Mercer International Inc. Takes Next Step to Implement Recapitalization and Effectuate Balance Sheet Restructuring

Mercer International Inc. (Nasdaq: MERC) (“Mercer” or the “Company”) today announced that it has commenced the next phase of its previously announced comprehensive recapitalization (the "Recapitalization") pursuant to a restructuring support agreement (the "RSA") with holders of more than 88% of the aggregate outstanding principal amount of its 12.875% Senior Notes due 2028 and 5.125% Senior Notes due 2029, including the members of an ad hoc group of noteholders.

To effectuate the transactions contemplated by the RSA, Mercer and one non-operating subsidiary have commenced voluntary Chapter 11 prepackaged cases under the United States Bankruptcy Code (the "Chapter 11 Cases") and filed a plan of reorganization (the "Plan") in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the "Court"). Mercer’s operating subsidiaries have not commenced, and will not be parties to, the Chapter 11 Cases, and will continue to operate their businesses as usual and in the ordinary course.

Completion of the Recapitalization is subject to customary conditions, including confirmation of the Plan by the Court, the satisfaction or waiver of the conditions to the Plan’s effectiveness, and receipt of requisite regulatory approvals. Mercer expects to complete the Recapitalization by the end of calendar year 2026.

Upon emergence from the process, Mercer expects to reduce its existing senior note debt by approximately 88% and eliminate more than $100 million of annual cash interest payments. The Recapitalization is also expected to bring approximately $400 million of new capital into the business through a fully backstopped rights offering. Together, these measures are expected to strengthen Mercer’s balance sheet, enhance its liquidity and extend its maturity runway, and better position the Company to navigate prevailing industry and market conditions.

Juan Carlos Bueno, President and Chief Executive Officer, stated: "This filing is a planned step toward completing our previously announced Recapitalization. The transaction is expected to significantly improve our capital structure and position Mercer for long-term success."

He continued, "The Recapitalization provides a clear framework for implementing the transactions contemplated by the RSA. Throughout this process, our operations are continuing in the ordinary course, and we remain focused on supporting our employees and working closely with our customers, suppliers and other business partners. We appreciate the constructive engagement of our supporting stakeholders and look forward to completing the process on the contemplated timeline and emerging as a stronger company and partner to our stakeholders."

In connection with the Chapter 11 Cases, Mercer is seeking customary "first day" relief intended to support ordinary-course operations, subject to Court approval. Mercer expects the Court to consider these requests promptly. Mercer intends to fund operations during the Chapter 11 Cases with cash on hand and cash generated from operations.

As previously reported, in connection with the filing, Mercer expects to receive notice from Nasdaq that it has determined to suspend trading of the Company’s common stock. Further information regarding any such notice, together with information regarding the timing of any suspension of trading, will be set forth in a future Current Report on Form 8-K filed with the SEC.

Mercer’s common stock currently continues to trade on Nasdaq under the symbol “MERC.” If trading in the common stock on Nasdaq is suspended, Mercer expects that its common stock may be quoted on an over-the-counter market. However, there can be no assurance that the common stock will be quoted on an over-the-counter market or that an active trading market will exist.

Advisors

Houlihan Lokey is serving as investment banker, Alvarez & Marsal is serving as financial advisor, and Latham & Watkins LLP, Sangra Moller LLP and Hunton Andrews Kurth LLP are serving as legal counsel to the Company. Ducera Partners LLC is serving as financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel to the Ad Hoc Group. Stretto, Inc. is serving as claims and solicitation agent under the Recapitalization.