Mercer International Files for Bankruptcy to Hand Control to Creditors -- WSJ

By Akiko Matsuda

Mercer International filed for chapter 11 bankruptcy on Monday with a prepackaged plan to hand control to senior creditors in exchange for eliminating roughly $900 million in debt.

The bankruptcy covers only Mercer's Vancouver, British Columbia-based parent holding company and a Texas affiliate. Mercer's operating subsidiaries across Germany, Canada and the U.S. aren't part of the bankruptcy and will operate normally, according to papers filed by the company with the U.S. Bankruptcy Court in Houston.

Under the reorganization plan, supported by holders of 88.6% of the senior notes, the bondholders agreed to exchange their debt for 91.5% of the reorganized common stock and 56.5% of new preferred shares, while existing shareholders will see their combined stake reduced to 8.5%.

The prepackaged plan aims to eliminate roughly $900 million in debt and cut annual cash interest expense by over $100 million. Mercer's nine-member board of directors will step down when the company emerges from bankruptcy.

The plan is backed by a fully guaranteed $400 million rights offering to fund its operations upon exiting chapter 11. New York investment firm Redwood Capital Management, which sold all of its existing Mercer common shares last week, agreed to help backstop the $400 million stock offering alongside other creditors, according to a Securities and Exchange Commission filing.

Mercer recorded roughly $1.64 billion in total debt at the time of filing, including $1.275 billion in unsecured notes issued by the parent company.

Founded in 1968, Mercer entered the pulp business in 1994 by acquiring a German mill. It subsequently expanded across Germany and Canada, building a global footprint in market pulp, lumber and mass timber. Its distress stemmed from a severe downturn in global pulp pricing, weakened demand linked to Chinese paper market oversupply and surging raw fiber costs.

Mercer reported a six-month operating loss of $91.9 million after burning through $100.8 million in cash. Faced with $122 million in annual cash interest and looming debt maturities, Mercer skipped an October coupon payment to negotiate a consensual restructuring.

Latham & Watkins, Sangra Moller, and Hunton Andrews Kurth serve as its legal advisers. Houlihan Lokey is its investment banker, and Alvarez & Marsal is its financial adviser. Judge Christopher Lopez has been assigned to the case, No. 26-90829.

Write to Akiko Matsuda at akiko.matsuda@wsj.com

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November 10, 2026 14:32 ET (19:32 GMT)