 26,055 13,471 19,370 Servicing liability 49 — 14 Successor Predecessor Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020 Cash proceeds for the period ended: Cash purchase price $ 216,497 $ 41,692 $ 151,817 Deferred purchase price 82,649 10,926 74,328 Service fees 276 25 218 Total $ 299,422 $ 52,643 $ 226,363 18. Guarantees In certain markets, the Company guarantees bank loans to suppliers to finance their crops. Under longer-term arrangements, the Company may also guarantee financing on suppliers’ construction of curing barns or other tobacco production assets. Guaranteed loans are generally repaid concurrent with the delivery of tobacco to the Company. The Company is obligated to repay guaranteed loans should the supplier default. 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 and a lease obligation for a former unconsolidated subsidiary. The following summarizes amounts guaranteed and the fair value of those guarantees: Successor September 30, 2021 September 30, 2020 March 31, 2021 Amounts guaranteed (not to exceed) $ 93,982 $ 84,345 $ 93,489 Amounts outstanding under guarantee (1) 14,777 13,456 30,111 Fair value of guarantees 343 491 1,740 Amounts due to local banks on behalf of suppliers and included in accounts payable — — 10,930 (1) Of the guarantees outstanding at September 30, 2021, most expire within one year . 19. Derivative Financial Instruments 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. The U.S. Dollar notional amount of derivative contracts outstanding as of September 30, 2021 was $ 72,522 . -37- 20. Fair Value Measurements The following summarizes the financial assets and liabilities measured at fair value on a recurring basis: Successor September 30, 2021 September 30, 2020 March 31, 2021 Total Total Total Level 2 Level 3 at Fair Value Level 2 Level 3 at Fair Value Level 2 Level 3 at Fair Value Financial Assets: Derivative financial instruments $ 1,523 $ — $ 1,523 $ — $ — $ — $ 917 $ — $ 917 Securitized beneficial interests — 26,056 26,056 — 13,471 13,471 — 19,370 19,370 Total assets $ 1,523 $ 26,056 $ 27,579 $ — $ 13,471 $ 13,471 $ 917 $ 19,370 $ 20,287 Financial Liabilities: Long-term debt $ 446,770 $ 3,127 $ 449,897 $ 500,549 $ 3,714 $ 504,263 $ 467,795 $ 3,162 $ 470,957 Guarantees — 343 343 — 491 491 — 1,740 1,740 Total liabilities $ 446,770 $ 3,470 $ 450,240 $ 500,549 $ 4,205 $ 504,754 $ 467,795 $ 4,902 $ 472,697 Level 2 measurements • Debt: The fair value of debt is based on the market price for similar financial instruments or model-derived valuations with observable inputs. 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 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 0.6 % to 10.0 % as of September 30, 2021. The historical loss rate was weighted by the principal balance of the loans. • Securitized beneficial interests: 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 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. Payment speed was weighted by the average days outstanding. • Long-term debt: The fair value of the long-term debt is based on the present value of future payments. The primary inputs to this valuation include treasury notes interest of 1.0 % to 1.4 % and borrowing rates of 7.0 % to 10.7 % . The borrowing rates were weighted by average loans outstanding. The following summarizes the reconciliation of changes in Level 3 instruments measured on a recurring basis: Successor Predecessor 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 Issuances of sales of receivables/guarantees 53,243 — 274 12,308 — 147 19,702 — 19 Settlements ( 45,979 ) ( 37 ) ( 1,678 ) ( 9,793 ) ( 178 ) ( 917 ) ( 23,137 ) — ( 2,075 ) Additions — — — — — — — 88 — (Losses) gains recognized in earnings ( 1,479 ) — ( 215 ) ( 203 ) — 5 ( 355 ) — ( 1 ) Ending balance $ 26,056 $ 3,127 $ 343 $ 13,471 $ 3,714 $ 491 $ 11,159 $ 3,892 $ 1,256 -38- 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. 21. Pension and Other Postretirement Benefits The following summarizes the net periodic pension cost for the defined benefit pension plans: Defined Benefit Plans Successor Predecessor Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020 Operating expenses: Service cost $ 99 $ 36 $ 70 Interest expense: Interest expense 677 226 638 Expected return on plan assets ( 728 ) ( 244 ) ( 494 ) Amortization of prior service cost ( 1 ) — 7 Settlement loss 1 ( 70 ) — — 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. -39- 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 ( 70 ) — — 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. 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. The following summarizes the net periodic pension cost (income) for the postretirement health and life insurance benefits plans: Other Postretirement Benefits Successor Predecessor Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020 Operating expenses: Service cost $ 2 $ 1 $ 1 Interest expense: Interest expense 49 18 46 Amortization of prior service cost — — ( 118 ) Actuarial loss ( 3 ) — 63 Net periodic benefit cost (income) $ 48 $ 19 $ ( 8 ) Other Postretirement Benefits Successor Predecessor Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020 Operating expenses: Service cost $ 4 $ 1 $ 3 Interest expense: Interest expense 98 18 114 Amortization of prior service cost — — ( 294 ) Actuarial loss ( 6 ) — 157 Net periodic benefit cost (income) $ 96 $ 19 $ ( 20 ) The following summarizes contributions to pension plans and postretirement health and life insurance benefits: Successor Predecessor Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020 Contributions made during the period $ 1,553 $ 651 $ 1,066 -40- Successor Predecessor Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020 Contributions made during the period $ 3,056 $ 651 $ 1,941 Contributions expected for the remainder of the fiscal year 2,815 3,245 — Total $ 5,871 $ 3,896 $ 1,941 22. Contingencies and Other Information Brazilian Tax Credits The government in the Brazilian State of Parana ("Parana") issued a tax assessment on October 26, 2007 with respect to local intrastate trade tax credits that result primarily from tobacco transferred between states within Brazil. At September 30, 2021, the assessment for intrastate trade tax credits taken is $ 2,422 and the total assessment including penalties and interest is $ 8,794 . On March 18, 2014, the government in Brazilian State of Santa Catarina also issued a tax assessment with respect to local intrastate trade tax credits that result primarily from tobacco transferred between states within Brazil. At September 30, 2021, the assessment for intrastate trade tax credits taken is $ 2,095 and the total assessment including penalties and interest is $ 5,695 . The Company believes it has properly complied with Brazilian law and will contest any assessment through the judicial process. Should the Company lose in the judicial process, the loss of the intrastate trade tax credits would have a material impact on the financial statements of the Company. The Company also has local intrastate trade tax credits in the Brazil State of Rio Grande do Sul. This jurisdiction permits the sale or transfer of excess credits to third parties, however approval must be obtained from the tax authorities. The Company has an agreement with the state government regarding the amounts and timing of credits that can be sold. The tax credits have a carrying value of $ 10,578 . The intrastate trade tax credits are monitored for impairment in future periods based on market conditions and the Company’s ability to use or sell the tax credits. Other Matters In addition to the above-mentioned matters, certain of the Company’s subsidiaries are involved in other litigation or legal matters incidental to their business activities, including tax matters. While the outcome of these matters cannot be predicted with certainty, the Company is vigorously defending them and does not currently expect that any of them will have a material adverse effect on its business or financial position. However, should one or more of these matters be resolved in a manner adverse to its current expectation, the effect on the Company’s results of operations for a particular fiscal reporting period could be material. Asset Retirement Obligations The Company identified an asset retirement obligation ("ARO") associated with one of its facilities that requires it to restore the land to its initial condition upon vacating the facility. The Company has not recognized a liability under generally accepted accounting principles for this ARO as the fair value of restoring the land at this site cannot be reasonably estimated since the settlement date is unknown at this time. The settlement date is unknown because the land restoration is not required until title is returned to the government, and the Company has no current or future plans to return the title. The Company will recognize a liability in the period in which sufficient information is available to reasonably estimate its fair value. 23. Related Party Transactions The Company engages in transactions with its equity method investees primarily for the procuring and processing of inventory. The following summarizes sales and purchases transactions with related parties: Successor Predecessor Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020 Sales $ 8,176 $ 539 $ 6,325 Purchases 25,331 18,919 19,928 Successor Predecessor Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020 Sales $ 18,813 $ 539 $ 13,483 Purchases 47,673 18,919 38,655 -41- The Company has the following related party balances included in its condensed consolidated balances sheets: Successor Location in the Condensed Consolidated Balance Sheets September 30, 2021 September 30, 2020 March 31, 2021 Accounts receivable, related parties $ 5,611 $ 3,773 $ 3,585 Other receivables Notes receivable, related parties 3,519 — 11,890 Other receivables Accounts payable, related parties 13,451 34,815 22,376 Accounts payable Advances from related parties 14,550 — — Advances from customers Transactions with the Glendon Investor and the Monarch Investor On August 24, 2020, the Company entered into an Exit Term Loan Credit Agreement and issued Senior Secured First Lien Notes with certain lenders, including the Glendon Investor and the Monarch Investor (see “Note 3. Emergence from Voluntary Reorganization under Chapter 11” for additional information). On April 23, 2021, the Company and certain of its subsidiaries with certain funds managed by the Glendon Investor and the Monarch Investor, as lenders, and related matters entered into a $ 120,000 delayed-draw credit facility agreement (see "Note 16. Debt Arrangements" for additional information). Accrued expenses and other current liabilities as presented in the condensed consolidated balance sheets as of September 30, 2021 and 2020, and March 31, 2021, includes $ 4,369 , $ 2,192 , and $ 2,309 , respectively, of interest payable to the Glen don Investor and the Monarch Investor. Interest expense as presented in the condensed consolidated statements of operations includes $ 8,537 and $ 16,036 for three and six months ended September 30, 2021, respectively, and $ 2,192 for the three and six months ended September 30, 2020, that relates to the Glendon Investor and the Monarch Investor. Transactions with the Deconsolidated Canadian Cannabis Subsidiaries In connection with the CCAA Proceeding, the DIP Lender, another non-U.S. subsidiary of the Company, provided Figr Brands with secured debtor-in-possession financing 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 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 agreed to by the DIP Lender. As of September 30, 2021 and 2020, and March 31, 2021, the outstanding loan balance under the Canadian DIP Facility was $ 0 , $ 0 , and $ 5,790 , respectively, and is included in other receivables within the condensed consolidated balance sheets. As of September 30, 2021 and 2020, and March 31, 2021, other receivables as presented in the condensed consolidated balance sheets also includes $ 0 , $ 0 , and $ 59 , respectively, of interest receivable associated with the loans under the Canadian DIP Facility due from the Canadian Cannabis Subsidiaries. For the three and six months ended September 30, 2021, respectively, the Canadian Cannabis Subsidiaries have incurred $ 19 and $ 184 in interest expense associated with the Canadian DIP Facility, which is considered income to the Company and is recorded in interest expense, net within the condensed consolidated statements of operations. On July 8, 2021, the loans under the Canadian DIP Facility were fully repaid to the DIP Lender. As of September 30, 2021 and 2020, and March 31, 2021, the fair value of the related party note receivable retained by the Company from the Canadian Cannabis Subsidiaries was $ 3,519 , $ 0 , and $ 6,100 , respectively, and is recorded in other receivables within the condensed consolidated balance sheets. See "Note 5. CCAA Proceeding and Deconsolidation of Subsidiaries" for additional information. 24. Segment Information The Company's operations are managed and reported in nine operating segments that are organized by product category and geographic area and aggregated into three reportable segments for financial reporting purposes: Leaf - North America, Leaf - Other Regions, and Other Products and Services. The types of products and services from which each reportable segment derives its revenues are as follows: • Leaf - North America ships tobacco to manufacturers of cigarettes and other consumer tobacco products around the world. Leaf - North America is more concentrated on processing and other activities compared to the rest of the world. -42- • Leaf - Other Regions ships tobacco to manufacturers of cigarettes and other consumer tobacco products around the world. Leaf - Other Regions sells a small amount of processed but un-threshed flue-cured and burley tobacco in loose-leaf and bundle form to certain customers. • Other Products and Services primarily consists of e-liquid products and industrial hemp and included, for periods prior to the Order Date, the Canadian Cannabis Subsidiaries. E-liquids and industrial hemp products are sold through retailers and directly to consumers via e-commerce platforms and other distribution channels. The Canadian Cannabis Subsidiaries collectively operate businesses, under licenses issued by Health Canada, for the production and sale of cannabis products to retailers in Canada. The following summarizes segment information: Successor Predecessor Three months ended September 30, 2021 One month ended September 30, 2020 Two months ended August 31, 2020 Sales and other operating revenues: Leaf - North America $ 90,521 $ 19,977 $ 27,837 Leaf - Other Regions 300,434 96,988 152,758 Other Products and Services 3,246 869 4,196 Total sales and other operating revenues $ 394,201 $ 117,834 $ 184,791 Operating income (loss): Leaf - North America $ 8,502 $ 905 $ 1,210 Leaf - Other Regions 9,881 3,892 5,153 Other Products and Services ( 12,929 ) ( 13,263 ) ( 6,724 ) Total operating income (loss) $ 5,454 $ ( 8,466 ) $ ( 361 ) Successor Predecessor Six months ended September 30, 2021 One month ended September 30, 2020 Five months ended August 31, 2020 Sales and other operating revenues: Leaf - North America $ 140,289 $ 19,977 $ 57,734 Leaf - Other Regions 580,524 96,988 380,497 Other Products and Services 6,678 869 9,369 Total sales and other operating revenues $ 727,491 $ 117,834 $ 447,600 Operating income (loss): Leaf - North America $ 11,098 $ 905 $ 376 Leaf - Other Regions 21,821 3,892 ( 1,028 ) Other Products and Services ( 19,261 ) ( 13,263 ) ( 43,305 ) Total operating income (loss) $ 13,658 $ ( 8,466 ) $ ( 43,957 ) Successor September 30, 2021 September 30, 2020 March 31, 2021 Segment assets: Leaf - North America $ 315,593 $ 271,593 $ 247,265 Leaf - Other Regions 1,293,640 1,275,117 1,204,993 Other Products and Services 66,323 191,589 87,204 Total assets $ 1,675,556 $ 1,738,299 $ 1,539,462 -43- 25. Subsequent Events Operating and Reportable Segment Considerations The Company is reevaluating its operating and reportable segments under ASC Topic 280 – Segment Reporting following the effectiveness of the Plan in August 2020, the appointment of a new Board of Directors in fiscal 2021, the outcomes achieved from cost savings initiatives implemented in fiscal 2021, the Company's exit from its industrial hemp, CBD, and Canadian cannabis businesses in 2021, and the impact the COVID-19 pandemic has had on the Company's global operations. These events are changing how the Company is managed and the information used by Management to assess the Company's performance and allocation of its resources. The Company expects to conclude this evaluation during the three months ended December 31, 2021. -44-