What changed in this filing

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Item 1. Financial Statements

2022-11-10 compared with 2022-08-11 · 175 added, 139 removed, 479 unchanged (40% of the section changed)

3 unchanged sentences

Condensed Consolidated Statements of Operations

(in thousands, except per share data) Three months ended June 30, 2022 Three months ended June 30, 2021

Three Months Ended Six Months Ended

September 30, September 30,

(in thousands, except per share data) 2022 2021 2022 2021

Sales and other operating revenues $ 508,278 $ 394,201 $ 852,183 $ 727,491

2 unchanged sentences

Selling, general, and administrative expenses 34,987 37,925 69,575 71,770

Other income, net 1,085 162

Other expense, net 1,151 1,816 66 1,654

Restructuring and asset impairment charges 4,045 6,859 4,345 7,092

1 unchanged sentence

Loss on deconsolidation/disposition of subsidiaries 49 2,456 648 2,456

Loss on pension settlement 2,588 — 2,588 —

Interest expense, net 28,814 28,477 54,288 55,317

3 unchanged sentences

Net loss ( 1,550 ) ( 10,023 ) ( 16,055 ) ( 21,651 )

Net income (loss) attributable to noncontrolling interests 158 ( 120 )

Net (loss) income attributable to noncontrolling interests ( 13 ) ( 342 ) 145 ( 462 )

Net loss attributable to Pyxus International, Inc.

8 unchanged sentences

Condensed Consolidated Statements of Comprehensive Loss

(in thousands) Three months ended June 30, 2022 Three months ended June 30, 2021

Three Months Ended Six Months Ended

September 30, September 30,

(in thousands) 2022 2021 2022 2021

Net loss $ ( 1,550 ) $ ( 10,023 ) $ ( 16,055 ) $ ( 21,651 )

1 unchanged sentence

Foreign currency translation adjustment ( 4,801 ) ( 1,591 ) ( 3,854 ) ( 902 )

Pension and other postretirement benefit plans ( 1,562 ) ( 512 ) ( 1,562 ) ( 512 )

Cash flow hedges ( 1,768 ) ( 2,896 ) ( 3,271 ) 1,432

1 unchanged sentence

Total comprehensive loss ( 9,681 ) ( 15,022 ) ( 24,742 ) ( 21,633 )

Comprehensive income (loss) attributable to noncontrolling interests 158 ( 120 )

Comprehensive (loss) income attributable to noncontrolling interests ( 13 ) ( 342 ) 145 ( 462 )

Comprehensive loss attributable to Pyxus International, Inc.

4 unchanged sentences

Condensed Consolidated Balance Sheets

(in thousands) June 30, 2022 June 30, 2021 March 31, 2022

(in thousands) September 30, 2022 September 30, 2021 March 31, 2022

Current assets

43 unchanged sentences

Retained deficit ( 235,013 ) ( 157,883 ) ( 218,813 )

Accumulated other comprehensive income (loss) 3,248 ( 1,716 ) 3,804

Accumulated other comprehensive (loss) income ( 4,883 ) ( 6,715 ) 3,804

Total stockholders’ equity of Pyxus International, Inc.

6 unchanged sentences

and Subsidiaries

Condensed Statements of Consolidated Stockholders' Equity

Accumulated Other Comprehensive Income (Loss)

Condensed Consolidated Statements of Stockholders' Equity

Accumulated Other Comprehensive (Loss) Income

(in thousands) Common

7 unchanged sentences

Other — — — — — ( 3,052 ) ( 3,052 )

Other comprehensive loss, net of tax — — 947 — ( 1,503 ) — ( 556 )

Other comprehensive income (loss), net of tax — — 947 — ( 1,503 ) — ( 556 )

Balance, June 30, 2022 390,290 ( 233,476 ) ( 7,926 ) 6,328 4,846 3,196 163,258

Net loss attributable to Pyxus International, Inc.

— ( 1,537 ) — — — ( 13 ) ( 1,550 )

Other comprehensive loss, net of tax — — ( 4,801 ) ( 1,562 ) ( 1,768 ) — ( 8,131 )

Balance, September 30, 2022 $ 390,290 $ ( 235,013 ) $ ( 12,727 ) $ 4,766 $ 3,078 $ 3,183 $ 153,577

Balance, March 31, 2021 $ 391,089 $ ( 136,686 ) $ ( 4,649 ) $ 541 $ ( 2,625 ) $ 6,270 $ 253,940

4 unchanged sentences

Balance, June 30, 2021 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 $ 391,089 $ ( 157,883 ) $ ( 5,551 ) $ 29 $ ( 1,193 ) $ 5,728 $ 232,219

See "Notes to Condensed Consolidated Financial Statements"

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

(in thousands) Three months ended June 30, 2022 Three months ended June 30, 2021

Six Months Ended

(in thousands) September 30, 2022 September 30, 2021

Operating Activities:

2 unchanged sentences

Depreciation and amortization 10,284 8,170

Loss on deconsolidation/disposition of subsidiaries 599 —

Debt amortization/interest 10,401 11,656

Loss on foreign currency transactions 970 2,605

Income from unconsolidated affiliates, net of dividends 7,773 10,567

Asset impairment charges 4,035 5,689

Loss on deconsolidation/disposition of subsidiaries 648 2,456

Loss on pension settlement 2,588 —

Income (loss) from unconsolidated affiliates, net of dividends 6,217 9,248

Changes in operating assets and liabilities, net

12 unchanged sentences

Purchases of property, plant, and equipment ( 5,426 ) ( 8,568 )

Proceeds from sale of property, plant, and equipment 2,114 1,571

Collections on beneficial interests on securitized trade receivables 76,209 82,649

DIP loan to deconsolidated subsidiary — ( 5,229 )

Collection of DIP loan from deconsolidated subsidiary — 10,996

Proceeds from settlement of debt claims from deconsolidated subsidiaries 2,011 —

2 unchanged sentences

Financing Activities:

Net proceeds and repayments from short-term borrowings 170,419 29,015

Net proceeds from short-term borrowings 176,302 85,047

Proceeds from DDTL facility — 117,600

Repayment of DDTL facility ( 110,250 ) —

Proceeds from term loan facility 100,000 —

Proceeds from revolving loan facilities 45,000 —

Repayment of revolving loan facilities ( 80,000 ) ( 11,000 )

Debt issuance costs ( 5,544 ) ( 6,300 )

Fees paid to refinance the DDTL facility ( 4,000 ) —

Other, net 340 126

1 unchanged sentence

Effect of exchange rate changes on cash 3,894 ( 1,223 )

Decrease in cash, cash equivalents, and restricted cash ( 26,378 ) ( 15,193 )

Pyxus International, Inc.

and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Six Months Ended

(in thousands) September 30, 2022 September 30, 2021

(Decrease) increase in cash, cash equivalents, and restricted cash ( 85,541 ) 33,340

Cash and cash equivalents at beginning of period 198,777 92,705

14 unchanged sentences

Revenue Recognition

Restructuring and Asset Impairment

Loss Per Share

45 unchanged sentences

During processing, ownership remains with the customers.

All Other revenue is primarily composed of revenue from the sale of e-liquids and non-tobacco agriculture product revenue.

All Other revenue is primarily composed of revenue from the sale of e-liquids and non-tobacco agriculture products.

The following disaggregates sales and other operating revenues by major source, with the All Other category being included for purposes of reconciliation of the respective balances below of the Leaf segment (the Company's sole reportable segment) to the condensed consolidated financial statements:

Three months ended June 30, 2022 Three months ended June 30, 2021

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

Product revenue $ 475,599 $ 357,716 $ 798,483 $ 669,457

4 unchanged sentences

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

Three months ended June 30, 2022 Three months ended June 30, 2021

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

Balance, beginning of period $ ( 23,330 ) $ ( 21,133 ) $ ( 24,541 ) $ ( 20,900 )

4 unchanged sentences

Trade receivables, net $ 205,024 $ 204,927 $ 205,024 $ 204,927

Restructuring and Asset Impairment Charges

The Company continued its focus on cost saving initiatives.

The employee separation and asset impairment charges for the periods ended September 30, 2022 were primarily related to the restructuring of certain non-leaf agriculture operations.

The employee separation and asset impairment charges for the periods ended September 30, 2021 were 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:

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

Employee separation charges $ 10 $ 1,256 $ 310 $ 1,403

Asset impairment and other non-cash charges 4,035 5,603 4,035 5,689

Restructuring and asset impairment charges $ 4,045 $ 6,859 $ 4,345 $ 7,092

The Company's quarterly provision for income taxes has generally been calculated using the annual effective tax rate method ("AETR method"), which applies an estimated annual effective tax rate to pre-tax income or loss.

The AETR method was used to calculate the provision for income taxes for the prior fiscal years, for which the Company reported income tax benefits in each prior reporting period.

As of June 30, 2022, the AETR method produced an unreliable estimate of the Company’s annual effective tax rate;

As of September 30, 2022, the AETR method produced an unreliable estimate of the Company’s annual effective tax rate;

therefore, the Company recorded its interim income tax provision using the discrete method, as allowed under ASC 740-270, Income Taxes - Interim Reporting .

Using the discrete method, the Company determined current and deferred income tax expense as if the three-month interim period of the current fiscal year were an annual period.

The effective tax rate for the three months ended June 30, 2022 and 2021 was 4.5 % and 45.3 %, respectively.

For the three months ended June 30, 2022 and 2021, the difference between the Company’s effective rate and the U.S.

Using the discrete method, the Company determined current and deferred income tax expense as if the six-month interim period of the current fiscal year were an annual period.

The effective tax rate for the six months ended September 30, 2022 and 2021 was 8.9 % and 51.2 %, respectively.

For the six months ended September 30, 2022 and 2021, the difference between the Company’s effective rate and the U.S.

statutory rate of 21.0% is primarily due to the impact of net foreign exchange effects, non-deductible interest, and variations in the expected jurisdictional mix of earnings.

1 unchanged sentence

The following summarizes the computation of loss per share:

Three months ended June 30, 2022 Three months ended June 30, 2021

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

Basic and diluted loss per share:

5 unchanged sentences

The following summarizes the composition of inventories, net:

June 30, 2022 June 30, 2021 March 31, 2022

September 30, 2022 September 30, 2021 March 31, 2022

Processed tobacco $ 712,078 $ 605,424 $ 517,613

7 unchanged sentences

("Figr Brands"), and Canada’s Island Garden Inc.

("Figr East," and together with Figr Norfolk and Figr Brands, the "Canadian Cannabis Subsidiaries"), which, prior to their sale, were indirect subsidiaries 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.

("Figr East," and together with Figr Norfolk and Figr Brands, the "Canadian Cannabis Subsidiaries"), which, prior to their disposition, were indirect subsidiaries 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").

3 unchanged sentences

GAAP) of the Canadian Cannabis Subsidiaries at that time, and the deconsolidation on January 20, 2021 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.

Prior to the deconsolidation of the Canadian Cannabis Subsidiaries, they comprised an operating segment within the Other Products and Services reportable segment, which upon the Company's reevaluation of operating and reportable segments effective during the fourth quarter of the year ended March 31, 2022 is presented in the All Other category.

Prior to the deconsolidation of the Canadian Cannabis Subsidiaries, they comprised an operating segment within the Other Products and Services reportable segment, which upon the Company's reevaluation of operating and reportable segments effective during the fourth quarter of the fiscal year ended March 31, 2022 is presented in the All Other category.

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

14 unchanged sentences

Equity Method Investments

The following summarizes the Company's equity method investments as of June 30, 2022:

Investee Name Location Primary Purpose The Company's Ownership Percentage Basis Difference

The following summarizes the Company's equity method investments as of September 30, 2022:

Investee Name Location Primary Purpose Ownership Percentage Basis Difference

Adams International Ltd.

9 unchanged sentences

The following summarizes financial information for these equity method investments:

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

Operations statement:

Three months ended June 30, 2022 Three months ended June 30, 2021

Sales $ 62,275 $ 32,513 $ 131,657 $ 63,945

2 unchanged sentences

Company's dividends received 1 18 11,523 8,866

September 30, 2022 September 30, 2021 March 31, 2022

Balance sheet:

June 30, 2022 June 30, 2021 March 31, 2022

Current assets $ 414,911 $ 280,561 $ 375,015

6 unchanged sentences

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

June 30, 2022 June 30, 2021 March 31, 2022

September 30, 2022 September 30, 2021 March 31, 2022

Investments in variable interest entities $ 81,988 $ 80,205 $ 88,118

3 unchanged sentences

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

Three months ended June 30, 2022

Six Months Ended September 30, 2022

Weighted Average Remaining Useful Life Beginning Carrying Amount, Net Amortization Expense Ending Intangible Assets, Net

15 unchanged sentences

The following summarizes debt and notes payable:

June 30, June 30, March 31,

September 30, September 30, March 31,

(in thousands) Interest Rate 2022 2021 2022

3 unchanged sentences

Exit ABL Credit Facility 5.8 % (1)

Term Loan Facility (2)

DDTL Facility 10.7 % (1)

14 unchanged sentences

Long-term debt 646,125 543,233 580,477

$ 692,558 $ 672,479 $ 688,333

Total $ 646,265 $ 665,159 $ 688,333

Letters of credit $ 14,292 $ 9,244 $ 9,038

(1) Weighted average rate for the trailing twelve months ended June 30, 2022.

As the ABL Credit Facility has not been outstanding for a trailing twelve-month period, the interest rate is the weighted average rate from inception through June 30, 2022.

(1) Weighted average rate for the trailing twelve months ended September 30, 2022.

As the ABL Credit Facility and the Term Loan Facility have not been outstanding for a trailing twelve-month period, the interest rate is the weighted average rate from inception through September 30, 2022.

(2) Balance of $ 96,464 is net of original issue discount of $ 3,536 .

Total repayment will be $ 110,250 , which includes a $ 5,250 exit fee payable upon repayment.

Total repayment will be $ 100,000 , subject to a 2.0 % exit fee payable upon repayment occurring after July 28, 2023.

(3) Balance of $ 272,621 is net of original issue discount of $ 8,222 .

Total repayment will be $ 280,844 .

(4) The aggregate balance of the Term Loan Credit Facility of $ 220,518 includes $ 5,436 of accrued paid-in-kind interest.

(4) The aggregate balance of the Exit Term Loan Credit Facility of $ 221,606 includes $ 5,932 of accrued paid-in-kind interest.

(5) Primarily foreign seasonal lines of credit.

3 unchanged sentences

The ABL Credit Facility includes a $ 20,000 uncommitted accordion feature that permits Pyxus Holdings, under certain conditions, to solicit the lenders under the ABL Credit Facility to provide additional revolving loan commitments to increase the aggregate amount of the revolving loan commitments under the ABL Credit Facility not to exceed a maximum principal amount of $ 120,000 .

The ABL Credit Facility matures, subject to extension on terms and conditions set forth in the ABL Credit Agreement, on the earlier of February 8, 2027 or 90 days prior to the earliest maturity of obligations owing under the Exit Term Loan Credit Agreement and the Indenture.

A detailed description of the ABL Credit Agreement is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2022.

At June 30, 2022, Pyxus Holdings was in compliance with the covenants under the ABL Credit Agreement.

At September 30, 2022, Pyxus Holdings was in compliance with the covenants under the ABL Credit Agreement.

Exit ABL Credit Facility

On August 24, 2020, Pyxus Holdings entered into the Exit ABL Credit Agreement to establish the Exit ABL Credit Facility.

The Exit 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.

The Exit 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.

On February 8, 2022, Pyxus Holdings terminated the Exit ABL Credit Agreement and repaid $ 56,500 outstanding thereunder with proceeds from the initial borrowing under the ABL Credit Facility.

10 unchanged sentences

A detailed description of the DDTL Facility Credit Agreement is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2022.

At June 30, 2022, Intabex and each Guarantor was in compliance with the covenants under the DDTL Facility Credit Agreement.

As described below, the DDTL Facility Credit Agreement was amended and restated on July 28, 2022.

The portion of the DDTL Facility that was refinanced on a long-term basis, effective July 28, 2022, is classified as noncurrent and recorded in Long-term debt within the condensed consolidated balance sheet as of June 30, 2022.

Amendment and Restatement of DDTL Facility Credit Agreement

On June 2, 2022, Intabex, the Company and the Guarantors entered into an Amendment and Restatement Agreement dated as of June 2, 2022 (the "Amendment and Restatement Agreement") with the DDTL Facility Lenders and the DDTL Agent to, subject to the satisfaction of customary closing conditions, amend and restate the DDTL Facility Credit Agreement as set forth in the form of an Amended and Restated Term Loan Credit Agreement (the "Amended Credit Agreement"), appended to the Amendment and Restatement Agreement, among (i) Intabex, as borrower, (ii) the Company and the Guarantors, (iii) the DDTL Facility Lenders and any other lender that becomes a party thereto (collectively, the "Term Loan Lenders"), and (iv) the DDTL Agent, as administrative agent and collateral agent.

On July 28, 2022, following the satisfaction of the conditions to effectiveness specified in the Amendment and Restatement Agreement, the amendment and restatement of the DDTL Facility Credit Agreement by the Amended Credit Agreement became effective.

See " Note 20.

Subsequent Events " for additional information.

On July 28, 2022 (the "Amendment and Restatement Effectiveness Date"), following the satisfaction of the conditions to effectiveness specified in the Amendment and Restatement Agreement, the amendment and restatement of the DDTL Facility Credit Agreement by the Amended Credit Agreement became effective.

The Amended Credit Agreement establishes a $ 100,000 term loan credit facility (the "Term Loan Facility") and requires that Intabex use the net proceeds of the loans made thereunder (the "Term Loans") and other funds to repay in full its obligations under the DDTL Facility Credit Agreement, including the outstanding principal of, and accrued and unpaid interest on, borrowings under the DDTL Facility on the Amendment and Restatement Effectiveness Date and the payment of fees and expenses incurred in connection with repaying such borrowings and entering into the Amended Credit Agreement.

The Term Loans mature on December 2, 2023.

The Amended Credit Agreement provides that the Term Loans may be prepaid at any time, with a 2.0 % fee due with respect to any principal payment made after the one-year anniversary of the Amendment and Restatement Effectiveness Date, including a payment made at maturity.

3 unchanged sentences

Pursuant to the Amended Credit Agreement, the Term Loan Lenders received on the Amendment and Restatement Effectiveness Date a non-refundable commitment fee equal to 3.0 % of the aggregate commitments under the Term Loan Facility and a closing fee equal to 1.0 % of the aggregate commitments under the Term Loan Facility, as original issue discount.

The Term Loans mature on December 2, 2023.

Under the Amended Credit Agreement, the obligations of Intabex under the Amended Credit Agreement (and certain related obligations) continue to be guaranteed and secured by the same guarantors of, and the same collateral securing, Intabex’s obligations under the DDTL Facility Credit Agreement.

At September 30, 2022, Intabex and each of the Guarantors was in compliance with the covenants under the Amended Credit Facility.

Related Party Transactions

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

Based on a Schedule 13D/A filed with the SEC on October 19, 2022 by Glendon Capital Management, L.P.

(the "Glendon Investor"), Glendon Opportunities Fund, L.P.

5 unchanged sentences

is the investment manager of certain funds and reported beneficial ownership of 2,405 shares of the Company’s common stock on December 31, 2021, representing approximately 9.6 % of the outstanding shares of the Company’s common stock.

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

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

Fallon is a Managing Principal at Monarch Alternative Capital LP.

A representative of the Glendon Investor and a representative of the Monarch Investor servce as directors of Pyxus.

The DDTL Facility Credit Agreement, the Amendment and Restatement Agreement, the Amended Credit Agreement and any and all borrowings under the DDTL Facility Credit Agreement and the Amended Credit Agreement 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.

1 unchanged sentence

On the August 24, 2020, Pyxus Holdings issued approximately $ 280,844 in aggregate principal amount of the Notes to holders of Allowed First Lien Notes Claims pursuant to the Indenture dated as of August 24, 2020 (the "Indenture") among Pyxus Holdings, the initial guarantors party thereto, and Wilmington Trust, National Association, as trustee and collateral agent.

The Notes mature on August 24, 2024.

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, 2022.

At June 30, 2022, Pyxus Holdings was in compliance with the covenants under the Indenture.

At September 30, 2022, Pyxus Holdings was in compliance with the covenants under the Indenture.

Exit Term Loan Credit Facility

1 unchanged sentence

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

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

A detailed description of the Exit Term Loan Credit Agreement and Exit Term Loan Credit Facility is included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2022.

At June 30, 2022, Pyxus Holdings was in compliance with the covenants under the Exit Term Loan Credit Agreement.

At September 30, 2022, Pyxus Holdings was in compliance with the covenants under the Exit Term Loan Credit Agreement.

Short-Term Seasonal Lines of Credit

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

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

Excluding all long-term credit agreements, the Company typically finances its foreign operations with uncommitted 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 365 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 trade receivables and inventories as collateral.

African Lines of Credit

On June 30, 2022, 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 Fourth Amendment and Restatement Agreement dated as of June 27, 2022 (the "Restated TDB Agreement") with Eastern and Southern African Trade and Development Bank ("TDB") to amend and restate the Third Amendment and Restatement Agreement dated August 12, 2021 among them.

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 $ 100,000 , a lending commitment with respect to the line of credit of the Company’s Tanzania subsidiary of $ 70,000 , and a lending commitment with respect to the line of credit of the Company’s Zambia subsidiary of $ 15,000 , in each case with current borrowing availability reduced by the

amount of outstanding loans borrowed under the respective prior-existing line of credit with TDB.

The prior-existing outstanding loans under the Restated TDB Agreement bear interest at LIBOR plus 6.0 % and new loans made under the Restated TDB Agreement bear interest at LIBOR plus 5.5 %.

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

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

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, Inc., guarantee the obligations of the African Subsidiary Borrowers under the Restated TDB Agreement.

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

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

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

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

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

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

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

• Grant liens on assets;

• 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;

• 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 June 30, 2022, the Company and its subsidiaries party to the Restated TDB Agreement were in compliance with all such covenants under the Restated TDB Agreement and $ 55,642 was available for borrowing under the Restated TDB Agreement, after reducing availability by the aggregate borrowings under the Restated TDB Agreement of $ 129,358 outstanding on that date.

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

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

Certain of the foreign seasonal lines of credit are secured by trade receivables and inventories as collateral and are guaranteed by the Company and certain of its subsidiaries.

As of September 30, 2022, the total borrowing capacity under individual foreign seasonal lines of credit range up to $ 148,000 , which includes the lines of credit of certain of the Company's African subsidiaries with Eastern and Southern African Trade and Development Bank ("TDB").

As of September 30, 2022, the aggregate amount available for borrowing under the seasonal lines of credit was $ 165,900 .

At September 30, 2022, the Company, and its subsidiaries, were in compliance with the covenants associated with its short-term seasonal lines of credit.

Securitized Receivables

The Company sells trade receivables to unaffiliated financial institutions under three accounts receivable securitization facilities, which are subject to annual renewal.

The Company sells trade receivables to unaffiliated financial institutions under three accounts receivable securitization facilities, two of which are subject to annual renewal.

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

As of June 30, 2022, the investment limit of this facility was $ 100,000 of trade receivables.

As of September 30, 2022, the investment limit of this facility was $ 100,000 of trade receivables.

For the other facilities, the Company offers trade receivables for sale to an unaffiliated financial institution, which are then subject to acceptance by the unaffiliated financial institution.

As of June 30, 2022, the investment limit under the second facility was $ 80,000 of trade receivables.

As of June 30, 2022, the investment limit under the third facility was variable based on qualifying sales.

As of September 30, 2022, the investment limit under the second facility was $ 80,000 of trade receivables.

As of September 30, 2022, the investment limit under the third facility was variable based on qualifying sales.

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

As of June 30, 2022 and 2021, and March 31, 2022, trade

As of September 30, 2022 and 2021, and March 31, 2022, trade

receivables, net in the condensed consolidated balance sheets has been reduced by $ 5,108 , $ 4,843 , and $ 1,872 as a result of the net settlement, respectively.

1 unchanged sentence

Fair Value Measurements " for additional information.

The following summarizes the accounts receivable securitization information:

June 30, 2022 June 30, 2021 March 31, 2022

The following summarizes the Company's accounts receivable outstanding in the securitization facilities, which represents trade receivables sold into the program that have not been collected from the customer, and related beneficial interests, which represents the Company's residual interest in receivables sold that have not been collected from the customer:

September 30, 2022 September 30, 2021 March 31, 2022

Receivables outstanding in facility $ 149,523 $ 119,254 $ 131,092

Beneficial interests 22,842 26,055 28,072

Three months ended June 30, 2022 Three months ended June 30, 2021

Cash proceeds from the sale of trade receivables is comprised of a combination of cash and a deferred purchase price receivable.

Deferred purchase price receivable is realized after the collection of the underlying trade receivables sold by the purchasers.

The following summarizes the Company's cash purchase price and deferred purchase price:

Six Months Ended

September 30,

Cash proceeds for the period ended:

5 unchanged sentences

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

June 30, 2022 June 30, 2021 March 31, 2022

September 30, 2022 September 30, 2021 March 31, 2022

Amounts guaranteed (not to exceed) $ 103,434 $ 93,982 $ 114,208

3 unchanged sentences

Amounts due to local banks on behalf of suppliers for government subsidized rural credit financing 102 — 15,781

(1) Most of the guarantees outstanding at June 30, 2022 expire within one year .

(1) Most of the guarantees outstanding at September 30, 2022 expire within one year .

Derivative Financial Instruments

1 unchanged sentence

These contracts are for green tobacco purchases, processing costs, and selling, general, and administrative expenses.

The Company recorded a net gain of $ 862 and $ 415 from its derivative financial instruments in cost of goods and services sold for the three months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022 and 2021, the Company recorded current derivative assets of $ 560 and $ 4,896 within other current assets, respectively.

Dollar notional amount of derivative contracts outstanding as of June 30, 2022 and 2021 was $ 7,259 and $ 53,436 , respectively.

The Company recorded a net gain of $ 1,848 and $ 2,710 from its derivative financial instruments in cost of goods and services sold for the three and six months ended September 30, 2022, respectively.

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

As of September 30, 2022 and 2021, the Company recorded current derivative assets of $ 0 and $ 1,523 within other current assets and current derivative liabilities of $ 531 and $ 634 within accrued expenses and other current liabilities, respectively.

Dollar notional amount of derivative contracts outstanding as of September 30, 2022 and 2021 was $ 32,000 and $ 72,522 , respectively.

Fair Value Measurements

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

June 30, 2022 June 30, 2021 March 31, 2022

Total Total Total

Level 2 Level 3 at Fair Value Level 2 Level 3 at Fair Value Level 2 Level 3 at Fair Value

September 30, 2022 September 30, 2021 March 31, 2022

Level 2 Level 3 Total

Value Level 2 Level 3 Total

Financial Assets:

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Financial Liabilities:

Derivative financial instruments $ 531 $ — $ 531 $ 634 $ 634 $ — $ — $ —

Long-term debt 417,542 577 418,119 446,770 3,127 449,897 447,843 246 448,089

2 unchanged sentences

The following summarizes the reconciliation of changes in Level 3 instruments measured on a recurring basis:

Three months ended June 30, 2022 Three months ended June 30, 2021

Three Months Ended

September 30, 2022 September 30, 2021

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

3 unchanged sentences

Additions 41,816 — — — — —

(Losses) gains recognized in earnings ( 982 ) — ( 26 ) ( 902 ) — 25

Losses recognized in earnings ( 2,341 ) ( 83 ) ( 1,068 ) ( 1,479 ) — ( 215 )

Ending balance $ 22,842 $ 577 $ 1,206 $ 26,056 $ 3,127 $ 343

For the three months ended June 30, 2022 and 2021, the impact to earnings attributable to the change in unrealized losses on securitized beneficial interests was $ 618 and $ 319 , respectively.

Six Months Ended

September 30, 2022 September 30, 2021

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

Beginning balance $ 28,072 $ 246 $ 2,956 $ 19,370 $ 3,162 $ 1,740

Issuances of sales of receivables/guarantees — — 687 91,741 — 497

Settlements ( 72,756 ) — ( 1,343 ) ( 82,674 ) ( 37 ) ( 1,704 )

Additions 71,082 370 — — 2 —

Losses recognized in earnings ( 3,556 ) ( 39 ) ( 1,094 ) ( 2,381 ) — ( 190 )

Ending balance $ 22,842 $ 577 $ 1,206 $ 26,056 $ 3,127 $ 343

For the six months ended September 30, 2022 and 2021, the impact to earnings attributable to the change in unrealized losses on securitized beneficial interests was $ 597 and $ 826 , respectively.

Pension and Other Postretirement Benefits

3 unchanged sentences

Termination of the U.S.

Pension Plan is a twelve -to- eighteen month process.

The Company will settle benefits directly with vested participants electing a lump sum payout and purchase a group annuity contract to administer future payments to the remaining U.S.

Pension Plan is expected to occur during the three-month period ending December 31, 2022.

During the three months ended September 30, 2022, the Company settled benefits with vested participants that elected a lump sum payout and made a cash contribution of $ 5,300 to fully fund the U.S.

Pension Plan's liabilities in preparation to purchase a group annuity contract to administer future payments to the remaining U.S.

Pension Plan participants.

Based on the estimated value of assets held in the U.S.

Pension Plan, the Company estimates that a cash contribution of between $ 3,000 and $ 5,000 will be required to fully fund the U.S.

Pension Plan's liabilities upon termination.

In addition, the Company expects to record a pension settlement charge at plan termination, which includes the reclassification of unrecognized pension gains and losses within accumulated other comprehensive income (loss) to other (expense) income, net within the Company's condensed consolidated statements of operations.

The Company does not have an estimate for this future settlement charge.

The amount of unrecognized pension gains within accumulated other comprehensive income (loss) related to the U.S.

Pension Plan is approximately $ 5,401 at June 30, 2022.

In addition, the Company recorded a pension settlement charge of $ 2,588

during the three months ended September 30, 2022, which included the reclassification of unrecognized pension gains within accumulated other comprehensive loss within the Company's condensed consolidated statements of operations.

The amount of unrecognized pension gains within accumulated other comprehensive loss related to the remaining U.S.

pension plans is approximately $ 3,839 at September 30, 2022.

Contingencies and Other Information

1 unchanged sentence

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 June 30, 2022, the assessment for intrastate trade tax credits taken is $ 2,515 and the total assessment including penalties and interest is $ 9,386 .

At September 30, 2022, the assessment for intrastate trade tax credits taken is $ 2,436 and the total assessment including penalties and interest is $ 9,218 .

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 June 30, 2022, the assessment for intrastate trade tax credits taken is $ 2,175 and the total assessment including penalties and interest is $ 6,057 .

At September 30, 2022, the assessment for intrastate trade tax credits taken is $ 2,107 and the total assessment including penalties and interest is $ 5,936 .

The Company believes it has properly complied with Brazilian law and will contest any assessment through the judicial process.

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.

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.

5 unchanged sentences

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, they are being vigorously defending and the Company does not currently expect that any of them will have a material adverse effect on its business or financial position.

While the outcome of these matters cannot be predicted with certainty, they are being vigorously defended and the Company 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.

Related Party Transactions

1 unchanged sentence

The following summarizes sales and purchases transactions with related parties:

Three months ended June 30, 2022 Three months ended June 30, 2021

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

Sales $ 9,928 $ 8,176 $ 20,550 $ 18,813

Purchases 50,555 25,331 76,396 47,673

The Company included the following related party balances in its condensed consolidated balances sheets:

June 30, 2022 June 30, 2021 March 31, 2022 Location in the Condensed Consolidated Balance Sheets

The Company included the following related party balances in its condensed consolidated balance sheets:

September 30, 2022 September 30, 2021 March 31, 2022 Location in the Condensed Consolidated Balance Sheets

Accounts receivable, related parties $ 2,657 $ 5,611 $ 1,896 Other receivables

10 unchanged sentences

On June 2, 2022, Intabex, the Company and the Guarantors entered into an Amendment and Restatement Agreement with the DDTL Facility Lenders and the DDTL Agent to amend and restate the DDTL Facility Credit Agreement as set forth in Amended Credit Agreement, which became effective on July 28, 2022 (see " Note 12.

Debt Arrangements " and " Note 20.

Subsequent Events " for additional information).

Accrued expenses and other current liabilities as presented in the condensed consolidated balance sheets as of June 30, 2022 and 2021, and March 31, 2022, includes $ 5,953 , $ 6,361 , and $ 3,984 , respectively, of interest payable to the Glen don Investor,

the Monarch Investor, and funds managed by Owl Creek Asset Management, L.P.

Interest expense as presented in the condensed consolidated statements of operations includes $ 8,097 and $ 7,499 for the three months ended June 30, 2022 and 2021, respectively, that relates to the Glendon Investor, the Monarch Investor, and funds managed by Owl Creek Asset Management, L.P.

Debt Arrangements " for additional information).

In connection with the effectiveness of the Amended Credit Agreement, the Glendon Investor, the Monarch Investor, and a fund managed by Owl Creek Asset Management, L.P.

received $ 5,119 of the aggregate $ 5,250 in exit fee payments from the repayment of the principal amount under the DDTL Facility.

The Glendon Investor, the Monarch Investor and a fund managed by Owl Creek Asset Management, L.P.

received in the aggregate $ 3,900 of the total $ 4,000 in commitment and closing fees, which were reflected as original issue discount, paid to all Term Loan Lenders in connection with the aggregate $ 97,500 principal amount of the Term Loans made by them of the total $ 100,000 aggregate principal amount of the Term Loans made by all Term Loan Lenders.

Accrued expenses and other current liabilities as presented in the condensed consolidated balance sheets as of September 30, 2022 and 2021, and March 31, 2022, includes $ 4,085 , $ 4,369 , and $ 3,984 , respectively, of interest payable to the Glen don Investor, the Monarch Investor, and funds managed by Owl Creek Asset Management, L.P.

Interest expense as presented in the condensed consolidated statements of operations includes $ 8,133 and $ 16,230 for the three and six months ended September 30, 2022, respectively, and $ 8,537 and $ 16,036 for the three and six months ended September 31, 2021, respectively, that relates to the Glendon Investor, the Monarch Investor, and funds managed by Owl Creek Asset Management, L.P.

Transactions with the Deconsolidated Canadian Cannabis Subsidiaries

2 unchanged sentences

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 June 30, 2022 and 2021, and March 31, 2022, the outstanding loan balance under the Canadian DIP Facility was $ 0 , $ 11,082 , and $ 0 , respectively, and is included in other receivables within the condensed consolidated balance sheets.

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

1 unchanged sentence

The following summarizes segment information, with the All Other category being included for purposes of reconciliation of the respective balances below of the Leaf segment (the Company's sole reportable segment) to the condensed consolidated financial statements:

Three months ended June 30, 2022 Three months ended June 30, 2021

Three Months Ended Six Months Ended

September 30, September 30,

2022 2021 2022 2021

Sales and other operating revenues:

8 unchanged sentences

Consolidated operating income $ 27,136 $ 5,454 $ 34,088 $ 13,658

June 30, 2022 June 30, 2021 March 31, 2022

September 30, 2022 September 30, 2021 March 31, 2022

Segment assets:

3 unchanged sentences

Subsequent Events

On July 28, 2022, the Amended Credit Agreement became effective (see " Note 11.

Debt Arrangements " for additional information).

In connection with the effectiveness of the Amended Credit Agreement, the Glendon Investor, the Monarch Investor, and a fund managed by Owl Creek Asset Management, L.P.

received $ 5,119 of the aggregate $ 5,250 in exit fee payments from the repayment of the principal amount under the DDTL Facility.

The Glendon Investor, the Monarch Investor and a fund managed by Owl Creek Asset Management, L.P.

Securitized Receivables

On November 3, 2022, the investment limit of the second securitization facility described in " Note 13.

Securitized Receivables " was increased from $ 80,000 to $ 110,000 of trade receivables.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements