Mercer International (MERC) Shares Skyrocket 126% After-Hours: Here’s Why

Mercer International Inc. (NASDAQ: MERC) shares rose 126.19% to $0.28 in after-hours trading Monday after the company announced a recapitalization agreement with holders of its senior notes and common stock, which is expected to reduce its existing senior note debt by approximately 88%.

Mercer describes itself as a global forest products company with operations in Germany, the United States and Canada.

Recapitalization Agreement Details

Mercer said it signed restructuring support agreements with holders of more than 87% of the principal amount of its 12.875% Senior Notes due 2028 and 5.125% Senior Notes due 2029, as well as holders of a majority of its common stock. Under the plan, approximately $1.1 billion of the $1.275 billion in senior notes would be exchanged for equity, and the company would eliminate approximately $96 million of annual cash interest on the notes.

The plan also provides $400 million in new capital through a rights offering of new senior secured notes, which certain members of an ad hoc group of noteholders have fully backstopped. Existing shareholders would receive approximately 8.5% of the new common stock and 3.5% of the new convertible preferred stock, and existing common stock would be canceled when the plan takes effect.

"This is a balance sheet recapitalization only," said President and CEO Juan Carlos Bueno. He added that the company’s mills in Germany, Canada and the United States are operating as usual.

Chapter 11 Implementation

Mercer and Mercer International (Texas) LLC expect to file prepackaged Chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of Texas. The company expects to have the plan confirmed within about 45 days of filing and completed by the end of 2026, subject to customary conditions.

Mercer said Nasdaq has discretion to delist the stock of a company that files for Chapter 11, and it expects to receive a delisting notice. If trading is suspended, the company expects its stock to be quoted over the counter, though it said there is no assurance of that.

Separately, Mercer said it extended the grace period on its missed Oct. 1 interest payment on the 2028 notes from 30 days to 90 days.

Trading Metrics, Technical Analysis

Mercer has a market capitalization of approximately $8.44 million.

Over the past year, the stock has traded between a 52-week high of $2.85 and a 52-week low of $0.12. Shares have fallen 93.40% over the past 12 months.

Benzinga’s Edge Stock Rankings indicate negative price trends in the short, medium and long term.

Price Action: In the regular session, Mercer shares rose 5.00% to close at $0.13 on Monday.

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