Mercer International to Exchange $1.275 Billion of Notes for Equity Through Chapter 11

Mercer International Inc. (Nasdaq: MERC) said it plans to enter Chapter 11 bankruptcy with a prepackaged plan that would exchange about $1.275 billion of senior notes for equity, according to an 8-K filed Monday, Nov. 9, 2026. The filing includes Item 1.03 on bankruptcy, and the company said it intends to file voluntary petitions in the U.S. Bankruptcy Court for the Southern District of Texas on Nov. 9.

This follows a restructuring agreement reached Nov. 2, which we covered in Mercer International Agrees to Debt-for-Equity Restructuring Through Chapter 11. Our Nov. 5 report, Mercer International Details $1.275 Billion Debt Restructuring and Q3 Results, covers the disclosure that accompanied the third-quarter results.

Who gets what

Senior noteholders would receive 91.5% of the new common stock, 56.5% of the new convertible preferred stock, $150.0 million in takeback senior secured notes, and subscription rights in a rights offering. Holders of existing equity would receive 8.5% of the new common stock and 3.5% of the new convertible preferred stock. The company said these shares are stated before dilution from a management incentive plan and any conversion of preferred stock.

Consenting senior noteholders hold about 88.58% of the senior notes and have agreed to vote for the plan. Consenting equityholders hold about 43.1% of existing equity interests and have also agreed to support it.

New money and debt reduction

The company said total funded debt would fall from about $1.6 billion at the petition date to about $700 million on emergence. The restructuring includes a rights offering of up to $400.0 million in new liquidity, fully backstopped by certain noteholders, and a new asset-based lending facility of up to $300.0 million. The backstop fee is $56.0 million, payable in put option premium notes.

Proceeds would be used to reduce the Canadian ABL facility by at least $41.0 million, which matures in January 2027, and to repay in full the German revolving credit facility, which matures in September 2027.

For scale, the $400.0 million of new liquidity is about 25 times Mercer's market value of about $16.1 million before the filing, based on $0.24 a share and 67.0 million shares as of Nov. 3. The company reported $71.0 million of cash and equivalents as of Sept. 30, 2026. Its net loss for 2025 was $497.9 million, compared with $85.1 million in 2024. In the third quarter of 2026, the net loss was $59.2 million, narrowing from $80.8 million a year earlier, on revenue of $440.7 million.

Timeline

The company said it intends to seek a court order approving the backstop within 22 days of the petition date and to seek confirmation of the plan within about 45 days. It expects to emerge from Chapter 11 by about Dec. 31, 2026, with a possible 30-day extension if required regulatory approvals are not yet obtained. The voting deadline is 4:00 p.m. Central time on Dec. 10, 2026.

The company said it will continue operating in the ordinary course and expects to pay trade creditors, taxing authorities, customers and insurance providers in full. Trade creditors are unimpaired under the plan. The company did not say what the new common stock would be worth once issued.

The shares closed at $0.24 on Nov. 9, the last close before the filing.