MERCER INTERNATIONAL INC. 8-K

What Happened
Mercer International Inc. announced that certain German subsidiaries entered into a Waiver and Consent Request Letter effective May 4, 2026 relating to their €370.1 million revolving credit facility (the "German Facility") under the Credit Agreement with UniCredit Bank GmbH as agent and a group of lenders. The Waiver temporarily suspends the Loan Parties’ obligation to meet the Leverage Ratio covenant for the first three fiscal quarters of fiscal 2026 (through the Calculation Date of December 31, 2026) and implements several covenant, reporting and security changes.

Key Details

• The lenders waived compliance with the Leverage Ratio covenant for the first three fiscal quarters of fiscal 2026; covenant compliance will next be measured on the Calculation Date of December 31, 2026.
• Facility utilization capped at €300 million while Leverage Ratio for any 12-month period exceeds 2.00:1.00; interest margin reset to 2.50%–4.25% based on leverage levels.
• Additional restrictions: average liquidity requirement of US$30 million (tested monthly, rolling 13-week), FY2026 cap on capital expenditures of €60 million without Agent consent, distribution restrictions to the parent until Sept 30, 2026 (Agent may allow up to €15 million subject to conditions), and a €20 million limit on incremental borrowings until a 13-week liquidity forecast is delivered.
• The Loan Parties must grant security over assets with realizable value ≥110% of the amount drawn under the German Facility (trade receivables, inventory, bank accounts, intra-group loans, share pledges including Mercer Stendal GmbH equity) and provide expanded periodic reporting; specified breaches and certain bankruptcy-related actions are Events of Default.

Why It Matters
These changes give Mercer’s German subsidiaries short-term covenant relief while tightening liquidity, reporting and collateral requirements. For investors, the Waiver reduces immediate risk of a covenant breach but signals continued lender oversight and limits on borrowing, dividends, and capital spending — factors that can affect the company’s cash flow flexibility and near-term financial strategy.