Home / Business and Economy / Mercer Bonds Tumble on Creditor Treatment Ditch Bid
Mercer Bonds Tumble on Creditor Treatment Ditch Bid
10 Apr
Summary
- Mercer seeks to remove equal treatment rules for creditors.
- A creditor group is organizing for debt talks.
- Company grapples with $1.6 billion debt and weak cash flow.
Mercer International Inc. is facing increased scrutiny as its bonds experienced a significant slump following a request to abandon equal treatment clauses for its creditors. This strategic maneuver by the pulp producer aims to grant it the discretion to prioritize specific lenders in any potential debt restructuring.
Bondholders of Mercer's 2028 and 2029 notes were asked to remove a provision mandating uniform treatment for all lenders during debt negotiations. Such a change would theoretically enable Mercer to offer a deal to a select group of creditors, excluding others.
A coalition of Mercer's creditors has reportedly organized in preparation for upcoming debt discussions. This group intends to formalize a cooperation agreement, binding its members to act collectively. The company's financial situation is precarious, burdened by approximately $1.6 billion in debt as of the end of last year.
Mercer is contending with weakened earnings and diminishing cash flow, exacerbated by rising fiber costs and declining pulp prices, which S&P Global Ratings cited when downgrading the firm to CCC+ in February. The company initiated a cost-cutting program last year targeting $100 million in savings by 2026.
