Item 1.03 Bankruptcy or Receivership
On June 15, 2020, Pyxus International, Inc. (Pyxus) and its subsidiaries Alliance One International, LLC, Alliance One North
America, LLC, Alliance One Specialty Products, LLC and GSP Properties, LLC (collectively, the Company) filed voluntary petitions (the Chapter 11 Cases) under Chapter 11 of the United States Bankruptcy Code (the
Bankruptcy Code) with the Bankruptcy Court for the District of Delaware (the Bankruptcy Court) to implement a prepackaged chapter 11 plan of reorganization (Prepack Plan) that effectuates a financial restructuring
of the Companys secured debt (the Restructuring). The Company commenced solicitation of the Prepack Plan with a related disclosure statement (Disclosure Statement) on June 14, 2020, and anticipates completing the
solicitation during the Chapter 11 Cases. The Company has requested that the Bankruptcy Court administer the Chapter 11 Cases jointly under the caption In re Pyxus International, Inc., et al.
The Company filed motions with the Bankruptcy Court seeking authorization to continue to operate its businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the
Bankruptcy Court. To ensure its ability to continue operating in the ordinary course of business both domestically and internationally, the Company also has filed with the Bankruptcy Court a variety of first day relief motions, including
authority to pay employee wages and benefits and vendors and suppliers in the ordinary course of business. The Prepack Plan and the first day relief anticipate that vendors and other unsecured creditors who continue to work with the
Company on existing terms will be paid in full and in the ordinary course of business.
A copy of the Prepack Plan is attached to the
Disclosure Statement included as Exhibit 99.2 hereto and is incorporated herein by reference.
Restructuring Support Agreement
In furtherance of the Restructuring, on June 14, 2020, the Company entered into a Restructuring Support Agreement (the RSA)
with holders (collectively, the Consenting Noteholders) of greater than 92% of the Companys 8.500% Senior Secured First Lien Notes due 2021 (the First Lien Notes) and greater than 67% of the Companys 9.875% Senior
Secured Second Lien Notes due 2021 (the Second Lien Notes). As set forth in the RSA, including in the term sheets attached thereto (including all exhibits, annexes and schedules attached thereto, the Term Sheets), the Company
and Consenting Noteholders (collectively, the RSA Parties) agreed to the terms of the Restructuring, which is contemplated to be implemented through the Prepack Plan.
As described above, on June 15, 2020, the Company commenced the Chapter 11 Cases to implement the Prepack Plan.
The RSA contemplates a comprehensive deleveraging of the Companys balance sheet. Specifically, the RSA and Term Sheets provide, in
pertinent part, as follows:
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The Companys general unsecured creditors, including its foreign working capital lines, vendors and
employees, will be paid in full in the ordinary course of business.
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The Company is entering into
debtor-in-possession financing structured as a delayed draw term loan (the DIP Facility) in the aggregate principal amount of $206.7 million. The DIP
Facility, which is subject to Bankruptcy Court approval, will have a stated maturity of six months from the closing date of the DIP Facility. The DIP Facility will be guaranteed by certain of the Companys subsidiaries, including subsidiaries
that are not subject to the Chapter 11 Cases, and will bear interest at LIBOR + 1025 basis points (subject to a LIBOR floor of 150 basis points), payable in cash monthly. Pursuant to the RSA, certain Consenting Noteholders have committed to fund the
full amount of the DIP Facility. Certain eligible holders of the Second Lien Notes can subscribe to a portion of the DIP Facility as lenders subject to subscription procedures that will be distributed to the holders of Second Lien Notes after entry
of the initial Bankruptcy Court order approving the DIP Facility.
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