Mercer Agrees on Recapitalization to Address $1.275 Billion in Bonds and Add $400 Million
Key Facts
Mercer International announced support agreements for a debt recapitalization aimed at addressing $1.275 billion in bonds and adding $400 million in new financing. The company intends to implement the agreement through a prepackaged Chapter 11 plan, but the announcement does not mean a court filing has already been made. The process remains subject to required approvals and the Chapter 11 process. The company said its pulp, lumber and engineered wood facilities continue to operate in the ordinary course of business.
The agreements follow pressure on liquidity and debt-servicing capacity. On October 2, Mercer disclosed that it had not paid approximately $25.8 million in interest due October 1 on its 2028 notes and elected to use the 30-day grace period. The company said in its disclosure that using the grace period does not constitute an event of default under the bond indenture. A special committee of the board and its advisers had been in advanced discussions with holders of the 2028 and 2029 notes. The company said members of the creditor group involved in the discussions hold more than 75% of the principal amount of the outstanding notes.
The negotiations with bondholders reflect a decline in operating performance over the year. In the second quarter of 2026, Mercer reported a net loss of $76 million, compared with a loss of $86.1 million in the same period of 2025. Earnings before interest, taxes, depreciation and amortization were negative $21 million, versus negative $20.9 million a year earlier. Although revenue remained relatively stable at $460.3 million, compared with $453.5 million, that did not translate into a similar improvement in the operating measure. The measure also declined to negative $13.1 million in the first half, after reaching $26.2 million in the first half of 2025.
Mercer attributed the weak results to market conditions and costs. Chief Executive Juan Carlos Bueno said, "Continued economic uncertainty has delayed the market recovery," adding that "second-quarter results were also affected by higher fiber costs in Europe." The company linked the first-half decline in performance mainly to lower pulp sales realizations and higher fiber costs per unit. Second-quarter results show that stable revenue did not prevent continued pressure on operating profitability. These factors put the recapitalization in the context of an effort to address financing burdens while operational challenges persist.
The company said total liquidity was about $191.7 million on June 30, 2026. Liquidity comprised $78.8 million in cash and cash equivalents and about $112.9 million available under revolving facilities. These figures predate the announcement of the recapitalization agreement, while the proposed plan remains subject to approvals and court procedures. Mercer said its pulp, lumber and engineered wood operations continue in the ordinary course of business, and that it expects to continue serving customers and paying suppliers and employees during the process. The announced plan thus combines a restructuring of obligations with continued operations during the proceedings.
In trading, Mercer shares closed at $0.126 on November 2, 2026, compared with a close of $0.12 on October 30. The price data provided contain no further details on the stock's daily moves. The company is scheduled to report third-quarter results on November 5, 2026, then hold an earnings call on November 6 at 10:00 a.m. Eastern Time. The results will provide a near-term checkpoint on performance after the agreement announcement, while filing the plan and obtaining court approval remain steps required to implement the recapitalization.