MERCER INTERNATIONAL INC.

Current report

Our consolidated financial statements as of and for the period ended June 30, 2026 have been prepared assuming we will continue as a going concern. However, as described in Note 1 to our consolidated financial statements and under “Liquidity and Capital Resources – Going Concern” in Part I, Item 2 of this report, conditions and events exist that raise substantial doubt about our ability to continue as a going concern for the one-year period from the date of this report. The substantial doubt about our ability to continue as a going concern may affect the price of our common stock and our credit ratings, may negatively impact relationships with third parties with whom we do business, including customers, vendors and lenders, and may impact our ability to raise additional capital or implement our business plan.

Current report

Our Canadian Facility matures in January 2027 and, as a result, has been classified as a current liability. Absent a renegotiation, replacement or other external refinancing prior to maturity, we are not projected to generate sufficient cash flow to settle this obligation, which we expect would result in a liquidity shortfall. In addition, although our German Facility does not mature until September 2027, the outstanding borrowings thereunder have been reclassified as a current liability because management has determined it is probable that we will not meet the required leverage ratio with respect to the quarter ending December 31, 2026, following the expiration of our existing waiver. During the six months ended June 30, 2026 we incurred a net loss of $128.0 million and used $100.8 million of cash in operating activities.

Current report

These conditions have been driven by a delayed industry recovery, including an extended cyclical downturn in global pulp prices, prolonged geopolitical conflicts and elevated fiber costs at our German pulp mills. To address our near-term liquidity requirements, we have engaged advisors to review strategic alternatives and broader financing initiatives. As part of this process, we have entered into discussions with holders of our 2028 and 2029 senior notes, and with other stakeholders across our capital structure regarding potential financing and other liquidity-enhancing transactions.

Current report

There can be no assurance that we will successfully renegotiate, amend or replace these facilities, complete any financing, refinancing or other strategic transaction, or otherwise obtain sufficient liquidity, on acceptable terms or at all. If an unwaived covenant breach or other default occurs and the lenders under the German Facility or our other creditors exercise acceleration or other remedies, this could trigger cross-defaults under our other indebtedness, including our outstanding senior notes and our Canadian Facility. If we are unable to resolve these liquidity requirements prior to the applicable maturities or any acceleration, we will not have sufficient cash to settle these obligations, which would have a material adverse effect on our business, financial condition, results of operations and our ability to continue as a going concern.

Current report

QUARTERLY REPORT - PAGE 49

Previous report

We have obtained a temporary Waiver under our German joint revolving credit facility, and any failure to comply with the terms of the Waiver, return to compliance by the end of the waiver period or obtain additional relief could materially adversely affect our liquidity and financial condition.

Previous report

As of March 31, 2026, we did not meet the required leverage ratio covenant under our German joint revolving credit facility. We subsequently obtained a Waiver from our lenders, effective through September 30, 2026. Pursuant to the Waiver, we are subject to additional restrictions, including limitations on facility utilization, capital expenditures and distributions, as well as increased interest rate margins and security requirements. For more information, see “Liquidity and Capital Resources - Debt Covenants” in Part I, Item 2 of this report.

Previous report

There can be no assurance that we will return to compliance with our financial covenants by the end of the Waiver period or that, if necessary, we would be able to obtain additional waivers under our existing indebtedness on acceptable terms, or at all. The Waiver also created additional events of default, including cross-defaults to certain of our other debt agreements and failure to comply with the Waiver’s covenants and reporting requirements. Our inability to maintain compliance or secure additional relief could result in an event of default, acceleration of amounts due, and a material adverse impact on our liquidity, financial condition and results of operations.