Mercer International Agrees to Debt-for-Equity Restructuring Through Chapter 11

Mercer International Inc. (Nasdaq: MERC) said it has signed restructuring support agreements with holders of most of its senior notes and with holders of its existing equity, setting up a prepackaged Chapter 11 case. The terms appear in an 8-K that was accepted Monday night, Nov. 2, 2026, along with a press release and a backstop commitment letter.

How the debt would change

The company said the plan addresses $1.275 billion of senior notes. About $1.1 billion of those notes would be exchanged for equity, which the press release says would cut senior note debt by about 88% and eliminate about $96 million of annual cash interest. Holders of senior notes would receive 91.5% of the new common stock, 56.5% of $325.0 million of new convertible preferred stock, and $150.0 million of takeback senior secured notes.

Existing shareholders would receive 8.5% of the new common stock and 3.5% of the new convertible preferred stock, and their existing shares would be cancelled. The last close before the filing was $0.13 on Monday, Nov. 2, which put the market value at about $8.7 million based on 67.0 million shares as of Aug. 4. Cash and equivalents were $78.8 million as of June 30.

New money and backstop terms

The rights offering covers $420.0 million of new senior secured notes, including $20.0 million of original issue discount. The press release describes aggregate cash proceeds of $400.0 million. Noteholders who take part would also receive 40% of the new common stock and 40% of the new convertible preferred stock. Certain members of the ad hoc group of noteholders have agreed to backstop the offering.

The company would pay the backstop parties a nonrefundable put option premium of $56.0 million on the effective date, paid in additional notes. The new money alone is about five times the company's June 30 cash balance. The filing also describes a new asset-based revolving credit facility of up to $300.0 million.

The figures show the scale of recent losses. Revenue for last year was $1.87 billion, down 9%. The operating result swung to a loss of $397.7 million from operating income of $15.0 million the year before. The net loss was $497.9 million, wider than the $85.1 million loss a year earlier.

Timeline and conditions

The company expects to start the Chapter 11 cases in the Southern District of Texas, and the agreements require a filing no later than Nov. 9, 2026. The plan calls for a confirmation order within 45 days of the petition date. The plan must become effective by the earlier of Dec. 31, 2026, or 14 days after confirmation. Mercer said it is optimistic it can finish by the end of 2026, but it gave no assurance that the transactions will be completed.

The press release said Nasdaq has discretionary authority to delist companies in Chapter 11 and that Mercer expects to receive a delisting notice. Separately, the company skipped a $25.8 million interest payment due Oct. 1, 2026, on its 2028 notes and used a 30-day grace period. On Oct. 30 it extended that grace period to 90 days. The company did not say how much of the new revolving facility would be drawn at emergence.