Mercer International files Chapter 11 bankruptcy to shrink $1.6 billion debt as mass timber plants keep running
Mercer International Inc., the Vancouver-based pulp, lumber and mass timber maker that owns the former Structurlam CLT plants, filed a prepackaged Chapter 11 bankruptcy in Houston on Nov. 9. Its plan would turn about $1.1 billion of bonds into stock and cut funded debt from about $1.6 billion to about $700 million.
Only the parent company and a non-operating subsidiary, Mercer International (Texas) LLC, are in court. The case is No. 26-90829 in the U.S. Bankruptcy Court for the Southern District of Texas, before Judge Christopher M. Lopez. Mercer said its operating subsidiaries, which run the pulp mills, sawmills and Mercer Mass Timber, did not file and will keep working as usual, funded by cash on hand and cash from operations.
Bondholders owning over 88% of Mercer's 12.875% notes due 2028 and 5.125% notes due 2029, which total $1.275 billion, support the plan. About $1.1 billion of those notes would become equity, leaving bondholders with 91.5% of the reorganized company's common shares and current shareholders with 8.5%. A group of noteholders is backstopping a $400 million offering of new secured notes. Mercer expects to save more than $100 million a year in cash interest. TheStreet, citing the disclosure statement, reported that funded debt would drop from about $1.6 billion to $700 million. Mercer had skipped an Oct. 1 interest payment on the 2028 notes.
Suppliers and subcontractors owed money are not asked to take a cut. The plan leaves vendor bills and other unsecured debts untouched, and Mercer said on Nov. 2 they will be paid in full, either on the day the plan takes effect or as they come due. Mercer expects the court to confirm the plan about 45 days after filing and the deal to close by the end of 2026. Bondholders who did not sign can still object at confirmation, a bankruptcy lawyer told TheStreet. Nasdaq is expected to suspend trading in Mercer's shares.
Mercer Mass Timber, based in Spokane Valley, Washington, also runs the former Structurlam factories in Conway, Arkansas, and Okanagan Falls, British Columbia. Mercer can make 210,000 cubic meters of CLT and 45,000 of glulam a year. Its mass timber orders and commitments came to about $151 million as of Sept. 30, led by large data center projects due to start in late 2026 and 2027, according to the third-quarter report. Mercer lost $59.2 million in that quarter.
Why it matters: The Mercer companies that sign CLT and glulam purchase orders are outside the bankruptcy, and the plan pays trade debts in full. If Mercer panels are on your schedule, watch the confirmation hearing, expected in late December.
If this affects you
- The case, In re Mercer International Inc., No. 26-90829, is before Judge Christopher M. Lopez at the federal bankruptcy court in Houston, which covers the Southern District of Texas. cases.stretto.com
- Stretto, Inc. is the claims and solicitation agent; its case page posts the court docket, hearing dates and a case information line at 833-333-9454. cases.stretto.com
- Mercer's Nov. 2 announcement says vendor (trade) claims and other unsecured claims are not impaired by the plan and will be paid in full when it takes effect or as they fall due. globenewswire.com
Sources
- Mercer International Announces Comprehensive Recapitalization Agreement with Significant Support from Noteholders and ShareholdersGlobeNewswire (Mercer International), Nov 2
- Mercer International Inc. Reports Third Quarter 2026 ResultsGlobeNewswire (Mercer International), Nov 5
- Mercer International Inc. Takes Next Step to Implement Recapitalization and Effectuate Balance Sheet RestructuringGlobeNewswire (Mercer International), Nov 9
- Mercer Mass TimberMercer International, Nov 10
- Giant lumber and toilet paper supplier files Chapter 11 bankruptcyTheStreet, Nov 10