| Schedule of Reorganization Items |
Expenditures, gains, and losses that are realized or incurred by the Debtors subsequent to the Petition Date and as a direct result of the Chapter 11 Cases are reported as reorganization items, net in the consolidated statements of operations, and include the following: | | | | | | | | | Five months ended August 31, 2020 | | Reorganization items, net | | | Gain on settlement of liabilities subject to compromise | $ | 462,304 | | | Professional fees | (30,526) | | | United States trustee fees | (970) | | | Write-off of unamortized debt issuance costs and discount | (5,303) | | | Issuance of exit facility shares and DIP financing fees | (208,538) | | | Other debt restructuring costs | (19,442) | | | Fresh start reporting adjustments | (91,541) | | | Total | $ | 105,984 | |
The adjustments set forth in the following consolidated balance sheet as of August 31, 2020 reflect the effects of the transactions contemplated by the Plan and executed on the Fresh Start Reporting Date (reflected in the column entitled "Reorganization Adjustments") as well as the fair value and other required accounting adjustments resulting from the adoption of fresh start reporting (reflected in the column entitled "Fresh Start Reporting Adjustments"). Pre-petition liabilities that were allowed as claims in the Chapter 11 Cases are classified as liabilities subject to compromise within the consolidated balance sheet. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 Exit ABL Credit Facility, net of debt issuance costs | $ | 26,861 | | | Repayment of DIP Facility | (213,418) | | | Proceeds from Exit 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 Exit ABL Credit Facility. (4) Represents the conversion of the DIP Facility that was exchanged for the Exit Term Loan, 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 Exit ABL Credit Facility | $ | 30,000 | | Issuance of the Exit 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.
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