MERCER INTERNATIONAL INC
For the period ended Dec 31, 2023. Filed Feb 15, 2024.
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FY2023 · Filed Feb 15, 2024
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Interest Rate Risk
Fluctuations in interest rates may affect the fair value of fixed interest rate financial instruments which are sensitive to such fluctuations. A decrease in interest rates may increase the fair value of such fixed interest rate financial instrument assets and an increase in interest rates may decrease the fair value of such fixed interest rate financial instrument liabilities, thereby increasing our fair value. An increase in interest rates may decrease the fair value of such fixed interest rate financial instrument assets and a decrease in interest rates may increase the fair value of such fixed interest rate financial instrument liabilities, thereby decreasing our fair value. We may seek to manage our interest rate risks through the use of interest rate derivatives.
The following table provides information about our exposure to interest rate fluctuations for the financial instruments sensitive to such fluctuations as of December 31, 2023 and expected cash flows from these instruments:
| Expected maturity date | ||||||||
|---|---|---|---|---|---|---|---|---|
| Total | Fair Value | 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | |
| (in thousands other than percentages) | ||||||||
| Liabilities | ||||||||
| Long-term debt: | ||||||||
| Fixed rate ($)(1) | 300,000 | 287,235 | — | — | 300,000 | — | — | — |
| Interest rate | 5.500% | 5.500% | 5.500% | |||||
| Fixed rate ($)(2) | 200,000 | 218,610 | — | — | — | — | 200,000 | — |
| Interest rate | 12.875% | 12.875% | 12.875% | |||||
| Fixed rate ($)(3) | 875,000 | 751,581 | — | — | — | — | — | 875,000 |
| Interest rate | 5.125% | 5.125% | 5.125% | |||||
| Variable rate ($)(4) | 161,330 | 161,330 | — | — | — | 161,330 | — | — |
| Interest rate | 5.296% | 5.296% | 5.296% | |||||
| Variable rate ($)(5) | 47,255 | 47,255 | — | — | — | 47,255 | — | — |
| Interest rate | 6.614% | 6.614% | 6.614% | |||||
(1)
2026 Senior Notes bearing interest at 5.50%, principal amount $300.0 million.
(2)
2028 Senior Notes bearing interest at 12.875%, principal amount $200.0 million.
(3)
2029 Senior Notes bearing interest at 5.125%, principal amount $875.0 million.
(4)
The German Revolving Facility bearing interest by way of: Euribor plus a variable margin ranging from 1.40% to 2.35% dependent on conditions including but not limited to a prescribed leverage ratio. The facility is sustainability linked whereby the interest rate margin is subject to upward or downward adjustments of up to 0.05% per annum if the Company achieves, or fails to achieve, certain specified sustainability targets.
(5)
The Canadian Revolving Facility bearing interest by way of: (i) Canadian denominated advances, which bear interest at a designated prime rate per annum; (ii) banker’s acceptance equivalent loans, which bear interest at the applicable Canadian dollar banker’s acceptance plus 1.20% to 1.45% per annum; (iii) dollar denominated base rate advances at the greater of the federal funds rate plus 0.50%, an Adjusted Term SOFR for a one month tenor plus 1.00% and the bank’s applicable reference rate for U.S. dollar loans; and (iv) dollar SOFR advances, which bear interest at Adjusted Term SOFR plus 1.20% to 1.45% per annum.
(75)
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