1 unchanged sentence
Any of the following risks could materially adversely affect our business, our operating results, our financial condition, and the actual outcome of matters as to which forward-looking statements are made in this Annual Report.
−Removed: Risks Related to Our Liquidity
−Removed: We may not be able to achieve our stated goals, which may adversely affect our liquidity.
−Removed: We face a number of risks, such as changes in economic conditions, continued impacts of the COVID-19 pandemic, changes in the leaf tobacco market, changes in regulations affecting the tobacco industry, other changes in demand for our products, and increasing expenses.
−Removed: We may need to raise additional funds through public or private debt or equity financing or other various
−Removed: means to fund our business, both at a holding-company level and the local short-term credit lines that fund the operating needs of our non-U.S.
−Removed: local leaf tobacco subsidiaries.
−Removed: Our access to necessary financing may be limited, if it is available at all.
−Removed: Therefore, adequate funds may not be available when needed or may not be available on favorable terms, or at all.
−Removed: Developments with respect to our liquidity needs and sources of liquidity could result in a deficiency in liquidity.
−Removed: Our liquidity requirements are affected by various factors from our core tobacco leaf business, including crop seasonality, foreign currency and interest rates, green tobacco prices, customer mix and shipping requirements, crop size, and quality.
−Removed: Our leaf tobacco business is seasonal, and purchasing, processing, and selling activities have several associated peaks where cash on-hand and outstanding indebtedness may vary significantly during the fiscal year.
−Removed: We anticipate periods in the next twelve months during which our liquidity needs will approach the levels of our anticipated available cash and permitted borrowings under our credit facilities.
−Removed: Developments affecting our liquidity needs, including with respect to the foregoing factors, and sources of liquidity, including impacts affecting our cash flows from operations (including as a result of delays with respect to the anticipated timing of shipments of leaf tobacco, whether due to the impact of COVID-19, customer preferences, or other reasons) and the availability of capital resources (including an inability to renew or refinance short-term operating lines of credit and other short-term indebtedness), may result in a deficiency in liquidity.
−Removed: To address a potential liquidity deficiency, we may continue to undertake plans to minimize cash outflows, which could include exiting operations that do not generate positive cash flow.
−Removed: It is possible that, depending on the occurrence of events affecting our liquidity needs and sources of liquidity, such plans may not be sufficient to adequately or timely address a liquidity deficiency.
−Removed: We may be unable to continue to access short-term operating credit lines to fund local operations on terms that are acceptable or at all.
−Removed: We have historically financed our non-U.S.
−Removed: local leaf tobacco operations with short-term operating credit lines at the local level.
−Removed: These operating lines are typically seasonal in nature, corresponding to the tobacco crop cycle in that location.
−Removed: Certain of these facilities are uncommitted in that the lenders have the right to cease making loans or demand payment of outstanding loans at any time.
−Removed: Moreover, as these facilities mature, local lenders may not renew them or otherwise offer replacement financing facilities.
−Removed: If local lenders lose confidence in us, they may cease making loans or demand payment of outstanding loans with respect to uncommitted facilities or, with respect to committed facilities, decline to renew or extend existing facilities, or require stricter terms and conditions with respect to future facilities.
−Removed: We may not find these terms and conditions acceptable or they may overly restrict our ability to conduct our businesses successfully.
−Removed: An inability to maintain adequate financing to fund our non-U.S.
−Removed: local leaf tobacco operations in any significant location could result in a significant decline in our revenues, profitability and cash flow and may require us to exit operations in that jurisdiction.
−Removed: Risks Related to our Indebtedness
−Removed: We have substantial debt which may adversely affect us by limiting future sources of financing, interfering with our ability to pay interest, and principal on our indebtedness and subjecting us to additional risks.
−Removed: We have a significant amount of indebtedness and d ebt service obligations.
−Removed: As of March 31, 2022, we had approximately $1,066.9 million in aggregate principal amount of indebtedness.
−Removed: This indebtedness included (i) approximately $90.0 million of outstanding borrowings pursuant to an ABL Credit Agreement (the " ABL Credit Agreement " ), dated as of February 8, 2022 by and among, amongst others, Pyxus, our subsidiaries Pyxus Parent, Inc., and Pyxus Holdings, Inc.
−Removed: ( " Pyxus Holdings " ), and certain subsidiaries of Pyxus Holdings, certain lenders party thereto and PNC Bank, National Association, as Administrative Agent and Collateral Agent to establish an asset-based revolving credit facility (the "ABL Credit Facility") which provides for revolving credit loans and letters of credit from time to time up to an initial maximum principal amount of $100.0 million subject to certain limitations, and matures 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 (each as defined below), (ii) approximately $219.5 million in aggregate principal amount of term loans (the " Exit Term Loans " ) under an Exit Term Loan Credit Agreement, dated as of August 24, 2020 (the " Exit Term Loan Credit Agreement " ), by and among, amongst others, Pyxus Holdings, certain lenders party thereto and Alter Domus (US) LLC, as administrative agent and collateral agent, which Term Loans mature on February 24, 2025, (iii) approximately $270.8 million in aggregate principal amount of 10.00% Senior Secured First Lien Notes due 2024 (the "Notes") of Pyxus Holdings pursuant to an Indenture (the "Indenture") dated as of August 24, 2020 among Pyxus Holdings, the initial guarantors party thereto (including Pyxus International, Inc.), and Wilmington Trust, National Association, as trustee, and collateral agent, which Notes mature on August 24, 2024, (iv) approximately $107.8 million in aggregate principal amount of term loans (the "DDTL Term Loans") under a delayed-draw term loan lending facility (as amended on May 21, 2021, the "DDTL Facility") established under a term loan credit agreement (the "DDTL Facility Credit Agreement") dated April 23, 2021 among Intabex Netherlands B.V.
−Removed: ("Intabex"), our indirect wholly owned subsidiary, as the borrower, the Company, Pyxus Holdings, Pyxus Parent, Inc., Alliance One International, LLC and Alliance One International Holdings, Ltd.
−Removed: as guarantors, and the lenders party thereto, including certain funds managed by Glendon Capital Management LP, Monarch Alternative Capital LP, and Owl Creek Asset Management, L.P., which mature on July 31, 2022, (v) approximately $71.6 million in aggregate outstanding borrowings under a Third Amendment and Restatement Agreement (the "TDB Facility Agreement") among Pyxus and certain of our subsidiaries, including subsidiaries in Malawi, Tanzania and Zambia, and Eastern and Southern African Trade and Development Bank ("TDB"), which TDB Facility
−Removed: Agreement terminates on June 30, 2024, unless terminated sooner at TDB's discretion on June 30, 2022 or June 30, 2023, and (vi) approximately $378.6 million in aggregate outstanding borrowings under local short-term operating lines of credit.
−Removed: Our substantial debt could have important consequences, including:
−Removed: • making it more difficult for us to satisfy our obligations with respect to the ABL Credit Facility, the Exit Term Loans, the Notes, the DDTL Facility, the TDB Facility Agreement and our other obligations;
−Removed: • requiring us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing the funds available for operations, working capital, capital expenditures, acquisitions, product development, and other purposes;
−Removed: • limiting our ability to obtain additional financing on satisfactory terms and to otherwise fund working capital, capital expenditures, debt refinancing, acquisitions, and other general corporate requirements;
−Removed: • hampering our ability to adjust to changing market conditions;
−Removed: • increasing our vulnerability to general adverse economic and industry conditions;
−Removed: • placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged;
−Removed: • limiting our flexibility in planning for, or reacting to, changes in our business, and the industries in which we operate;
−Removed: • restricting us from making strategic acquisitions or exploiting business opportunities;
−Removed: • exposing us to the risk of increased interest rates as borrowings under a substantial portion of our debt are subject to variable interest rates.
−Removed: We require a significant amount of cash to service our indebtedness.
−Removed: Our ability to generate cash depends on many factors beyond our control.
−Removed: We require a significant amount of cash to service our indebtedness and a substantial portion of our cash flow is required to fund the interest payments on our indebtedness.
−Removed: Our ability to service our indebtedness and to fund planned capital expenditures depends on our ability to generate cash.
−Removed: This is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control, including the continuing impact of shipping constraints related to the COVID-19 pandemic.
−Removed: Also, a substantial portion of our debt, including borrowings under the ABL Credit Facility, bears interest at variable rates.
−Removed: If market interest rates increase, variable-rate debt will create higher debt-service requirements, which would adversely affect our cash flow.
−Removed: We cannot assure you that our businesses will generate sufficient cash flow from operations or that future borrowings will be available to us under in an amount sufficient to enable us to service our indebtedness or to fund our other liquidity needs.
−Removed: We may not be able to refinance or renew our indebtedness, which may have a material adverse effect on our financial condition.
−Removed: We may not be able to renew or refinance our indebtedness, including indebtedness under the ABL Credit Facility, the Exit Term Loans, the Notes, the DDTL Facility (including any amendment and restatement thereof) or indebtedness under the TDB Facility Agreement, other seasonal credit lines, or other credit facilities, on substantially similar terms, or at all.
−Removed: Our ability to access short-term and long-term lending and capital markets to obtain, and the availability of acceptable terms and conditions of, financing are impacted by many factors, including:
−Removed: (i) our credit ratings;
−Removed: (ii) the liquidity and volatility of the overall lending and capital markets;
−Removed: and (iii) the current state of the economy, including the tobacco industry.
−Removed: There can be no assurances that we will be able to access the lending and capital markets to refinance our indebtedness.
−Removed: We may have to pay additional fees and expenses that we might not have to pay under normal circumstances, and we may have to agree to terms that could increase the cost of our debt structure.
−Removed: If we are unable to renew or refinance our indebtedness on terms that are not materially less favorable than the terms currently available to us or obtain alternative or additional financing arrangements, we may not be able to timely repay certain of our indebtedness, which may result in a default under other indebtedness.
−Removed: Failure to refinance or renew any material indebtedness would have a material adverse effect on our financial condition.
−Removed: We may not be able to satisfy the covenants included in our financing arrangements, which could result in the default of our outstanding debt obligations.
−Removed: The agreement governing the ABL Credit Facility includes certain restrictive covenants, a springing covenant requiring that our fixed charge coverage ratio be no less than 1.10 to 1.00 during any cash dominion period under the ABL Credit Agreement, and a covenant requiring Domestic Availability (as defined in the ABL Credit Agreement) greater than $20.0 million at all times until audited financial statements for fiscal year ending March 31, 2023 are delivered under the ABL Credit Agreement.
−Removed: Certain agreements governing our seasonal credit facilities, including the TDB Agreement, include financial and restrictive covenants applicable to the subsidiaries that borrow thereunder and in certain cases with respect to Pyxus.
−Removed: The agreements governing our other indebtedness, including the Exit Term Loan Credit Agreement, the Indenture and the DDTL Facility Credit Agreement, also include restrictive covenants.
−Removed: These covenants limit our ability to, among other things:
−Removed: • incur additional indebtedness or issue disqualified stock or preferred stock;
−Removed: • make investments;
−Removed: • pay dividends and make other restricted payments;
−Removed: • sell certain assets;
−Removed: • create liens;
−Removed: • consolidate, merge, sell or otherwise dispose of all or substantially all of their assets;
−Removed: • enter into transactions with affiliates;
−Removed: • designate subsidiaries as Unrestricted Subsidiaries (as defined in the ABL Credit Agreement, the Indenture and the Exit Term Loan Credit Agreement).
−Removed: Complying with these covenants may cause us to take actions that we otherwise would not take or not take actions that we otherwise would take.
−Removed: Our failure to comply with certain of these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of a substantial portion of our indebtedness, much of which is cross-defaulted to other indebtedness.
−Removed: In the past, we sought and obtained waivers and amendments under our then-existing financing arrangements to avoid future non-compliance with financial covenants and cure past defaults under restrictive covenants, including recent waivers with respect to financial covenants included in the TDB Facility Agreement and waivers under the Indenture, ABL Credit Facility and the Exit Term Loan Credit Agreement with respect to the commencement of the CCAA Proceeding and the dispositions with respect to the Canadian Cannabis Subsidiaries.
−Removed: We also paid significant fees to obtain certain of these waivers and consents.
−Removed: We cannot assure you that we will be able to maintain compliance with, or obtain waivers and amendments related to, financial or restrictive covenants in the future.
−Removed: Despite current indebtedness levels, we may still be able to incur substantially more debt.
−Removed: This could exacerbate further the risks associated with our significant leverage.
−Removed: We may be able to incur substantial additional indebtedness in the future to the extent permitted under the ABL Credit Agreement, the Exit Term Loan Credit Agreement, the Indenture and the DDTL Facility Credit Agreement.
−Removed: As of March 31, 2022 , $302.1 million was available for borrowing under our short and long-term credit facilities.
−Removed: If new debt is added to our current debt levels, the risks discussed above could intensify.
−Removed: Risks Related to the COVID-19 Pandemic
−Removed: We have been and will likely continue to be negatively impacted by the COVID-19 global pandemic and its related shipping constraints, labor shortages and supply-chain impacts.
−Removed: The COVID-19 pandemic has had, and may continue to have, an adverse impact on our business and consolidated financial results, and we are unable to determine the extent, duration, or nature at this time.
−Removed: The intensity, duration and governmental responses to the pandemic, as well as the pace of vaccination efforts and the emergence of new variants of the virus that cause COVID-19, are all highly uncertain and could contribute to the ultimate impact on our business.
−Removed: Among other things, the impact of the COVID-19 pandemic has resulted, and could continue to result, in:
−Removed: • Shipping constraints, including vessel and equipment availability, closure of port facilities due to quarantines, port congestion, and rising freight costs, which have resulted in delays in shipments to customers;
−Removed: • Disruptions in our supply chain or increased costs for certain materials or commodities;
−Removed: • Labor shortages and difficulties filling positions within our organization;
−Removed: • Greater cybersecurity risk and other fraud risks.
−Removed: Due to the scope of our operations, including emerging markets, and our sale to customers around the world, the impact of the COVID-19 pandemic on our operations and the demand for our products may not coincide with impacts experienced in the United States in the event that the impacts in the United States improve over time due to increased vaccinations or improved medical treatments.
−Removed: Accordingly, to the extent that the impact of the COVID-19 pandemic in the United States may improve over time, results of operations may continue to be adversely affected by COVID-19 impacts in other areas of the world.
−Removed: Risks Relating to Our Leaf Tobacco Operations
+Added: Risks Related to Our Leaf Tobacco Operations
Our reliance on a small number of significant customers may adversely affect our financial results.
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Demand for our leaf tobacco or processing services could be materially reduced if cigarette manufacturers make the decision to significantly vertically integrate their operations, either through acquisition of our competitors, establishing new operations or contracting directly with suppliers.
−Removed: In general, our results of operations have not been adversely affected by vertical integration
−Removed: initiatives, and some customers have reversed certain aspects of their previous vertical integration of operations.
+Added: In general, our results of operations have not been adversely affected by vertical integration initiatives, and some customers have reversed certain aspects of their previous vertical integration of operations.
However, further vertical integration by our customers could have a material adverse effect on our financial performance.
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These fluctuations result in varying volumes and sales in given periods, which also reduces your ability to compare our financial results in different periods or in the same periods in different years.
−Removed: Loss of confidence in us by our customers, farmers and other suppliers may have a material adverse impact on our business, financial condition, results of operations, and cash flows.
−Removed: If our customers, farmers and other suppliers lose confidence in us, they may seek to establish alternative commercial relationships.
+Added: Loss of confidence in us by our customers and suppliers may have a material adverse impact on our business, financial condition, results of operations, and cash flows.
+Added: If our customers and suppliers lose confidence in us, they may seek to establish alternative commercial relationships.
In addition, in such circumstances, our suppliers, farmers, vendors, counterparties and service providers may seek to renegotiate the terms of our agreements, attempt to terminate their relationships with us or require financial assurances from us.
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Two primary factors determine the market value of the tobacco suppliers deliver to us:
−Removed: the quantity of tobacco delivered and the quality of the tobacco delivered, both of which are subject to factors outside of our control at the time we
−Removed: make advances to suppliers.
+Added: the quantity of tobacco delivered and the quality of the tobacco delivered, both of which are subject to factors outside of our control at the time we make advances to suppliers.
Unsatisfactory quantities or quality of the tobacco delivered could result in losses with respect to advances to our tobacco suppliers or the deferral of those advances.
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A significant event impacting the condition or quality of a large amount of the tobacco crops we buy could make it difficult for us to sell such tobacco or to fill our customers’ orders.
+Added: Competition could erode our earnings.
+Added: The leaf tobacco industry is highly competitive.
+Added: Competition is based primarily on the prices charged for products and services as well as the merchant’s ability to meet customer specifications in the buying, processing, and financing of tobacco.
+Added: The loss or substantial reduction of any large or significant customer could reduce our earnings.
+Added: Although we are one of only two primary global independent publicly held leaf tobacco merchants, cigarette manufacturers also buy tobacco directly from local and regional suppliers.
+Added: We also face increasing competition from new local and regional independent leaf merchants with low fixed costs and overhead and good local customer connections, where the new entrants have been able to capitalize in the global transition to those markets.
+Added: Any of these sources of new competition may result in less tobacco available for us to purchase and process in the applicable markets.
+Added: Continued high inflation may adversely affect our profitability and the demand for our leaf tobacco products.
+Added: The economies of the United States and other nations have recently experienced the highest levels of consumer price inflation in decades.
+Added: Continued inflationary pressures may continue to increase our costs, including the cost of leaf tobacco that we purchase.
+Added: If these increased costs cannot successfully be passed on to our customers, many of which have significant negotiating power, our profitability and results of operations may be adversely affected.
+Added: In addition, since our leaf tobacco products are used in the manufacturing of tobacco consumer goods, consumer behavior that deprioritizes the purchase of tobacco consumer goods in response to inflationary increases in the price of such goods could result in reduced overall demand for consumer tobacco products and consequently for the leaf tobacco we provide to manufacturers, which could materially adversely affect our profitability, results of operations and financial position.
+Added: Risks Related to the Scope of Our International Operations
We face increased risks of doing business due to the extent of our international operations.
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Further, the imposition of governmental sanctions or other restrictions may preclude us from continuing to sell to certain customers or to source leaf tobacco from certain jurisdictions.
−Removed: For example, approximately $57.8 million of our revenue for the year ended March 31, 2022 was from direct sales to entities located in Russia.
−Removed: Governmental sanctions imposed in response to the invasion of Ukraine by Russia and additional sanctions imposed in response to the continuation or escalation of these
−Removed: hostilities could restrict or prohibit such sales, which would have an adverse effect on our profitability, results of operations and financial position.
−Removed: Other limitations imposed on such subsidiaries' ability to continue to sell to customers in Russia, whether through commercial, societal or other pressures, could similarly have an adverse effect on our profitability, results of operations and financial position.
−Removed: Failure of foreign banks in which our subsidiaries deposit funds or the failure to transfer funds or honor withdrawals may affect our results of operations.
−Removed: Funds held by our foreign subsidiaries are often deposited in their local banks.
−Removed: In addition, we maintain deposit accounts with numerous financial institutions around the world in amounts that exceed applicable governmental deposit insurance levels.
−Removed: Banks in certain foreign jurisdictions may be subject to a higher rate of failure or may not honor withdrawals of deposited funds.
−Removed: In addition, the countries in which these local banks operate may lack sufficient regulatory oversight or suffer from structural weaknesses in the local banking system.
−Removed: Due to uncertainties and risks relating to the political stability of certain foreign governments, these local banks also may be subject to exchange controls and therefore unable to perform transfers of certain currencies.
−Removed: If our ability to gain access to these funds was impaired, it could have a material adverse effect on our results of operations.
+Added: For example, governmental sanctions imposed in response to the invasion of Ukraine by Russia have adversely affected sales to customers impacted by the sanctions.
+Added: Similarly, the imposition of sanctions with respect to other jurisdictions, including sanctions imposed in response to conflict or threat of conflict in other regions could have a material adverse effect on our profitability, results of operations and financial position.
We are subject to the Foreign Corrupt Practices Act (the "FCPA") and we operate in jurisdictions that pose a high risk of potential FCPA violations.
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or foreign authorities also could have an adverse impact on our business, financial condition, and results of operations.
−Removed: In 2010, we entered into settlements with the SEC and the U.S.
−Removed: Department of Justice to resolve their investigations regarding potential criminal and civil violations of the FCPA.
−Removed: The settlements resulted in the disgorgement in profits and fines totaling $19.5 million, which have been paid.
−Removed: Both settlements also required us to retain an independent compliance monitor for a three-year term that was completed on September 30, 2013.
Our exposure to foreign tax regimes, and changes in U.S.
or foreign tax regimes, could adversely affect our business.
+Added: Our global exposure to tax regimes could adversely affect our business.
We do business in countries that have tax regimes in which the rules are not clear, are not consistently applied and are subject to sudden change.
−Removed: This is especially true with regard to international transfer pricing.
−Removed: Our earnings could be reduced by the uncertain and changing nature of these tax regimes.
−Removed: Certain of our subsidiaries are and may in the future be involved in tax matters in foreign countries.
−Removed: While the outcome of any of these existing matters cannot be predicted with certainty, we are vigorously defending them and do not currently expect that any of them will have a material adverse effect on our business or financial position.
+Added: Our earnings could be changed by the uncertain and changing nature of these tax regimes.
+Added: Certain of our subsidiaries are and may in the future be subject to audit, investigation, or other tax controversies.
+Added: While the outcome of such matters cannot be predicted with certainty, we do not currently expect that such matters will have a material adverse effect on our business or financial position.
However, should one or more of these matters be resolved in a manner adverse to our current expectation, the effect on our results of operations for a particular fiscal reporting period could be material.
−Removed: We seek to optimize our tax footprint across globally.
−Removed: The related benefits are contingent upon existing tax laws and regulations in the countries in which our operations are located.
−Removed: Future changes in domestic or international tax laws and regulations could adversely affect our ability to continue to realize these tax benefits.
Fluctuations in foreign currency exchange and interest rates could adversely affect our results of operations.
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We may incur a loss of business as a result of the devaluation of these currencies now or in the future.
−Removed: Competition could erode our earnings.
−Removed: The leaf tobacco industry is highly competitive.
−Removed: Competition is based primarily on the prices charged for products and services as well as the merchant’s ability to meet customer specifications in the buying, processing, and financing of tobacco.
−Removed: In addition, there is competition in all countries to buy the available tobacco.
−Removed: The loss or substantial reduction of any large or significant customer could reduce our earnings.
−Removed: In addition to the two primary global independent publicly held leaf tobacco merchants, the cigarette manufacturers also buy tobacco directly from local and regional suppliers.
−Removed: We also face increasing competition from new local and regional independent leaf merchants with low fixed costs and overhead and good local customer connections, where the new entrants have been able to capitalize in the global transition to those markets.
−Removed: Any of these sources of new competition may result in less tobacco available for us to purchase and process in the applicable markets.
−Removed: Continued high inflation may adversely affect our profitability and the demand for our leaf tobacco products.
−Removed: The economies of the United States and other nations have recently experienced the highest levels of consumer price inflation in decades.
−Removed: Continued inflationary pressures may continue to increase our costs, including the cost of leaf tobacco that we purchase.
−Removed: If these increased costs cannot successfully be passed on to our customers, many of which have significant negotiating power, our profitability and results of operations may be adversely affected.
−Removed: In addition, since our leaf tobacco products are used in the manufacture of tobacco consumer goods, consumer behavior that deprioritizes the purchase of tobacco consumer goods in response to inflationary increases in the price of such goods could result in reduced overall demand for consumer tobacco products and consequently for the leaf tobacco we provide to manufacturers, which could materially adversely affect of our profitability, results of operations and financial position.
−Removed: Risks Relating to Other Aspects of Our Operations
+Added: Risks Related to Other Aspects of Our Operations
We rely on internal and externally hosted information technology systems and disruption, failure, or security breaches of these systems could adversely affect our business.
2 unchanged sentences
Although we have disaster recovery plans and several intrusion preventive mitigating tools and services in-place, which are active inline services or are tested routinely, our portfolio of hardware and software products, solutions and services and our enterprise IT systems, including those hosted by service providers, may be vulnerable to damage or disruption caused by circumstances beyond our control, such as catastrophic events, power outages, natural disasters, computer system, or network failures, computer viruses or other malicious software programs, and cyber-attacks, including system hacking and other cyber-security breaches.
−Removed: For example, in April 2019, the Company discovered that the email accounts of two Canadian employees had been compromised resulting in the unauthorized access of customer and vendor data.
−Removed: These incidents were neither material nor compromised the Company’s other IT systems.
The failure or disruption of our IT systems to perform as anticipated for any reason could disrupt our business and result in decreased performance, significant remediation costs, transaction errors, loss of data, processing inefficiencies, downtime, litigation, and the loss of suppliers or customers.
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We may be required to obtain environmental permits from governmental authorities for certain of its current or proposed operations.
−Removed: We may not have been, nor may it be able to be at all times, in full compliance with such laws, regulations and permits.
+Added: We may not have been, nor may be able to be at all times, in full compliance with such laws, regulations and permits.
If we violate or fail to comply with these laws, regulations or permits, we could be fined or otherwise sanctioned by regulators.
3 unchanged sentences
Furthermore, our costs of complying with current and future environmental, health, and safety laws, or our liabilities arising from past or future releases of, or exposure to, regulated materials, may have a material adverse effect on our business, financial condition, and results of operations.
−Removed: Derivative transactions may expose us to potential losses and counterparty risk.
−Removed: We may, from time to time, enter into certain derivative transactions, including interest rate swaps and foreign exchange contracts.
−Removed: Changes in the fair value of these derivative financial instruments that are not accounted for as cash flow hedges are reported as income, and accordingly could materially affect our reported income in any period.
−Removed: In addition, the counterparties to these derivative transactions may be financial institutions or affiliates of financial institutions, and we would be subject to risks that these counterparties default under these transactions.
−Removed: In some of these transactions, our exposure to counterparty credit risk may not be secured by any collateral.
−Removed: Global economic conditions over the last few years have resulted in the actual or perceived failure or financial difficulties of many financial institutions, including bankruptcy.
−Removed: If one or more of the counterparties to one or more of our derivative transactions not secured by any collateral becomes subject to insolvency proceedings, we would become an unsecured creditor in those proceedings with a claim equal to our exposure at the time under those transactions.
−Removed: We cannot assure you of the financial stability or viability of our counterparties.
Increasing scrutiny and changing expectations from governments, as well as other stakeholders such as investors and customers, with respect to our environmental, social and governance ("ESG") policies, including sustainability policies, may impose additional costs on us or expose us to additional risks.
3 unchanged sentences
These may lead to increased expenditures for environmental controls, land use restrictions, reporting, and other conditions, which could have an adverse effect on our results of operations.
−Removed: In addition, a number of governments are considering due diligence procedures to ensure strict compliance with environmental, labor, and government regulations.
+Added: In addition, a number of governments have implement or are considering implementing due diligence procedures to ensure strict compliance with environmental, labor, and government regulations.
The European Union has proposed broad due diligence reporting requirements for all industries operating within Europe.
−Removed: The United States has called for a broader and more robust approach to labor compliance in foreign jurisdictions, which could include some of our strategic origins.
+Added: The United States has called for a broader and more
+Added: robust approach to labor compliance in foreign jurisdictions, which could include some of our strategic origins.
Due to general uncertainty regarding the timing, content, and extent of any such regulatory changes in the United States or abroad, we cannot predict the impact, if any, that these changes could have to our business, financial condition, and results of operations.
1 unchanged sentence
As a manufacturer and distributor of products that are ingested or otherwise consumed by humans, our e-liquids business faces the risk of exposure to product liability claims, regulatory action and litigation (including class proceedings and individual proceedings) if its products are alleged to have caused loss, injury or death.
−Removed: Our e-liquids business may be subject to these types of claims due to allegations that its products caused or contributed to injury, illness or death, made false, misleading or impermissible claims, failed to include adequate labelling and instructions for use or failed to include adequate warnings concerning possible side effects or interactions with other substances.
+Added: Our e-liquids business may be subject to these types of claims due to allegations that its products caused or contributed to injury, illness or death, made false, misleading or impermissible claims, failed to include adequate labeling and instructions for use or failed to include adequate warnings concerning possible side effects or interactions with other substances.
Previously unknown adverse reactions resulting from human consumption of these e-liquids products alone or in combination with other medications or substances could also occur.
1 unchanged sentence
Our e-liquids business may in the future have to recall certain of its products as a result of potential contamination and quality assurance concerns.
−Removed: A product liability claim or
−Removed: regulatory action against our e-liquids business could result in increased costs and could adversely affect its reputation and goodwill with its consumers.
+Added: A product liability claim or regulatory action against our e-liquids business could result in increased costs and could adversely affect its reputation and goodwill with its consumers.
We cannot assure you that product liability insurance can be maintained on acceptable terms or with adequate coverage against potential liabilities.
5 unchanged sentences
These circumstances create enhanced risk and exposure for the Company given the nature of its operations, the products it manufactures, distributes and sells, and its business environment.
−Removed: Risks Relating to the Ownership of Our Common Stock
+Added: Risks Related to Our Capital Structure
+Added: We may be unable to continue to access short-term operating credit lines to fund local operations on terms that are acceptable or at all.
+Added: We have historically financed our non-U.S.
+Added: local leaf tobacco operations with short-term operating credit lines at the local level.
+Added: These operating lines are typically seasonal in nature, corresponding to the tobacco crop cycle in that location.
+Added: Certain of these facilities are uncommitted in that the lenders have the right to cease making loans or demand payment of outstanding loans at any time.
+Added: Moreover, as these facilities mature, local lenders may not renew them or otherwise offer replacement financing facilities.
+Added: If local lenders lose confidence in us, they may cease making loans or demand payment of outstanding loans with respect to uncommitted facilities or, with respect to committed facilities, decline to renew or extend existing facilities, or require stricter terms and conditions with respect to future facilities.
+Added: We may not find these terms and conditions acceptable or they may overly restrict our ability to conduct our businesses successfully.
+Added: An inability to maintain adequate financing to fund our non-U.S.
+Added: local leaf tobacco operations in any significant location could result in a significant decline in our revenues, profitability and cash flow and may require us to exit operations in that jurisdiction.
+Added: We may not continue to have access to the capital markets to obtain long-term and short-term financing on acceptable terms and conditions.
+Added: We access the short-term capital markets and, from time to time, the long-term markets to obtain financing.
+Added: Our access to, and the availability of acceptable terms and conditions of, such financing are impacted by many factors, including:
+Added: (i) our credit ratings;
+Added: (ii) the liquidity and volatility of the overall capital markets;
+Added: and (iii) the current state of the economy, including the tobacco industry.
+Added: There can be no assurances that we will continue to have access to the capital markets on terms acceptable to us.
+Added: We have substantial debt which may adversely affect us by limiting future sources of financing, interfering with our ability to pay interest, and principal on our indebtedness and subjecting us to additional risks.
+Added: We have a significant amount of indebtedness and debt service obligations.
+Added: As of March 31, 2023, we had approximately $1,001.0 million in aggregate principal amount of indebtedness.
+Added: Our substantial debt could have important consequences, including:
+Added: • making it more difficult for us to satisfy our obligations with respect to our senior credit obligations and our other obligations;
+Added: • requiring us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing the funds available for operations, working capital, capital expenditures, acquisitions, product development, and other purposes;
+Added: • limiting our ability to obtain additional financing on satisfactory terms and to otherwise fund working capital, capital expenditures, debt refinancing, acquisitions, and other general corporate requirements;
+Added: • hampering our ability to adjust to changing market conditions;
+Added: • increasing our vulnerability to general adverse economic and industry conditions;
+Added: • placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged;
+Added: • limiting our flexibility in planning for, or reacting to, changes in our business, and the industries in which we operate;
+Added: • restricting us from making strategic acquisitions or exploiting business opportunities;
+Added: • exposing us to the risk of increased interest rates as borrowings under a substantial portion of our debt are subject to variable interest rates.
+Added: We require a significant amount of cash to service our indebtedness.
+Added: Our ability to generate cash depends on many factors beyond our control.
+Added: We require a significant amount of cash to service our indebtedness and a substantial portion of our cash flow is required to fund the interest payments on our indebtedness.
+Added: Our ability to service our indebtedness and to fund planned capital expenditures depends on our ability to generate cash.
+Added: This is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control, including the continuing impact of shipping constraints related to the COVID-19 pandemic.
+Added: Also, a substantial portion of our debt, including borrowings under our ABL credit facility, bears interest at variable rates.
+Added: If market interest rates increase, variable-rate debt will create higher debt-service requirements, which would adversely affect our cash flow.
+Added: We cannot assure you that our businesses will generate sufficient cash flow from operations or that future borrowings will be available to us under in an amount sufficient to enable us to service our indebtedness or to fund our other liquidity needs.
+Added: Despite current indebtedness levels, we may still be able to incur substantially more debt.
+Added: This could exacerbate further the risks associated with our significant leverage.
+Added: We may be able to incur substantial additional indebtedness in the future to the extent permitted under our existing credit arrangements.
+Added: As of March 31, 2023, $414.3 million was available for borrowing under our short and long-term credit facilities.
+Added: If new debt is added to our current debt levels, the risks discussed above could intensify.
+Added: We may not be able to refinance or renew our indebtedness or be able to borrow under our ABL credit facility or other future credit facilities, which may have a material adverse effect on our financial condition.
+Added: We may not be able to renew or refinance our ABL credit facility or other indebtedness, including our senior secured indebtedness, on substantially similar terms, or at all, including as a result of volatility and disruption of global credit markets.
+Added: We may have to pay additional fees and expenses that we might not have to pay under normal circumstances, and we may have to agree to terms that could increase the cost of our debt structure.
+Added: If we are unable to renew or refinance our ABL credit facility and other senior secured indebtedness on terms which are not materially less favorable than the terms currently available to us or obtain alternative or additional financing arrangements, we may not be able to repay the ABL credit facility, our senior secured indebtedness, or certain of our other indebtedness, which may result in a default under other indebtedness.
+Added: Failure of foreign banks in which our subsidiaries deposit funds or the failure to transfer funds or honor withdrawals may affect our results of operations.
+Added: Funds held by our foreign subsidiaries are often deposited in their local banks.
+Added: In addition, we maintain deposit accounts with numerous financial institutions around the world in amounts that exceed applicable governmental deposit insurance levels.
+Added: Banks in certain foreign jurisdictions may be subject to a higher rate of failure or may not honor withdrawals of deposited funds.
+Added: In addition, the countries in which these local banks operate may lack sufficient regulatory oversight or suffer from structural weaknesses in the local banking system.
+Added: Due to uncertainties and risks relating to the political stability of certain foreign governments, these local banks also may be subject to exchange controls and therefore unable to perform transfers of certain currencies.
+Added: If our ability to gain access to these funds was impaired, it could have a material adverse effect on our results of operations.
+Added: We may not be able to achieve our stated goals, which may adversely affect our liquidity.
+Added: We face a number of risks, such as changes in economic conditions, pandemics, changes in the leaf tobacco market, changes in regulations affecting the tobacco industry, other changes in demand for our products, and increasing expenses.
+Added: We may need to raise additional funds through public or private debt or equity financing or other various means to fund our business, both at a holding-company level and the local short-term credit lines that fund the operating needs of our non-U.S.
+Added: local leaf tobacco subsidiaries.
+Added: Our access to necessary financing may be limited, if it is available at all.
+Added: Therefore, adequate funds may not be available when needed or may not be available on favorable terms, or at all.
+Added: Developments with respect to our liquidity needs and sources of liquidity could result in a deficiency in liquidity.
+Added: Our liquidity requirements are affected by various factors from our core tobacco leaf business, including crop seasonality, foreign currency and interest rates, green tobacco prices, customer mix and shipping requirements, crop size, and quality.
+Added: Our leaf tobacco business is seasonal, and purchasing, processing, and selling activities have several associated peaks where cash on-hand and outstanding indebtedness may vary significantly during the fiscal year.
+Added: We anticipate periods in the next twelve months during which our liquidity needs will approach the levels of our anticipated available cash and permitted borrowings under our credit facilities.
+Added: Developments affecting our liquidity needs, including with respect to the foregoing factors, and sources of liquidity, including impacts affecting our cash flows from operations (including as a result of delays with respect to the anticipated timing of shipments of leaf tobacco, whether due to the impact of pandemics, customer preferences, or other reasons) and the availability of capital resources (including an inability to renew or refinance short-term operating lines of credit and other short-term indebtedness), may result in a deficiency in liquidity.
+Added: To address a potential liquidity deficiency, we may continue to undertake plans to minimize cash outflows, which could include exiting operations that do not generate positive cash flow.
+Added: It is possible that, depending on the occurrence of events affecting our liquidity needs and sources of liquidity, such plans may not be sufficient to adequately or timely address a liquidity deficiency.
+Added: Derivative transactions may expose us to potential losses and counterparty risk.
+Added: We may, from time to time, enter into certain derivative transactions, including interest rate swaps and foreign exchange contracts.
+Added: Changes in the fair value of these derivative financial instruments that are not accounted for as cash flow hedges are reported as income, and accordingly could materially affect our reported income in any period.
+Added: In addition, the counterparties to these derivative transactions may be financial institutions or affiliates of financial institutions, and we would be subject to risks that these counterparties default under these transactions.
+Added: In some of these transactions, our exposure to counterparty credit risk may not be secured by any collateral.
+Added: Global economic conditions over the last few years have resulted in the actual or perceived failure or financial difficulties of many financial institutions, including bankruptcy.
+Added: If one or more of the counterparties to one or more of our derivative transactions not secured by any collateral becomes subject to insolvency proceedings, we would become an unsecured creditor in those proceedings with a claim equal to our exposure at the time under those transactions.
+Added: We cannot assure you of the financial stability or viability of our counterparties.
+Added: Risks Related to the Ownership of Our Common Stock
Certain shareholders have the ability to exercise controlling influence on various corporate matters.
−Removed: Upon our emergence from Chapter 11, two shareholders and their respective affiliates, Glendon Capital Management LP (together with its affiliates, the "Glendon Investor") and Monarch Alternative Capital LP (together with its affiliates, the "Monarch Investor;" the Glendon Investor and the Monarch Investor are together referred to as the "Significant Shareholders") beneficially own in the aggregate approximately 56% of our issued and outstanding common stock and, therefore, have significant control on the outcome of matters submitted to a vote of shareholders, including, but not limited to, electing directors and approving corporate transactions.
+Added: Two shareholders and their respective affiliates, Glendon Capital Management LP (together with its affiliates, the "Glendon Investor") and Monarch Alternative Capital LP (together with its affiliates, the "Monarch Investor;" the Glendon Investor and the Monarch Investor are together referred to as the "Significant Shareholders") beneficially own in the aggregate approximately 56% of our issued and outstanding common stock and, therefore, have significant control on the outcome of matters submitted to a vote of shareholders, including, but not limited to, electing directors and approving corporate transactions.
Pursuant to the terms of a Shareholders Agreement dated as of August 24, 2020 among the Company and certain shareholders, including the Significant Shareholders, each of the Glendon Investor and the Monarch Investor has the right (depending on its continued ownership of a specified percentage of the outstanding shares of our common stock) to nominate up to two individuals for election as directors, and each of them and the other shareholders that are parties to the Shareholders Agreement have agreed to take all necessary action to elect such nominees as directors.
Under our articles of incorporation, the affirmative vote of each of the Glendon Investor and the Monarch Investor, so long as it continues to maintain an Investor Percentage Interest (as defined in the Shareholders Agreement) of at least five percent, is required for the approval of any amendment to the articles of incorporation.
−Removed: It is our understanding that each of the Glendon Investor and the Monarch Investor hold a significant amount of the Notes and the Exit Term Loans.
−Removed: In addition, the Glendon Investor and the Monarch Investor are the lenders under the DDTL Facility.
+Added: It is our understanding that each of the Glendon Investor and the Monarch Investor hold a significant amount of our senior secured indebtedness.
Circumstances may occur in which the interests of the Significant Shareholders could be in conflict with the interests of other shareholders, and the Significant Shareholders could have substantial influence to cause us to take actions that align with their interests.
7 unchanged sentences
This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.
−Removed: Risks Relating to the Tobacco Industry
+Added: Risks Related to the Tobacco Industry
Reductions in demand for consumer tobacco products could adversely affect our results of operations.
7 unchanged sentences
• current and potential actions by state attorneys general to enforce the terms of the Master Settlement Agreement, or MSA, between state governments in the United States and tobacco product manufacturers;
−Removed: • governmental and private bans and restrictions on smoking;
+Added: • governmental and private banks and restrictions on smoking;
• actual and proposed price controls and restrictions on imports in certain jurisdictions outside the United States;
13 unchanged sentences
cut rag processing facility with respect to covered tobacco products.
−Removed: On April 28, 2022, the FDA announced its proposal to adopt regulations to prohibit the manufacture, distribution, and sale in the United States of cigarettes having menthol as a characterizing flavor and all cigars having a characterizing flavor other than tobacco.
+Added: On April 28, 2022, the FDA announced its proposals to adopt regulations to prohibit the manufacture, distribution, and sale in the United States of cigarettes having menthol as a characterizing flavor and all cigars having a characterizing flavor other than tobacco.
According to the FDA’s proposed rulemaking, sales of menthol-flavored cigarettes accounted for 34-36% of total cigarette sales in the U.S.
28 unchanged sentences
A significant decrease in worldwide tobacco consumption brought about by existing or future governmental laws and regulations would reduce demand for tobacco products and services and could have a material adverse effect on our results of operations.
+Added: The impact of potential regulations to prohibit the sale of cigarettes in the United States other than low-nicotine cigarettes, if they are adopted and become effective, is uncertain, but they could materially adversely affect our business, results of operations and financial condition.
+Added: In June 2022, the U.S.
+Added: Food and Drug Administration (the "FDA") announced its plan to publish a proposed rule in 2023 that would prohibit the sale of cigarettes in the United States other than cigarettes having significantly reduced levels of nicotine.
+Added: The definitive provisions of such a proposed rule have not yet been announced and any rule proposal is subject to public comment prior to being adopted by the FDA.
+Added: Accordingly, the terms of any such final rule are uncertain and the date of effectiveness of such a rule is also uncertain.
+Added: While the FDA announced that reducing the nicotine levels of cigarettes would reduce consumption of cigarettes by future generations and facilitate current smokers to stop consuming cigarettes, it is uncertain whether such potential regulations, if they are adopted and become effective, will have such effect.
+Added: While the impact of such potential regulations on the Company is also uncertain, such regulations, if they are adopted and become effective, could materially adversely affect our business, results of operations and financial condition.
Government actions can have a significant effect on the sourcing of tobacco.
10 unchanged sentences
Regulations impacting our customers that change the requirements for leaf tobacco or restrict their ability to sell their products would inherently impact our business.
−Removed: We have implemented a proprietary "track and trace" system that gathers data on leaf product beginning at the farm level to assist our customers’ collection of raw material information to support leaf traceability and customer testing requirements.
+Added: We have implemented a proprietary "track and trace" system that gathers data on leaf
+Added: product beginning at the farm level to assist our customers’ collection of raw material information to support leaf traceability and customer testing requirements.
Additionally, given our global presence, we also have the ability to source different types and styles of tobacco for our customers should their needs change due to regulation.
10 unchanged sentences
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.