MJ Biz reports.
The first Big Tobacco company to make a foray into the marijuana and hemp industries is exiting both sectors in a bid to shore up its bottom line.
Pyxus International, one of the world’s largest tobacco suppliers, said Thursday it will focus on its more profitable tobacco and liquid nicotine products after filing for bankruptcy in June. Pyxus entered the cannabis space in 2018.
Based in Morrisville, North Carolina, Pyxus was growing hemp in the U.S. and marijuana in Canada. But the company was hard hit by declining tobacco consumption and coronavirus-sparked supply disruptions.
The Press Release
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.