Giant tobacco supplier Pyxus International (PYX) - Get Report filed for bankruptcy Monday, deploying a prepackaged option to slash $400 million in debt and give control of the company to junior bondholders.
The company has suffered for years from a global decline in tobacco usage. The coronavirus pandemic, meanwhile, turned out to be the straw that broke the camel’s back, putting a clamp on global trade.
Pyxus depends on tobacco leaf from more than 300,000 farmers in 30 countries, The Wall Street Journal reported.
Under the terms of the bankruptcy filing, Pyxus' second lien noteholders will convert approximately $635 million of the company's debt into equity or cash, and its first lien noteholders will extend the maturity date of their existing notes by four years.
Pyxus has commitments for a $206.7 million debtor-in-possession loan from some existing noteholders, the company said in a statement.
“The DIP Facility, combined with the Company's projected cash flows, are expected to provide liquidity to support its operations during the restructuring process, allowing the company to emerge with a strengthened balance sheet to complement its operations and future growth plans,” Pyxus said.
"We will continue to provide our customers with the quality products and services they are accustomed to without interruption and work with our business partners throughout the court-supervised process,” said Pyxus CEO Pieter Sikkel. “We expect to be a stronger company, better able to execute on our long-term strategy.”
Trading of Pyxus shares was halted Monday, with the stock at $2.91, down 56% in the last three months.