Mercer International Commences $1.275 Billion Recapitalization and Balance Sheet Restructuring

Paul, Weiss is advising an ad hoc group of noteholders of global forest products company Mercer International Inc. in connection with Mercer’s prepackaged recapitalization and balance sheet restructuring of approximately $1.275 billion of funded debt. Mercer and one subsidiary, Mercer International (Texas) LLC, filed voluntary prepackaged chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of Texas in accordance with a restructuring support agreement it reached with certain senior noteholders, including the ad hoc group advised by Paul, Weiss. No other Mercer subsidiaries are parties to the chapter 11 cases and the company expects to complete the recapitalization by the end of the year.

Under the restructuring support agreement and the debtors’ joint prepackaged plan of reorganization, Mercer's senior notes will be cancelled in exchange for a majority of the reorganized company’s common and convertible preferred equity, $150 million of takeback senior secured notes and rights to participate in a new-money rights offering. Mercer expects the balance sheet restructuring will reduce its funded debt by approximately $1.1 billion and eliminate approximately $100 million in annual interest payments. The recapitalization is also expected to bring approximately $400 million of new capital into the business through a rights offering fully backstopped by certain members of the ad hoc group. 

The Paul, Weiss team includes capital solutions and restructuring partners Jacob Adlerstein, Joe Graham, Sung Pak and Alice Eaton, and counsel Alexandria Plaia; corporate partners Andrew Krause, Timothy Cruickshank and Christopher Van Buren, and counsel Ashley Yoon; tax partner Lindsay Parks; and antitrust partners Ross Ferguson and Matthew Wheatley.