Mercer International Inc. (MERC) · Nov 2, 2026 · Bankruptcy

Mercer bankruptcy plan cuts debt 88% but cancels existing stock

$1.1B debt exchange — ~88% reduction in $1.275B senior-note debt; $400M cash backstop

Mercer’s bankruptcy recapitalization exchanges about 88% of senior-note debt for equity and backstops $400M of new capital, wiping out current shares.

Mercer is a diversified pulp, lumber and mass-timber producer trying to survive a severe liquidity squeeze: weak pulp pricing, high European fiber costs and recent operating losses had already pushed it toward a capital-structure solution. Its Q2 2026 Operating EBITDA was negative $21.0 million, while reported liquidity at June 30 was about $191.7 million; management had already said it was evaluating alternatives for debt maturities and liquidity.

This is now a formal bankruptcy-led rescue, not merely a financing discussion. Mercer has signed restructuring-support agreements with holders of more than 87% of its senior notes and roughly half of its equity, and plans to file prepackaged Chapter 11 cases for the parent and one non-operating subsidiary by November 9, 2026. The operating subsidiaries are outside the filing and are expected to keep serving customers and paying employees and vendors in the ordinary course. 〔0〕

The balance-sheet repair is substantial, but it confirms the old capital structure was untenable. About $1.1 billion of the $1.275 billion senior-note stack will be exchanged for equity, eliminating roughly $96 million of annual cash interest and pushing scheduled bond maturities out to 2031. The $400 million of cash proceeds is fully backstopped, which materially improves the company’s funding runway if the court process closes.

The rescue protects the operating business, not the existing shareholder security. Current common stock will be canceled at emergence; holders receive only 8.5% of the new common stock and 3.5% of new convertible preferred stock, both subject to dilution from the management incentive plan and preferred-stock conversion. That is a residual recovery claim, not continuity of the current equity story. 〔1〕

The filing also exposes how immediate the liquidity problem had become. Mercer had skipped the approximately $25.8 million interest payment due October 1, 2026 and amended the 2028 notes to extend the grace period from 30 to 90 days. The proposed structure adds $150 million of takeback notes, $56 million of put-option notes and up to $300 million of new revolver capacity, while allowing interest on the new notes to be paid partly in kind for two years.

Execution risk is reduced, but not removed. Creditor support is broad and the plan is prepackaged, yet court confirmation, regulatory approvals, funding of the new facilities and satisfaction of the milestone schedule remain conditions to completion. The company expects effectiveness by December 31, 2026, but the backstop and support agreements can terminate if milestones or other conditions fail.

Bottom line: This gives Mercer’s underlying mills a credible path to keep operating by replacing an unsustainable debt load with new money and equity. But for the current public equity, the event is a story-ending restructuring: the shares are canceled and any recovery is a small, diluted stake in the reorganized company.

What to watch next

Chapter 11 filing, no later than November 9, 2026

Original filing on SEC EDGAR