MERCER INTERNATIONAL INC.

Current report

We are subject to risks and uncertainties associated with our Chapter 11 Cases and the RSAs, and the Plan may not be confirmed or consummated on the anticipated terms or timeline, or at all.

Current report

We and one of our non-operating subsidiaries intend to commence voluntary cases under chapter 11 of the Bankruptcy Code to pursue confirmation of a prepackaged plan of reorganization implementing the terms of the RSAs. Although we entered into RSAs with holders of more than 87% of the aggregate outstanding principal amount of our Senior Notes and a majority of the outstanding shares of our common stock, there can be no assurance that the Bankruptcy Court will confirm the Plan, that the conditions to its effectiveness will be satisfied, or that the RSAs will not be terminated in accordance with their terms. If the Plan is not confirmed or consummated, we may be required to pursue alternative restructuring transactions on less favorable terms, which could include a non-prepackaged chapter 11 case or liquidation.

Current report

The pendency of the Chapter 11 Cases may adversely affect our relationships with customers, suppliers, employees and other third parties, divert management’s attention from operations, and result in significant professional fees and other costs. During the Chapter 11 Cases, transactions outside the ordinary course of business will require Bankruptcy Court approval, which may limit our ability to respond to business opportunities and market conditions.

Current report

Upon consummation of the Plan, holders of our Senior Notes are expected to receive approximately 91.5% of our newly issued common shares, subject to dilution, together with convertible preferred shares, new senior secured notes and subscription rights. As a result, our existing shareholders will experience substantial dilution, and the trading price of our common stock may be volatile or decline significantly. Following emergence, we will continue to have significant indebtedness, including the new senior secured notes, borrowings under the New ABL Facility of up to $300.0 million (reduced by any amount the lenders under our Canadian Facility agree to reinstate, extend or provide), any reinstated or amended Canadian Facility, and convertible preferred shares expected to be classified as a liability, which could limit our flexibility and adversely affect our financial condition, results of operations and liquidity.

Current report

If the Plan is not consummated before the extended grace period under the indenture governing our 2028 Senior Notes expires, an event of default could occur, which could result in the acceleration of our indebtedness.

Current report

Under the Second Supplemental Indenture entered into on October 30, 2026, the grace period for the payment of the approximately $25.8 million of interest due October 1, 2026 on our 2028 Senior Notes was extended from 30 calendar days to 90 calendar days. If the Plan is not consummated, and the interest is not paid, before the extended grace period expires, an event of default would occur under the indenture governing the 2028 Senior Notes. Such an event of default could permit the trustee or holders to accelerate the 2028 Senior Notes and could trigger cross-defaults or

Current report

QUARTERLY REPORT - PAGE 51 cross-acceleration under our other indebtedness, including our 2029 Senior Notes, the German Facility and the Canadian Facility, any of which would materially adversely affect our liquidity and financial condition.

Current report

Our common stock is expected to be delisted from Nasdaq and will be cancelled under the Plan.

Current report

We expect that Nasdaq will delist our existing common stock following the commencement of the Chapter 11 Cases. Delisting would likely reduce the liquidity and trading price of our common stock and could limit our ability to raise capital. Under the Plan, our existing common stock will be cancelled on the effective date of the Plan, and holders will receive only their pro rata share of 8.5% of the new common stock and 3.5% of the new convertible preferred stock, subject to dilution. Although we intend to apply to list the new common stock on Nasdaq or another national securities exchange on or after the effective date of the Plan, there can be no assurance that the new common stock will be approved for listing or that an active trading market will develop.

Previous 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.

Previous 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.

Previous 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.

Previous report

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