SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ________)
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-12
MERCER INTERNATIONAL INC.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
MERCER INTERNATIONAL INC.
14900 INTERURBAN AVENUE SOUTH, SUITE 282
SEATTLE, WA 98168
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To: The Shareholders of Mercer International Inc.
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Mercer
International Inc. (the "Company") will be held at 1000 - 925 West Georgia
Street, Vancouver, British Columbia, Canada at 10:00 a.m. (Vancouver time), on
October 3, 2003, for the following purposes:
1. To approve the issuance of up to 10,750,000 of the Company's shares of
beneficial interest upon conversion of convertible notes proposed to be
issued by the Company subject to adjustment for certain customary
anti-dilution matters such as distributions to the holders of the
Company's shares, subdivisions or combinations of the Company's shares
or alterations to the Company's share capital as described in the
accompanying proxy statement; and
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Trustees has fixed the close of business on September 12, 2003
as the record date for the determination of shareholders entitled to vote at the
special meeting or any adjournment thereof.
A proxy statement dated September 22, 2003 and a form of proxy accompany
this Notice of Special Meeting of Shareholders.
BY ORDER OF THE BOARD OF TRUSTEES
Jimmy S.H. Lee
President
September 22, 2003
WE URGE YOU TO COMPLETE, SIGN, DATE AND RETURN IN THE ENCLOSED ENVELOPE THE FORM
OF PROXY THAT ACCOMPANIES THIS NOTICE OF SPECIAL MEETING OF SHAREHOLDERS AS
PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. THIS WILL
ENSURE THE PRESENCE OF A QUORUM AT THE SPECIAL MEETING. A PROXY MAY BE REVOKED
IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT.
MERCER INTERNATIONAL INC.
PROXY STATEMENT
This statement is furnished in connection with the solicitation by the
management of Mercer International Inc. (the "Company") of proxies for use at
the special meeting of shareholders of the Company to be held at 1000 - 925 West
Georgia Street, Vancouver, British Columbia, Canada at 10:00 a.m. (Vancouver
time), on October 3, 2003, or any adjournment thereof (the "Special Meeting").
If a proxy in the accompanying form (a "Proxy") is properly executed and
received by the Company's proxy solicitor, Georgeson Shareholder Communications
Inc., 17 State Street, 10th Floor, New York, NY 10004, prior to the Special
Meeting or any adjournment thereof, the Company's shares of beneficial interest,
$1.00 par value (the "Shares") represented by such Proxy will be voted in the
manner directed. In the absence of voting instructions, the Shares will be
voted for the proposal set out in the accompanying Notice of Special Meeting of
Shareholders. Due to the short solicitation period, we recommend that
shareholders vote by telephone or the Internet, if available. Please see the
Proxy for voting instructions.
A Proxy may be revoked at any time prior to its use by filing a written
Notice of Revocation of Proxy or a later dated Proxy with the Company's proxy
solicitor, Georgeson Shareholder Communications Inc., at the address set out
above. A Proxy may also be revoked by attending the Special Meeting and voting
Shares in person. Attendance at the Special Meeting will not, in and of itself,
constitute revocation of a Proxy.
The holders of one-third of the outstanding Shares entitled to vote at the
Special Meeting, present in person or represented by proxy, constitutes a quorum
for the Special Meeting. Under applicable Washington state law, abstentions and
broker non-votes will be counted for the purposes of establishing a quorum for
the Special Meeting.
Proxies for the Special Meeting will be solicited primarily by mail.
Proxies may also be solicited personally by the trustees, officers or regular
employees of the Company without additional compensation. The Company may
reimburse banks, broker-dealers or other nominees for their reasonable expenses
in forwarding the proxy materials for the Special Meeting to beneficial owners
of Shares. The costs of this solicitation will be borne by the Company.
This proxy statement and accompanying Proxy will be mailed to shareholders
commencing on or about September 23, 2003. The close of business on September
12, 2003 has been fixed as the record date (the "Record Date") for the
determination of shareholders entitled to notice of and to vote at the Special
Meeting or any adjournment thereof.
COMMONLY ASKED QUESTIONS AND ANSWERS
Q: WHY AM I RECEIVING THIS PROXY STATEMENT AND PROXY?
A: This proxy statement describes the proposal upon which you, as a
shareholder, will vote. It also gives you information on the proposal,
as well as other information so that you can make an informed decision.
Q: WHAT IS THE PROXY?
A: The Proxy enables you to appoint Jimmy S.H. Lee and William McCartney as
your representatives at the Special Meeting. By completing and
returning the Proxy, you are authorizing Mr. Lee and Mr. McCartney to
vote your Shares at the meeting as you have instructed them on the Proxy.
This way your Shares will be voted whether or not you attend the
meeting. Even if you plan to attend the meeting, it is a good idea to
complete and return your Proxy before the meeting date just in case
your plans change.
Q: WHO CAN VOTE AT THE SPECIAL MEETING?
A: Registered shareholders who own the Company's Shares on the Record Date
may attend and vote at the Special Meeting. Each Share is entitled to one
vote. There were 16,874,899 Shares outstanding on the Record Date.
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If you own your Shares through a brokerage account or in another nominee
form, you must provide instructions to the broker or nominee as to how
your Shares should be voted. Your broker or nominee will generally
provide you with the appropriate forms at the time you receive this proxy
statement. If you own your Shares through a brokerage account or nominee,
you cannot vote in person at the Special Meeting unless you receive a
proxy from the broker or the nominee.
Q: WHAT AM I VOTING ON?
A: We are asking you to approve, in accordance with NASD Marketplace Rules,
the issuance of up to 10,750,000 Shares upon conversion of convertible
senior subordinated notes intended to be issued in a private offering by
the Company, subject to adjustment for certain customary anti-dilution
matters as described herein.
Q: HOW DO I VOTE?
A: You may vote by mail.
Complete, date, sign and mail the Proxy to the Company's proxy
solicitor, Georgeson Shareholder Communications Inc., 17 State Street,
10th Floor, New York, NY 10004, in the enclosed postage pre-paid
envelope. If you mark your voting instructions on the Proxy, your
Shares will be voted as you instruct. Due to the short solicitation
period, we recommend that shareholders vote by telephone or the
Internet, if available. Please see the Proxy for voting instructions.
You may vote in person at the meeting.
If you attend the Special Meeting, you may vote as instructed at
the meeting. However, if you hold your Shares in street name (that is,
through a broker/dealer or other nominee), you will need to bring to the
meeting a proxy delivered to you by such nominee reflecting your
Share ownership as of the Record Date.
Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY?
A: It means that you hold Shares in multiple accounts. Please complete and
return all proxies to ensure that all your Shares are voted.
Q: WHAT IF I CHANGE MY MIND AFTER RETURNING MY PROXY?
A: You may revoke your Proxy and change your vote at any time before
completion of voting at the meeting. You may do this by:
* sending a signed Notice of Revocation of Proxy to the Company's
proxy solicitor, Georgeson Shareholder Communications Inc., at the
address set out above, stating that the Proxy is revoked; or
* signing another Proxy with a later date and sending it to the
Company's proxy solicitor, Georgeson Shareholder Communications
Inc., at the address set out above, before the date of the
meeting; or
* voting at the meeting.
Your Proxy will not be revoked if you attend the meeting but do not
vote.
If you own your Shares through a broker or other nominee and wish to
change your vote, you must send those instructions to your broker
or nominee.
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Q: WILL MY SHARES BE VOTED IF I DO NOT SIGN AND RETURN MY PROXY?
A: If your Shares are registered in your name, they will not be voted unless
you submit your Proxy, or vote in person at the meeting. If your
Shares are held in street name, your broker/dealer or other nominee
will not have the authority to vote your Shares unless you provide
instructions.
Q: WHO WILL COUNT THE VOTES?
A: Agents of the Company will tabulate the proxies. Additionally, votes
cast by shareholders voting in person at the meeting are tabulated by a
person who is appointed by our management before the meeting.
Q: HOW MANY SHARES MUST BE PRESENT TO HOLD THE MEETING?
A: To hold the meeting and conduct business, at least one-third of the
outstanding Shares must be present at the meeting. This is called a
quorum.
Votes are counted as present at the meeting if a shareholder either:
* is present and votes in person at the meeting; or
* has properly submitted a Proxy.
Q: HOW MANY VOTES ARE REQUIRED TO APPROVE THE PROPOSAL TO BE CONSIDERED AT
THE MEETING?
A: The affirmative vote of a majority of the Shares represented and voting,
whether in person or by proxy, at the meeting will be required to
approve the proposal to be considered at the meeting, in accordance
with NASD Marketplace Rules.
Q: HOW ARE VOTES COUNTED?
A: You may vote "For", or "Against" or "Abstain" on the proposal to be
considered at the meeting.
If you abstain from voting, your vote will be counted for the
purposes of a quorum, but will not be counted as a vote for or
against the proposal.
If you sign and return your Proxy without voting instructions, your
Shares will be counted as a "For" vote in favor of the proposal.
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PROPOSAL
APPROVAL OF THE ISSUANCE OF SHARES UPON CONVERSION
OF CONVERTIBLE NOTES
PRIVATE OFFERING
On September 12, 2003, the Company announced that it intends to effect a
private offering (the "Private Offering") of $75 million of convertible senior
subordinated notes (the "Notes"), subject to, among other things, market
conditions. The Notes will be convertible at the option of the holder into our
Shares. The Notes will be offered to qualified institutional buyers, as defined
in Rule 144A under the Securities Act of 1933, as amended (the "Securities
Act"), and to certain non-U.S. persons in compliance with Regulation S under the
Securities Act, in transactions exempt from, or not subject to, the registration
requirements of the Securities Act.
The Notes and the Shares issuable upon conversion of the Notes will not be
registered under the Securities Act, or the securities laws of any other
jurisdiction. However, it is expected that the terms of the Private Offering
will require the Company to file within 90 days after the closing of the Private
Offering, and to use its reasonable best efforts to have declared effective
within 180 days after closing of the Private Offering, a shelf registration
statement under the Securities Act to register the resale by investors of the
Notes and Shares issuable upon conversion of the Notes. As a result, upon the
effectiveness of such shelf registration statement, the Shares issuable upon the
conversion of the Notes that are so registered will be freely tradeable and
likely affect the trading market for our Shares.
Shareholders are being asked to approve the proposed issuance of up to
10,750,000 Shares upon conversion of the Notes, subject to adjustment for
certain customary anti-dilution events such as distributions to the holders of
our Shares, subdivisions or combinations of our Shares or alterations to our
share capital. See "Description of the Notes".
The terms of the Notes, including the principal amount to be issued, the
interest rate and the conversion price will be determined through negotiation
between the Company and the initial purchaser(s) of the Notes. Although we
intend that the amount of the Private Offering will be $75 million, the amount
of Notes issued may be changed by our board of trustees (the "Board") based upon
market, pricing, demand, interest rates and other economic conditions but in no
event will the principal amount of the offering be increased by more than 10%.
Any change to the principal amount of the Notes will not be known until at or
about the time of the execution of definitive agreements in respect of the
Private Offering. Notwithstanding any change in the principal amount of the
Private Offering or the ultimate determination of the conversion price, the
maximum number of Shares issuable upon conversion of the Notes shall not exceed
10,750,000 as proposed to be authorized by shareholders other than as a result
of a Share Capital Change (as hereinafter defined).
It is currently contemplated that the Private Offering will be completed as
soon as practicable following the Special Meeting but in any event within 45
days of the date of the Special Meeting.
WHY WE NEED SHAREHOLDER APPROVAL
The Company's Shares are quoted on the Nasdaq National Market ("NNM"). The
NASD Marketplace Rules governing companies quoted on the NNM permit them to
issue in each separate transaction (which is not integrated under the NASD's
interpretation of its rules) up to 20% of their outstanding common stock as at
the date of the transaction without shareholder approval. However, the NASD
Marketplace Rules require quoted companies to obtain shareholder approval for
the sale, issuance or potential issuance of securities in a private offering of
common stock, or securities convertible into common stock, at a price less than
the greater of book or market value of such stock, if the issuance amounts to
20% or more of the common stock or 20% or more of the voting power of a company
outstanding before the issuance. As of the Record Date, the Company had
16,874,899 Shares issued and outstanding. The number of Shares that the Company
would be required to issue upon the conversion of the Notes will be in excess of
20% of the Company's issued and outstanding Shares and these Shares may be
issued at a conversion price which is less than the book value of the Shares,
being E7.19 per Share as of June 30, 2003, the date of the Company's latest
quarterly
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financial statements (which amounts to approximately $8.27 per Share when
converted at the Euro to U.S. dollar exchange rate of 1.1502, being the exchange
rate on June 30, 2003 and $8.13 per Share when converted at the Euro to U.S.
dollar exchange rate of 1.1307, being the exchange rate on September 12, 2003).
In addition, the NASD Marketplace Rules require companies quoted on the NNM
to obtain shareholder approval in connection with the issuance of securities
that could result in a "change of control" of an issuer. The NASD Marketplace
Rules do not currently define when a change of control may be deemed to have
occurred. Further, some or all of our principal shareholders (the "Principal
Shareholders") as set out under the caption "Voting Securities and Principal
Shareholders" on page 8 hereof may, at their sole election, purchase Notes
pursuant to the Private Offering. Such purchases, if any, could result in the
NASD determining (under its interpretation of its rules) that a change of
control has occurred in respect of one or more of the Principal Shareholders.
Although the Company does not believe that the purchasers of the Notes (and thus
the holders of Shares upon conversion of the Notes) will be sufficiently
concentrated to constitute a change of control of the Company, the Company is
seeking shareholder approval to ensure compliance with such rules (if the Nasdaq
Stock Market were to determine such rules to be applicable), including, without
limitation, with respect to a change of control involving one or more Principal
Shareholders, as well as with the other rules for which shareholder approval is
or may be required in connection with the issuance of Shares upon conversion of
the Notes. Such shareholder approval will not affect the interpretation or
application of our shareholder rights agreement dated August 20, 1993, as
amended.
USE OF PROCEEDS
The Company intends to use the net proceeds from the Private Offering to
fully repay two bridge loans (the "Bridge Loans"), which, including principal,
fees and accrued interest, aggregated approximately $61.4 million at August 29,
2003, and for general corporate purposes, including working capital. The Bridge
Loans in the principal amounts of E15 million and E30 million mature in October
2003 and April 2004, respectively, and were incurred in August 2002 to finance,
in part, the Company's contribution to the construction of a greenfield NBSK
pulp mill with a planned annual production capacity of approximately 552,000
tonnes in Stendal, Germany (the "Stendal Project"). Total investment costs in
connection with the Stendal Project are estimated to be approximately E1.0
billion, of which approximately E828.0 million is provided under a project
finance loan agreement (the "Project Financing Agreement") entered into by the
Company's 63.6% owned subsidiary that is implementing the project with a German
bank.
We obtained the E15 million Bridge Loan from Babcock & Brown Investment
Management Partners LP ("Babcock & Brown") and the E30 million Bridge Loan was
arranged by a Swiss banking affiliate of MFC Bancorp Ltd. ("MFC"). Babcock &
Brown was our advisor in connection with the overall financing arrangements for
the Stendal Project. MFC was our former approximately 92% owned subsidiary
until June 1996, when we spun-off approximately 83% of the issued shares of MFC
to our shareholders by way of a special dividend-in-kind. We currently hold,
directly and indirectly, approximately 575,683 common shares of MFC,
representing approximately 4.4% of the outstanding common shares of MFC. Jimmy
S.H. Lee, our Chairman, Chief Executive Officer and a trustee, is a
non-executive director of the Swiss banking affiliate of MFC. Ian Rigg, a
trustee and our former Chief Financial Officer, became a Vice President of MFC
in August 2003.
For additional information relating to the Bridge Loans and the Project
Financing Agreement, see our current report on Form 8-K filed with the
Securities and Exchange Commission ("SEC") on September 10, 2002 and our annual
report on Form 10-K.
DESCRIPTION OF THE NOTES
We intend to issue Notes in the principal amount of $75 million and
maturing in 2010. Depending on market, pricing, demand, interest rates and
other economic conditions at the time of the sale of the Notes, our Board may
change the principal amount of the Notes issued but in no event will the
principal amount of the Notes be increased by more than 10%. Any change to the
principal amount of the Notes will not be known until at or about the time of
the execution of definitive agreements in respect of the Private Offering. Any
change in the principal amount of the Notes will not increase the maximum number
of Shares issuable upon conversion of the Notes. Interest is expected to be
payable on the Notes from the closing date of the Private Offering.
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The anticipated terms of the Notes are set forth below. The final terms
are subject to negotiations between the Company and the initial purchaser(s) of
the Notes and may vary significantly from the description herein. Our Board
retains the discretion to negotiate and settle the final terms of the Notes
provided that the maximum number of Shares issuable upon conversion of the Notes
shall not exceed 10,750,000, other than an increase resulting from a Share
Capital Change.
The Notes will be convertible, at the option of the holder, at any time on
or prior to maturity, unless the Notes have previously been redeemed or
repurchased, into Shares.
The conversion price of the Notes will be negotiated and established with
the initial purchaser(s) of the Notes at the time of the sale of the Notes but
will not be less than the greater of: (i) the market price of the Shares on the
NNM on the date of execution of definitive agreements in respect of the Private
Offering plus a premium (to be negotiated at the time) of not less than 10%; and
(ii) $6.30 per Share (being the closing price of our Shares on the NNM on
September 19, 2003, the last trading day prior to the date of this proxy
statement). In order to effect the Private Offering pursuant to Rule 144A of the
Securities Act, among other things, the conversion price of the Notes must be at
a premium of at least 10% to the market price of the Shares at the time of sale.
The final settlement of the conversion price for the Notes will not result in
the number of Shares issuable upon conversion of the Notes to exceed 10,750,000
Shares as proposed to be authorized by shareholders other than as a result of a
Share Capital Change.
The conversion price of the Notes will be subject to adjustment upon the
occurrence of certain customary anti-dilution events such as: (i) the issuance
of Shares as a dividend or distribution on our Shares; (ii) the subdivision or
combination of our outstanding Shares; (iii) the issuance to all or
substantially all holders of our Shares of certain rights or warrants entitling
them to subscribe for or purchase our Shares, or securities convertible into our
Shares; (iv) the distribution to all or substantially all holders of our Shares
of shares of our capital stock, evidences of indebtedness (including convertible
or exchangeable indebtedness) or other non-cash assets, or rights or warrants;
(v) the dividend or distribution to all or substantially all holders of our
Shares of all-cash distributions; and (vi) certain purchases of our Shares
pursuant to a tender offer made by us or any of our subsidiaries (herein
collectively called a "Share Capital Change").
In the event of:
* any reclassification of our Shares;
* a consolidation, merger or combination involving the Company; or
* a sale or conveyance to another person of the property and assets of
the Company as an entirety or substantially as an entirety;
in which holders of our outstanding Shares would be entitled to receive stock,
other securities, other property, assets or cash for their Shares, holders of
Notes will generally be entitled to convert their Notes into the same type of
consideration received by holders of Shares immediately prior to one of these
types of events.
No adjustment in the conversion price of the Notes will be required unless
it would result in a change in the conversion price of at least one percent. Any
adjustment not made will be taken into account in subsequent adjustments. Except
as stated above, we will not adjust the conversion price of the Notes for the
issuance of our Shares or any securities convertible into or exchangeable for
our Shares or the right to purchase our Shares or such convertible or
exchangeable securities.
The Notes are expected to be unsecured and subordinated to all of the
Company's existing and future senior indebtedness and effectively subordinated
to all existing and future indebtedness and other liabilities of the Company's
subsidiaries. Neither the Company nor its subsidiaries are expected to be
restricted from paying dividends or issuing or repurchasing their securities
pursuant to the terms of the Notes.
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The Notes are expected to be redeemable after five years in whole or in
part, at the Company's option, at a price equal to the principal amount thereof
plus accrued and unpaid interest, if any, to the date of redemption. Upon
certain changes in control, each holder of the Notes is expected to be able to
require us to repurchase some or all of its Notes 30 business days after the
occurrence of the change of control at a purchase price equal to the principal
amount of the Notes plus accrued and unpaid interest, if any, to the date of
purchase. A change of control is expected to be deemed to have occurred, among
other things, if a person becomes, directly or indirectly, the beneficial owner
of 50% or more of the total voting power in the Company or has the power,
directly or indirectly, to elect a majority of the members of the Board.
An event of default in connection with the Company's obligations under the
Notes is expected to occur, among other things, if the Company fails to pay
principal and interest on the Notes when due and in certain events of
bankruptcy, insolvency or reorganization of the Company or any of its
significant subsidiaries. The Company is expected to be able to amend the terms
of the Notes with the consent of the holders of a majority in aggregate
principal amount of the outstanding Notes, except in connection with, among
other things, a change in principal, interest, maturity, conversion or
subordination of the Notes, which is expected to require the consent of the
holder of each outstanding Note affected thereby.
VOTE REQUIRED
In accordance with the NASD Marketplace Rules, the affirmative vote of a
majority of Shares represented and voting, whether in person or by proxy, at the
Special Meeting will be required to approve the issuance of up to 10,750,000
Shares upon conversion of the Notes to be issued under the Private Offering,
subject to adjustment in the event of a Share Capital Change.
EFFECT OF SHAREHOLDER APPROVAL
The issuance of Shares upon conversion of the Notes will significantly
increase the number of Shares outstanding, have a dilutive effect on the
Company's existing shareholders and result in existing shareholders owning a
smaller percentage of the outstanding Shares. As at the Record Date, there were
16,874,899 Shares issued and outstanding. Approval by shareholders of this
proposal at the Special Meeting will authorize the Company to issue up to
10,750,000 more Shares upon conversion of the Notes.
BOARD RECOMMENDATION
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE
ISSUANCE OF UP TO 10,750,000 SHARES UPON CONVERSION OF THE NOTES AS DESCRIBED IN
THIS PROPOSAL.
If approved, the Board will still retain the discretion not to proceed with
the Private Offering if, in its opinion, to do so would not be in the best
interests of the Company and to vary the principal amount of Notes to be issued,
as it so determines.
NO DISSENT RIGHTS
Under Washington state law, shareholders are not entitled to dissent rights
with respect to this proposal.
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VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
There were 16,874,899 Shares of the Company issued and outstanding on the
Record Date. Each Share is entitled to one vote at the Special Meeting.
The following table sets forth certain information regarding the beneficial
ownership of the Company's Shares as of the Record Date by each shareholder
known by the Company to own more than five percent of the outstanding Shares.
The following is based solely upon statements made in filings with the SEC or
other information the Company believes to be reliable.
NAME AND ADDRESS OF OWNER NUMBER OF SHARES OWNED PERCENTAGE OF OUTSTANDING SHARES
------------------------- ---------------------- --------------------------------
Greenlight Capital, L.L.C.(1) 2,517,500 14.9%
420 Lexington Ave.
Suite 875
New York, NY 10170
Peter R. Kellogg 2,305,260 13.7%
120 Broadway, 6th Floor
New York, NY 10271
Cramer Rosenthal McGlynn 1,729,700 10.3%
707 Westchester Avenue
White Plains, NY 10604
Merrill Lynch & Co., Inc. 1,596,700 9.5%
4 World Financial Center
New York, NY 10080
Coghill Capital Management, LLC(2) 891,679 5.3%
One North Wacker Drive
Suite 4725
Chicago, IL 60606
----------------
(1) Filed jointly with Greenlight Capital, Inc. and David Einhorn.
(2) Filed jointly with CCM Master Fund, Ltd. and Clint D. Coghill.
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SECURITY OWNERSHIP OF TRUSTEES AND OFFICERS
The following table sets forth information regarding the ownership of the
Company's Shares as of the Record Date by: (i) each trustee and executive
officer of the Company; and (ii) all trustees and executive officers of the
Company as a group. Unless otherwise indicated, each person has sole voting and
dispositive power with respect to the Shares set forth opposite his name. Each
person has indicated that he will vote all Shares owned by him in favor of the
proposal to be considered at the Special Meeting.
NUMBER OF PERCENTAGE OF
NAME OF OWNER SHARES OWNED OUTSTANDING SHARES
------------- ------------ ------------------
Jimmy S.H. Lee(1) 1,619,800 8.8%
C.S. Moon(2) 29,000 *
R. Ian Rigg(2) 60,000 *
David M. Gandossi(3) 100,000 *
William McCartney - -
Graeme Witts - -
Kenneth A. Shields - -
Guy W. Adams(4)(5) 325,000 1.9%
Wolfram Ridder(2) 60,000 *
Trustees and Officers as a Group (9 persons)(6) 2,193,800 11.5%
---------------
* Less than 1%.
(1) Includes presently exercisable stock options to acquire up to 1,585,000
Shares.
(2) Represents presently exercisable stock options.
(3) In September 2003, the Company issued to Mr. Gandossi options to acquire
up to 100,000 of our Shares at a price of $5.65 per Share exercisable
as of September 10, 2003 as to one-third of the options granted and
one-third on each of September 10, 2004 and September 10, 2005. These
options have a ten-year term.
(4) In August 2003, the Company issued options to purchase up to 225,000
Shares to GWA Investments, LLC ("GWA"), a company managed by Mr.
Adams, exercisable until September 22, 2003 and up to 100,000 Shares
to Mr. Adams exercisable until June 20, 2004, each at an exercise price
of $4.53 per Share.
(5) On September 16, 2003, the Company issued 225,000 Shares to GWA pursuant
to the exercise of stock options.
(6) Includes presently exercisable stock options to acquire up to 2,159,000
Shares.
INDEPENDENT ACCOUNTANTS AND AUDITORS
The Company appointed Deloitte & Touche LLP as the Company's new
independent auditors in place of Peterson Sullivan PLLC effective July 14, 2003
and the appointment was ratified by shareholders at the annual meeting of
shareholders held on August 22, 2003. Peterson Sullivan PLLC examined the
consolidated financial statements of the Company for the fiscal year ended
December 31, 2002. Representatives of Deloitte & Touche LLP and Peterson
Sullivan PLLC are not expected to be present at the Special Meeting.
FUTURE SHAREHOLDER PROPOSALS
Any proposal which a shareholder intends to present at the next annual
meeting of shareholders of the Company must be received by the Company on or
before January 30, 2004. A shareholder must submit such a proposal to the
Company for inclusion in the proxy statement for the next annual shareholders'
meeting on or before April 16, 2004, or management will have discretionary
authority to vote proxies received for such meeting with respect to any such
proposal.
9
OTHER MATTERS
The Trustees know of no matters other than those set out in this proxy
statement to be brought before the Special Meeting. If other matters properly
come before the Special Meeting, it is the intention of the proxyholders to vote
the proxies received for the Special Meeting in accordance with their judgment.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with it. This permits us to disclose important information to you by referring
you to those documents. We incorporate by reference in this proxy statement the
following:
* Audited Consolidated Financial Statements for the year ended
December 31, 2002 set out in the Company's Annual Report on
Form 10-K for the year ended December 31, 2002 (the "Annual
Report"), including supplementary financial information;
* Management's Discussion and Analysis of Financial Condition and
Results of Operations set out under Item 7 of the Annual Report;
* Quantitative and Qualitative Disclosures About Market Risk set out
under Item 7A of the Annual Report;
* Quarterly Report on Form 10-Q for the Six Months Ended June 30,
2003; and
* Current Reports on Form 8-K filed with the SEC on May 13, 2003
and July 17, 2003 and Current Report on Form 8-K/A filed with the
SEC on August 7, 2003 and Current Report on Form 8-K filed with
the SEC on September 12, 2003.
These documents have been filed with the SEC and are available to the
public from the SEC's web site at http://www.sec.gov. We will provide promptly
without charge to you, upon written or oral request, a copy of any document
incorporated by reference in this proxy statement, other than exhibits to these
documents unless the exhibits are specifically incorporated by reference in
these documents. Requests should be directed as follows:
Mercer International Inc.
14900 Interurban Avenue South
Suite 282
Seattle, Washington
USA 98168
Telephone: (206) 674-4639
Attention: Investor Relations
Any statement contained in a document incorporated or deemed to be
incorporated by reference into this proxy statement will be deemed to be
modified or superseded for the purposes of this proxy statement to the extent
that a statement contained herein, or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein, modifies or
supersedes that statement. The modifying or superseding statement need not state
it has modified or superseded a prior statement or include any other information
set forth in the document that it modifies or supersedes. The making of a
modifying or superseding statement is not an admission for any purposes that the
modified or superseded statement, when made, constituted a misrepresentation, an
untrue statement of a material fact or an omission to state a material fact that
is required to be stated or that is necessary to make a statement not misleading
in light of the circumstances in which it was made. Any statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this proxy statement.
BY ORDER OF THE BOARD OF TRUSTEES
Date: September 22, 2003
10
PROXY
MERCER INTERNATIONAL INC.
("MERCER" OR THE "COMPANY")
14900 INTERURBAN AVENUE SOUTH, SUITE 282
SEATTLE, WA 98168
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF MERCER INTERNATIONAL INC.
The undersigned hereby appoints Jimmy S.H. Lee, or failing him William
McCartney, as proxy, with the power of substitution, to represent and to vote as
designated below all the shares of beneficial interest of Mercer held of record
by the undersigned on September 12, 2003 at the Special Meeting of Shareholders
to be held on October 3, 2003, or any adjournment thereof.
1. Approval of the issuance of up to 10,750,000 shares upon conversion of
convertible notes proposed to be issued by the Company subject to
adjustment for certain customary anti-dilution matters such as
distributions of the Company's shares, subdivisions or combinations of
the Company's shares or alterations to the Company's share capital as
described in the Company's proxy statement dated September 22, 2003.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. In his discretion, the proxyholder is authorized to vote upon such other
business as may properly come before the meeting.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR EACH OF THE MATTERS TO BE VOTED UPON OR RATIFIED AT THE MEETING.
Please sign exactly as name appears on your share certificate(s). When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
DATED: , 2003.
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Signature
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Print Name
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Signature, if jointly held
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Print Name
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Number of shares held
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE OR BY FACSIMILE TO (212) 440-9009.