Company Intends to Divest Cannabis Subsidiaries in Canada
Company to Host Call Today at 5:30 P.M. (ET)
MORRISVILLE, N.C., Jan. 21, 2021 /PRNewswire/ -- Pyxus International, Inc. ("Pyxus" or "the Company") (OTC Pink: PYYX), a global value-added agricultural company, announced today, after a strategic review by the Boards of Directors of Pyxus and certain subsidiaries, that it intends to divest its cannabis business in order to focus on its more profitable tobacco and e-liquid businesses. In addition, the Company has taken action to restructure its industrial hemp and CBD operations to minimize financial investment in that business.
"Our strategic decision to exit cash flow negative cannabinoid operations will allow us to reduce corporate SG&A and sharpen our focus on growing our more profitable tobacco and e-liquid businesses such that these complementary businesses can fully leverage Pyxus' 145-year heritage and existing relationships," said Pieter Sikkel, President and CEO of Pyxus International. "We maintain our belief that there is value in FIGR and its growth can be accelerated with the right capital structure and partner. The completion of our financial restructuring, Global Operations Efficiency Program, and continued investment in agronomy, traceability and sustainability are proving to be of significant value to our tobacco customers as we have started to work together on long-term strategic partnerships that support our objective of growing our market share."
In connection with the plan, the Company's three Canadian cannabis subsidiaries, FIGR Brands, Inc., Canada's Island Garden Inc. (FIGR East) and FIGR Norfolk, Inc. (collectively, "FIGR" or the "Applicants") filed for and received protection from their creditors under the Companies' Creditors Arrangement Act (Canada) ("CCAA"). FTI Consulting Canada Inc. has been appointed as the Court-appointed monitor ("FTI" or "the Monitor") of the Applicants.
As part of its filing under the CCAA, FIGR has obtained a Debtor in Possession ("DIP") loan facility from another Pyxus subsidiary to support FIGR and fund its operations through the CCAA proceedings.
During the CCAA proceedings, it is expected that ordinary course obligations to employees and key suppliers of goods and services subsequent to the filing date will continue to be met. Management of FIGR will remain responsible for the day-to-day operations under the general oversight of the Monitor. FIGR intends to seek approval of a sale process to be conducted by the Monitor in the near future.
A copy of the Initial Order and other Court materials and information related to FIGR's CCAA proceedings, including the sale process if approved, will be available on the website maintained by the Monitor at http://cfcanada.fticonsulting.com/figr.
The Company intends to provide further updates on the CCAA proceedings as appropriate.
The Company will hold a conference call to discuss matters addressed in this announcement today, Thursday, January 21, at 5:30 P.M. ET.
Investors and analysts interested in participating in the call are invited to dial (786) 789-4772 or (800) 458-4121 and use conference ID 9746912. A live audio webcast of the call will also be available through the Pyxus International website at www.pyxus.com.
For those who are unable to listen to the live event, a telephonic replay of the conference call will be available for five days by dialing (719) 457-0820 or (888) 203-1112 and entering the access code 9746912.
Any replay, rebroadcast, transcript or other reproduction of the conference call, other than the replay accessible by calling the number above, has not been authorized by Pyxus International and is strictly prohibited. Investors should be aware that any unauthorized reproduction of the conference call may not be an accurate reflection of its contents.
About Pyxus International, Inc.
Pyxus International, Inc. is a global agricultural company with more than 145 years' experience delivering value-added products and services to businesses and customers. Driven by a united purpose—to transform people's lives, so that together we can grow a better world—Pyxus International, its subsidiaries and affiliates, are trusted providers of responsibly sourced, independently verified, sustainable and traceable products and ingredients. For more information, visit www.pyxus.com.
Cautionary Statement Regarding Forward-Looking Statements
Readers are cautioned that the statements contained in this release regarding expectations of the Company's performance or other matters that may affect its business, results of operations, or financial condition are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements, which are based on current expectations of future events, may be identified by the use of words such as "strategy," "expects," "continues," "plans," "anticipates," "believes," "will," "estimates," "intends," "projects," "goals," "targets," and other words of similar meaning. These statements also may be identified by the fact that they do not relate strictly to historical or current facts. If underlying assumptions prove inaccurate, or if known or unknown risks or uncertainties materialize, actual results could vary materially from those anticipated, estimated, or projected. Some of these risks and uncertainties include:
risks and uncertainties related to the CCAA proceedings, including uncertainties with respect to whether any proposed sales with respect to any of the Applicants will be successfully completed within anticipated time frames or at all and the extent of any impairment that Pyxus may recognize with respect to its investment in FIGR, the extent to which borrowings under the DIP facility will be repaid, and the extent to which Pyxus will incur liabilities with respect to certain obligations of the Applicants that Pyxus has guaranteed;
risks and uncertainties related to the COVID-19 pandemic, including uncertainties with respect to possible delays in shipments of leaf tobacco, including from the closure or restricted activities at ports or other channels, disruptions to the Company's operations or the operations of suppliers and customers resulting from restrictions on the ability of employees and others in the supply chain to travel and work, border closures, determinations by Pyxus or shippers to temporarily suspend operations in affected areas, whether the Company's operations that have been classified as "essential" under various governmental orders restricting business activities will continue to be so classified or, even if so classified, whether site-specific health and safety concerns related to COVID-19 might otherwise require operations at any of our facilities to be halted for some period of time, the extent of negative consumer purchasing behavior with respect to the Company's products or the products of its leaf tobacco customers during periods of government mandates restricting activities imposed in response to the COVID-19 pandemic, and the extent to which the impact of the COVID-19 pandemic on the Company's operations and the demand for its products may not coincide with impacts experienced in the United States due to the international scope of its operations, including in emerging markets;
risks and uncertainties relating to the cases (the "Chapter 11 Cases") voluntarily commenced by the Company's predecessor and certain of its domestic subsidiaries in June 2020 under Chapter 11 of the United States Bankruptcy Code to implement a prepackaged Chapter 11 plan of reorganization in order to effectuate a financial restructuring, which plan or reorganization, as amended, was confirmed and became effective in August 2020, including but not limited to: whether the Company's leaf tobacco customers, farmers and other suppliers might lose confidence in Pyxus as a result of the Chapter 11 Cases and may seek to establish alternative commercial relationships, whether, as a result of the Chapter 11 Cases, foreign lenders that have provided short-term operating credit lines to fund leaf tobacco operations at the local level may lose confidence in Pyxus and cease to provide such funding, and uncertainty and continuing risks associated with the Company's ability to achieve its goals, maintain adequate liquidity and continue as a going concern;
risk and uncertainties related to the Company's leaf tobacco operations, including changes in the timing of anticipated shipments, changes in anticipated geographic product sourcing, changes in relevant capital markets affecting the terms and availability of short-term seasonal financing, political instability, currency and interest rate fluctuations, shifts in the global supply and demand position for tobacco products, changes in tax laws and regulations or the interpretation of tax laws and regulations, resolution of tax matters, adverse weather conditions, the impact of disasters or other unusual events affecting international commerce, and changes in costs incurred in supplying products and related services; and
risks and uncertainties related to the Company's e-liquid business lines, including with respect to the impact of regulation associated with these business lines, including the risk of obtaining anticipated regulatory approvals for nicotine e-liquid products in the United States and uncertainties with respect to the impact of restrictions on the methods of shipment of e-liquid products in the United States, as well as uncertainties with respect to the development of the industries and markets of these business lines, consumer acceptance of products offered by these business lines, and the impact of increasing competition in these business lines.
Additional factors with respect to risks and uncertainties with respect to an investment in the common stock of Pyxus International, Inc. can be found in its Quarterly report on Form 10-Q for the period ended September 30, 2020 and its other filings with the Securities and Exchange Commission (the "SEC") which are available at the SEC's Internet site
(http://www.sec.gov). Pyxus International does not undertake to update any forward-looking statements made in this press release to reflect any change in management's expectations or any change in the assumptions or circumstances on which such statements are based, except as required by law.
SOURCE Pyxus International, Inc.