The interaction of antiprotons with low-energy positronium atoms is a fundamental three-body problem whose significance is its utility for formation of antihydrogen. Particular importance resides in understanding processes involving excited positronium states. Until recently such studies were performed using classical techniques. However, they become inapplicable in the low-energy domain. Here we report the results of comprehensive quantum calculations, which include initial excited positronium states with principal quantum numbers up to n i = 5. Contrary to expectation from earlier work, there are only muted increases in the cross-sections for antihydrogen formation for n i > 3. We interpret this in terms of quantum suppression of the reaction at higher angular momenta. Furthermore, the cross-sections for elastic scattering are around two orders of magnitude higher, which we attribute to the degeneracy of the positronium states. We outline some experimental consequences of our results.