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Emergence from Voluntary Reorganization under Chapter 11 (Tables)

3 Months Ended

Jun. 30, 2021

Schedule of Fresh-Start Reporting Adjustments

the condensed consolidated balance sheets, and include the following as of June 30, 2020:


	Predecessor
Liabilities subject to compromise:
Debt subject to compromise	$	635,686
Accrued interest on debt subject to compromise	13,421
	$	649,107

the following for the three months ended June 30, 2020:


	Predecessor
Reorganization Items:
Professional fees	$	(2,573)
United States trustee fees	(518)
Write-off of unamortized debt issuance costs and discount	(4,020)
DIP financing fees	(19,755)
	$	(26,866)

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


(in thousands)	As of August 31, 2020
						Fresh Start Reporting Adjustments
	Predecessor		Reorganization Adjustments			As Reported at September 30, 2020		As Adjusted at December 31, 2020		Successor
Assets
Current assets
Cash and cash equivalents	$	111,427	$	(18,289)	(1)	$	—	$	—	$	93,138
Restricted cash	2,949		21,500		(2)	—		—		24,449
Trade receivables, net	152,309		—			—		—		152,309
Other receivables	13,227		—			—		—		13,227
Accounts receivable, related parties	2,780		—			—		—		2,780

Inventories, net	861,851		—			—		—		861,851
Advances to tobacco suppliers, net	44,061		—			—		—		44,061


Recoverable income taxes	5,830		—			—		—			5,830
Prepaid expenses	34,350		—			—		—			34,350
Other current assets	15,059		—			—		—			15,059
Total current assets	1,243,843		3,211			—		—			1,247,054
Restricted cash	389		—			—		—			389

Investments in unconsolidated affiliates	54,460		—			13,291		30,531		(13)	84,991
Goodwill	6,120		—			48,756		31,815		(14)	37,935
Other intangible assets, net	64,924		—			1,596		6,075		(15)	70,999
Deferred income taxes, net	125		—			9,638		7,484		(16)	7,609
Long-term recoverable income taxes	3,130		—			—		—			3,130

Other noncurrent assets	45,821		3,139		(3)	(310)		(310)		(17)	48,650
Right-of-use assets	39,576		—			(4,281)		(4,281)		(18)	35,295
Property, plant, and equipment, net	299,293		—			(124,965)		(125,820)		(19)	173,473
Total assets	$	1,757,681	$	6,350		$	(56,275)	$	(54,506)		$	1,709,525

Liabilities and Stockholders’ Equity
Current liabilities
Notes payable to banks	$	461,783	$	—		$	—	$	—		$	461,783
DIP financing	206,700		(206,700)		(4)	—		—			—
Accounts payable	58,813		334		(5)	25		25			59,172
Accounts payable, related parties	26,125		—			—		—			26,125
Advances from customers	23,967		—			—		—			23,967

Accrued expenses and other current liabilities	113,118		(31,853)		(6)	(1,792)		(1,792)		(20)	79,473
Income taxes payable	8,319		—			—		—			8,319
Operating leases payable	11,083		—			(992)		(992)		(21)	10,091
Current portion of long-term debt	90		—			—		—			90
Total current liabilities	909,998		(238,219)			(2,759)		(2,759)			669,020
Long-term taxes payable	7,623		—			—		—			7,623
Long-term debt	277,090		250,546		(7)	(15,304)		(15,304)		(22)	512,332
Deferred income taxes	20,749		91		(8)	(10,070)		(7,742)		(23)	13,098
Liability for unrecognized tax benefits	13,420		—			—		—			13,420
Long-term leases	25,728		—			(2,263)		(2,263)		(21)	23,465
Pension, postretirement, and other long-term liabilities	71,898		—			3,467		3,467		(24)	75,365
Total liabilities not subject to compromise	1,326,506		12,418			(26,929)		(24,601)			1,314,323
Liabilities subject to compromise
Debt subject to compromise	635,686		(635,686)		(9)	—		—			—
Accrued interest on debt subject to compromise	26,156		(26,156)		(9)	—		—			—
Total liabilities subject to compromise	661,842		(661,842)			—		—			—
Total liabilities	1,988,348		(649,424)			(26,929)		(24,601)			1,314,323

Stockholders’ equity
Common Stock—no par value:
Predecessor common stock (shares)	9,976		(9,976)			—		—			—
Successor common stock (shares)	—		25,000			—		—			25,000
Predecessor additional paid-in capital	468,147		(468,147)		(10)	—		—			—
Successor additional paid-in capital	—		391,402		(11)	—		(313)			391,089
Retained deficit	(644,250)		728,160		(12)	(83,910)		(83,910)		(25)	—
Accumulated other comprehensive loss	(54,484)		—			54,484		54,484		(26)	—
Total stockholders’ equity (deficit) of Pyxus International, Inc.	(230,587)		651,415			(29,426)		(29,739)			391,089


Noncontrolling interests	(80)		4,359		80		(166)		4,113
Total stockholders’ equity (deficit)	(230,667)		655,774		(29,346)		(29,905)		395,202
Total liabilities and stockholders’ equity	$	1,757,681	$	6,350	$	(56,275)	$	(54,506)	$	1,709,525

(1) The following summarizes the change in cash and cash equivalents:


Proceeds from ABL Credit Facility, net of debt issuance costs	$	26,861
Repayment of DIP Facility	(213,418)
Proceeds from Term Loan Credit Facility	213,418
Proceeds from 10.0% first lien notes	280,844
Repayment of 8.5% first lien notes	(280,844)
Payment to fund professional fee escrow account	(21,500)
Payment of other professional and administrative fees	(11,828)
Payment of accrued interest on DIP Facility	(494)
Payment to holders of Predecessor second lien notes that elected the cash option	(1,199)
Payment to holders of Predecessor common stock	(1,000)
Payment of accrued interest on prepetition Predecessor first lien notes	(9,129)
	$	(18,289)

(2) Represents the funding of an escrow account for professional fees associated with the Chapter 11 Cases.

(3) Represents the capitalization of debt issuance costs related to the ABL Credit Facility.

(4) Represents the conversion of the DIP Facility that was exchanged for the Term Loans, and accordingly reclassified to long-term debt.

(5) Reflects the recognition of payables for professional fees to be paid subsequent to the Company's emergence from Chapter 11 Cases.

(6) The following summarizes the net change in accrued expenses and other current liabilities:


Payment of accrued interest on the DIP Facility	$	(494)
Payment of accrued interest on the Predecessor first lien notes	(9,129)
Settlement of accrued backstop fee through the issuance of common stock	(18,000)
Reclassification of DIP Facility exit fee to long-term debt	(6,718)
Recognition of accrued interest from the Effective Date to the Convenience Date	1,044
Accrual for professional fees	1,444
	$	(31,853)

(7) The following summarizes the changes in long-term debt:


Draw on the ABL Credit Facility	$	30,000
Issuance of the Term Loans (1)	213,418
Conversion of redemption fee on Predecessor first lien notes to Successor Notes	5,843
Derecognition of the original issue discount and the debt issuance costs on Predecessor first lien notes	1,285
	$	250,546
(1) Includes $6,718 related to the DIP Facility exit fee

(8) Represents the recognition of deferred tax liabilities as a result of the cumulative tax impact of the reorganization adjustments herein.

(9) Represents the settlement of liabilities subject to compromise in accordance with the Plan, which resulted in a gain on the discharge of the Predecessor second lien notes as follows:


Debt subject to compromise	$	635,686
Accrued interest on debt subject to compromise	26,156
Total second lien notes discharged	661,842
Payment to holders of second lien notes electing cash option	(1,199)
Value of common stock issued to holders of second lien notes	(198,339)
Gain on discharge of second lien notes	$	462,304

(10) Represents the cancellation of Predecessor common stock.

(11) The changes in Successor additional paid-in capital were as follows:


Value of Successor common stock, second lien notes	$	198,339
Value of Successor common stock, other	193,063
	$	391,402

(12) Represents $260,013 of cumulative impact to Predecessor retained deficit as a result of the reorganization adjustments described above and $468,147 for the elimination of Predecessor common stock.

(13) Represents fair value adjustments to the Company's equity method investments.

(14) Represents reorganization value in excess of value allocable to tangible and intangible assets.

(15) Represents the fair value adjustments to recognize the customer relationships, licenses, technology (inclusive of patents and know how), trade names, and internally developed software intangible assets.

(16) Represents the recognition of deferred tax assets as a result of the cumulative tax impact of the fresh start adjustments herein.

(17) Represents an adjustment to pension assets of ($352), partially offset by other adjustments of $42.

(18) Represents the fair value adjustments to right-of-use lease assets.

(19) Represents the following fair value adjustments to property, plant, and equipment, net:


	Predecessor Historical Value		Fair Value Adjustment		Successor Fair Value
Land	$	33,562	$	(104)	$	33,458
Buildings	259,255		(195,797)		63,458
Machinery and equipment	198,708		(122,151)		76,557
Total	491,525		(318,052)		173,473
Less: Accumulated Depreciation	(192,232)		192,232		—
Total property, plant, and equipment, net	$	299,293	$	(125,820)	$	173,473

(20) Represents the revaluation of the current pension liability of ($1,800), partially offset by an adjustment to financing leases of $8.

(21) Represents the Company's recalculation of lease obligations using a higher incremental borrowing rate applicable upon emergence from Chapter 11 Cases and commensurate with the new capital structure.

(22) Represents the fair value adjustment to the first lien notes.

(23) Represents the adjustment of deferred tax liabilities as a result of the cumulative tax impact of the fresh start valuation adjustments herein.

(24) Represents the recalculation of the present value of the Company's pension liability.

(25) Represents the cumulative impact of the remeasurement of assets and liabilities from fresh start reporting, $7,631 of tax effect of reorganization items, and the elimination of Predecessor's accumulated other comprehensive losses for the five months ended August 31, 2020.

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