• May 28, 2024

Pyxus Retires Debt

 Pyxus Retires Debt
Photo: Jade

Pyxus Holdings has signed a repurchase agreement with certain holders of the company’s 8.50 percent senior secured notes due 2027 and its senior secured Pyxus term loans due 2027.

“We are pleased our strategy has resulted in the growing strength of our operational and financial performance. Combined with our disciplined approach to working capital management, we have realized a significant opportunity to materially reduce our long-term debt,” said Pyxus President and CEO Pieter Sikkel in a statement. “These retirements improve our overall capital structure, directly enable lower annual interest costs and reinforce our ability to pursue ongoing opportunities to lower our cost of borrowing and drive future profitability.”

Pursuant to the repurchase agreement, as of March 29, 2024, the company will have paid approximately $60 million in cash plus certain customary fees and expenses and accrued and unpaid interest to repurchase from the holders approximately $78 million of aggregate principal amount of the 2027 notes, a 23 percent discount to par value.

Under the repurchase agreement, the company has also acquired the right, which it expects to exercise at its sole discretion and subject to certain timing and other considerations, to repurchase from the holders up to an additional $34.2 million of aggregate principal amount of the 2027 notes for $26.3 million, at the same discount to par value, and $10.3 million aggregate principal amount of the 2027 loans for $9.1 million, a 12 percent discount to par value.

All repurchases, including associated accrued and unpaid interest through their respective repurchase dates as well as certain fees and expenses, are expected to be primarily funded from cash on hand.

In addition to the $122.5 million reduction in aggregate principal amount of long-term debt from these actions, the company expects to retire, at maturity, the remaining outstanding $20.4 million aggregate principal amount of 10 percent senior secured notes due Aug. 24, 2024. As a result of these anticipated actions, the aggregate principal amount of the company’s long-term debt outstanding at $600.6 million as of Dec. 31, 2023, would be reduced by $142.9 million. The annual interest cost reduction associated with this elimination of long-term debt is $12.9 million per year.