By Timothy S. Donahue
Top Takeaways:
- Debt Exchange: Pyxus is offering stock and new floating-rate notes in exchange for $148.3 million in existing debt.
- Early Incentive: Creditors who tender by November 24 receive more favorable terms than those who participate later.
- Creditor Protections: If approved, the restructuring would eliminate key restrictions and collateral protections on existing notes.
Pyxus International is offering creditors a deal: swap their old debt for stock and new notes, plus a small premium for signing up early.
The North Carolina-based tobacco supplier launched a private exchange offer on November 10 for $148.3 million of outstanding 8.5% senior secured notes due in 2027, part of a broader effort to restructure its debt.
Under the proposal, noteholders who tender by November 24 will receive $344.37 in Pyxus common stock and $675.90 in new floating-rate senior secured notes for each $1,000 of existing principal.
The shares are valued at $3.25 per share. Creditors who participate after the early deadline will receive $327.15 in stock and $642.11 in new notes for each $1,000 exchanged.
The new notes would mature on December 31, 2031, extending repayment beyond the existing 2027 maturity. Participating holders whose notes are accepted would also receive accrued and unpaid interest.
But the exchange involves more than merely pushing back a repayment deadline.
Pyxus is seeking creditor approval to eliminate most restrictive covenants on the existing notes, remove change-of-control repurchase protections, subordinate the remaining notes to specified senior debt, and release the collateral securing them.
Those changes would reduce protections for creditors who retain existing notes, provided the required approvals are obtained.
The proposed amendments require consent from holders representing a majority of the outstanding notes, whereas releasing the collateral requires approval from holders of at least two-thirds of the principal amount.
The exchange is governed by a restructuring support agreement that became effective on November 5 with a group of institutional creditors, including Glendon Capital Management, Owl Creek Asset Management and several other investment firms.
Together, the supporting creditors hold approximately 56% of the outstanding notes, 74.9% of Pyxus’s term loans, and 67.9% of its Intabex term loans.
The broader transaction generally requires participation by holders of at least 99% of each affected debt class, although that threshold can be waived under specified conditions. The requirement for the existing notes may also be reduced to 97% in certain circumstances.
Under the proposed restructuring, Pyxus would issue new secured debt and common shares in exchange for portions of its existing obligations, potentially altering both its debt maturity profile and ownership structure.
The exchange offer expires at 5 p.m. Eastern on December 10 unless extended or terminated earlier. Settlement is expected around December 15, subject to creditor participation, approvals, and other closing conditions.
