Displaying items by tag: Mercer International Inc

Mercer International Inc. has announced it has established a C$1 million partnership with The University of British Columbia's (UBC) Department of Chemical and Biological Engineering and The Pulp and Paper Centre, both in the Faculty of Applied Science, in the creation of an industrial research chair in Advanced Forest Bio-Products Engineering.

"Mercer is very pleased to be partnering with the Department and the Centre, both of which have well respected reputations for strong commitments to education and research excellence," said Jimmy Lee, President and CEO.

"Mercer's five year commitment to support this new research chair at UBC underscores our belief in the future of the forest products industry and the opportunities and resulting value potentially available to the industry in the emerging bio-economy," says Mr. Lee. Mr. Lee also noted that, "Mercer is committed to being a global leader in sustainable forest practices, which includes maximizing the value of our forest resources through sound forestry management and investing in research and development that will generate tomorrow's transformative technologies. Partnering with UBC is a natural extension of our desire to be at the forefront of the industry's transformation."

The chairholder, who will be appointed in the Department of Chemical and Biological Engineering and who will work closely with the Pulp and Paper Centre, will focus specifically on establishing the scientific and engineering breakthroughs needed to create commercially viable opportunities for sustainably converting forest fibre resources into new high-value bio-products.

"Our strategy of continuously striving for world-class performance, and of implementing new and innovative technologies which improve our social, environmental and economic sustainability, is at the core of why Mercer is proud to support this research chair in Advanced Forest Bio-Products Engineering at UBC," said David Gandossi, Executive Vice President, Chief Financial Officer and Secretary.

Mercer International Inc. has announced it has served a Request for Arbitration on the Government of Canada for breaches by it of its obligations under the North American Free Trade Agreement ("NAFTA").

Actions by BC Hydro and the BC Government Disadvantage Mercer's Celgar Pulp Mill 

Mercer's NAFTA claim arises from the treatment of its Celgar Pulp Mill's energy generation assets and operations by the Province of British Columbia, both directly and through the actions of British Columbia Hydro and Power Authority ("BC Hydro"), a Provincially-owned and controlled enterprise, and the British Columbia Utilities Commission, a Provincial Government regulatory agency. Mercer's Claim is against Canada, rather than the Province of British Columbia as, under NAFTA, Canada is responsible for the actions of its Provinces.

Under NAFTA, Mercer's investments in Canada are required to be accorded treatment that is no less favorable than the most favorable treatment accorded to Canadian investors. The Celgar Mill, BC's largest and most modern, has been placed at a competitive disadvantage as a result of discriminatory treatment by BC Hydro and the uneven application of BC energy policy.

As a preliminary step in the NAFTA arbitration process, Mercer had previously served a Notice of Intent to Submit a Claim to Arbitration (the "Notice") on the Government of Canada on January 26, 2012.

Subsequent to the filing of the Notice, Mercer representatives met with representatives of the Government of Canada and the Province of British Columbia to attempt to settle the Claim through consultation and negotiation, as required under NAFTA Article 1118. However, no resolution was achieved. As a result, Mercer filed the Arbitration Request in order to meet the applicable filing deadline and to preserve and progress the Claim.

"We have reluctantly filed the Arbitration Request following years of attempts to resolve our issues through proceedings before the Commission, dialogue with the Province and recent consultations that included the Government of Canada," said Jimmy Lee, President and CEO. Mr. Lee also reiterated that: "Under Provincial policy, the Mill's ability to effectively utilize its own generation assets and to sell and purchase energy is severely and unfairly restricted. All other competing pulp mills in British Columbia receive more favorable treatment with respect to their ability to purchase and sell energy. This puts the Mill at a competitive disadvantage."

Under the NAFTA Claim Mercer is seeking damages in the amount of approximately CDN $250 million, consisting of past losses of approximately CDN $19 million per year accruing since 2008 and the net present value of projected losses that would result from the ongoing application of discriminatory Provincial policies should the status quo remain unchanged.

About the Claim

The Province of British Columbia is primarily served by two regulated utilities, BC Hydro, whose service area covers approximately 90% of the Province by area, and FortisBC Inc. ("FortisBC"), whose service area covers most of the remainder of the Province.

In the Arbitration Request, Mercer describes how the Mill has received unfair and discriminatory treatment as compared to other pulp mills and entities that generate and sell electricity within the Province of British Columbia.

As set forth in Mercer's press release of January 26, 2012, the basis for the Claim is that:

- In August, 2008, the Mill entered into an agreement with FortisBC (the "2008 PPA") to purchase all of its electricity needs from FortisBC, and filed the agreement for approval with the Commission. The 2008 PPA would have enabled the Mill to sell all of its self-generated electricity to third party purchasers. At the time that the Mill entered into the 2008 PPA, the agreement complied with all existing regulatory requirements.

- At such time, BC Hydro was obliged to supply a significant portion of FortisBC's energy requirements pursuant to an energy purchase agreement between BC Hydro and FortisBC (the "3808 Agreement") at lower embedded cost rates, the benefits of which were passed on to FortisBC's customers. The energy generated by BC Hydro's hydroelectric facilities is commonly referred to as "Heritage Power" and, as a matter of Provincial policy, is supposed to be made available to all BC Hydro ratepayers, including FortisBC for the benefit of its customers.

- In September, 2008, approximately three weeks after the Mill and FortisBC filed the 2008 PPA with the Commission, BC Hydro made application to the Commission to amend the 3808 Agreement for the purpose of restricting access by customers of FortisBC, such as the Mill, to energy (inclusive of Heritage Power) purchased under the 3808 Agreement, while such customers were selling their own self-generated electricity. The Province of British Columbia argued in favor of BC Hydro's application and the Commission ordered the requested amendment. The Mill was the only pulp mill in British Columbia operationally affected by the amendment.

- The 2008 Agreement was frustrated by the Commission's order. The Mill's ability to purchase energy from FortisBC, while selling its self-generated electricity, was blocked. As a result, the Mill became the only pulp mill in the Province of British Columbia that was required to service all of its internal electricity needs, from self-generation, before being entitled to sell any of its self-generated electricity.

- Other pulp mills throughout the Province have entered into agreements with BC Hydro that entitle them to purchase electricity from BC Hydro at the same time that they sell electricity. A similar arrangement between the Mill and FortisBC was prevented by the Commission order.

- As a result, competing pulp mills within the Province have been and continue to be provided an economic and competitive advantage over the Mill, in perpetuity, not because of technological innovation, greater investment or superior infrastructure, but because of government policy and regulatory intervention. In addition, such pulp mills have been the recipients from BC Hydro of direct subsidies or low interest rate loans, together with agreements to purchase power generated by such pulp mills, below their internal requirements, at favorable, market-based rates. Similar incentives, loans and below net-of-load purchase arrangements have not been made available to the Mill.

-Mercer has engaged in dialogue with the Province and has undertaken subsequent applications and proceedings before the Commission, seeking a reconsideration of the Commission's initial decision, and seeking other alternative remedies. However, the Mill remains barred from purchasing any energy from FortisBC, and continues to be the only pulp mill in the Province of British Columbia that is denied access to any Heritage Power, while selling energy that is not in excess of its operational needs.

Mercer International Inc. (Nasdaq:MERC) (TSX:MRI.U) ("Mercer") announced that its offer (the "Offer") for all of the common shares (the "Fibrek Shares") of Fibrek Inc. ("Fibrek") expired on April 27, 2012 (the "Expiry Time").

The Offer was conditioned upon, among other things, at least 50.1% of the outstanding Fibrek Shares, on a fully-diluted basis, having been tendered thereunder, which was not met as of the Expiry Time. Accordingly, Mercer and MERC Acquisition Inc. will not acquire any Fibrek Shares that were tendered under the Offer.

In connection with the foregoing, the Support Agreement between Mercer and Fibrek dated February 9, 2012, as amended, has been terminated. All Fibrek Shares that were previously tendered under the Offer and not withdrawn will be returned promptly.

AbitibiBowater Inc., doing business as Resolute Forest Products has announced that Mercer International Inc.has withdrawn its application requesting an order to cease trade Resolute's offer to acquire Fibrek Inc.  Mercer filed its application with the Bureau de décision et de révision (Québec) on March 29.

Yesterday the Company announced that the Supreme Court of Canada had refused to hear an appeal by Fibrek and Mercer of the Québec Court of Appeal's decision concerning Fibrek's special warrants.  Accordingly, the order issued by the Bureau de décision et de révision (Québec) on February 23 is now final and non-appealable, and Fibrek's dilutive private placement of 32,320,000 special warrants to Mercer is definitively cease traded.

On April 11, Resolute acquired 60,831,859 Fibrek shares, representing approximately 46.8% of those currently outstanding, and announced that it had extended the expiry time for its offer in order to allow additional Fibrek shareholders to participate.  The offer currently expires at 5:00 p.m. (Eastern time) on April 23, 2012.

Questions and requests for assistance or further information on how to tender Fibrek common shares to the offer should be directed to, and copies of the above referenced documents may be obtained by contacting, Georgeson at 1-866-598-0048 or by email at This email address is being protected from spambots. You need JavaScript enabled to view it.

Mercer International Inc.announced that the Supreme Court of Canada has denied Fibrek Inc.'s ("Fibrek") and Mercer's applications for leave to appeal the Québec Court of Appeal's decision to maintain the cease trade order of the Bureau de décision et de revision (Québec) in respect of the previously announced private placement of "special warrants" by Fibrek.

Any questions or requests for further information respecting the Mercer's offer for all of the common shares of Fibrek should be directed to Laurel Hill Advisory Group Company, the information agent under the offer, at 1-877-304-0211 (toll free in North America) or 1-416-304-0211 (collect calls) or by email at This email address is being protected from spambots. You need JavaScript enabled to view it..

Mercer International Inc. announced that it has extended to April 16, 2012, the expiry date for its offer (the "Offer") to acquire all of the issued and outstanding common shares of Fibrek Inc. ("Fibrek"). The extension is intended to allow Mercer to obtain shareholder approval (the "Shareholder Approval") at its meeting of shareholders scheduled for April 10, 2012, for the issuance of its common stock (the "Mercer Shares") in connection with the Offer. Mercer previously entered into voting support agreements with its two largest institutional shareholders and its Chairman and Chief Executive Officer, who collectively own approximately 44% of the outstanding Mercer Shares, who have agreed to vote their Mercer Shares in favor of the Shareholder Approval.

The consideration offered by Mercer under the Offer and the remaining terms thereof remain unchanged. As varied, Mercer's Offer will expire at 11:59 p.m. (Eastern Time) on April 16, 2012, unless otherwise extended or withdrawn by Mercer.

Mercer also announced that it has: (i) received a favorable decision from the federal Minister of Industry following his review of Mercer's proposed acquisition of Fibrek under the Investment Canada Act and (ii) been granted early termination of the statutory waiting period for U.S. competition and antitrust review by the U.S. Federal Trade Commission.

The Offer remains subject to customary conditions, including, among others, there being deposited (and not withdrawn) that number of Fibrek common shares which, together with the Fibrek common shares and special warrants, if any, held by Mercer, represent at least 50.1% of the outstanding Fibrek common shares on a fully-diluted basis, receipt of the Shareholder Approval and the absence of a material adverse change with respect to Fibrek. As at the date hereof, approximately 28 million common shares of Fibrek have been deposited to the Offer.

Full details of the Offer are included in the offer and takeover bid circular dated February 29, 2012 and ancillary documents, as amended by the notice of variation dated March 19, 2012 and the notice of variation and extension dated April 5, 2012, all of which are available on SEDAR at www.sedar.com.

Mercer International Inc. has announced that it has entered into a support agreement (the "Support Agreement") with Fibrek Inc. ("Fibrek") for Mercer to acquire all of the issued and outstanding common shares of Fibrek (the "Fibrek Shares") by way of a take-over bid (the "Offer").

Pursuant to the Offer, Fibrek shareholders will have the ability, on an individual basis, to elect to receive:

• C$1.30 in cash per Fibrek Share;
• 0.1540 of a share of Mercer's common stock (a "Mercer Share") per Fibrek Share; or
• C$0.54 in cash plus 0.0903 of a Mercer Share per Fibrek Share,

subject to proration necessary to effect maximum aggregate cash consideration of C$70.0 million and maximum aggregate share consideration of 11,741,496 Mercer Shares.

The Offer provides for consideration of C$1.30 per Fibrek Share or total consideration of approximately C$170 million for the Fibrek Shares, representing a premium of 30% over the unsolicited insider bid made by AbitibiBowater Inc. (the "Abitibi Bid"), 81% over the closing price of the Fibrek Shares on November 28, 2011, the date of announcement of the Abitibi Bid, and 70% over the volume-weighted average trading price of the Fibrek Shares on the Toronto Stock Exchange for the 20 trading days ending on such date.

The board of directors of Fibrek, after consulting with its financial and legal advisers, has unanimously approved entering into the Support Agreement and unanimously recommends that Fibrek shareholders tender to the Offer. Fibrek's board of directors has received a fairness opinion from Fibrek's financial advisor, TD Securities Inc., that the consideration offered by Mercer for the Fibrek Shares under the Offer is fair, from a financial point of view, to the Fibrek shareholders (other than shareholders that entered lock-up agreements in connection with the Abitibi Bid). In addition, in conjunction with the Support Agreement, certain directors and officers of Fibrek have entered into lock-up agreements with Mercer.

"We are pleased to have the full support of Fibrek's board of directors for a transaction that we believe will deliver significant benefits to both companies' customers, employees and shareholders. The acquisition of Fibrek clearly fits within our strategy of focusing on world-class production assets that produce high quality pulp. Additionally, the ability of Fibrek's St. Felicien mill to produce and sell surplus renewable energy is in line with our goal of increasing our revenues from energy sales," stated Jimmy S.H. Lee, President and Chief Executive Officer.

Mr. Lee added: "We believe that Fibrek's mills are complementary to our existing operations and we feel that, through active management, the acquisition of Fibrek will generate increased value for our shareholders."

The Support Agreement provides for, among other things, a non-solicitation covenant on the part of Fibrek, subject to customary "fiduciary out" provisions, a right in favour of Mercer to match any superior proposal and a termination fee of C$8.5 million payable to Mercer in certain circumstances, including if Fibrek accepts a superior proposal.

The Offer is expected to be made pursuant to a take-over bid circular and related documents to be mailed to Fibrek shareholders in accordance with applicable laws (all subject to the terms and conditions of the Support Agreement). The Mercer Shares to be issued under the Offer will be registered pursuant to a registration statement on Form S-4 (the "Registration Statement") to be filed with the U.S. Securities and Exchange Commission (the "SEC").

The Offer will be open for acceptance for a period of not less than 35 days from its commencement and may be extended from time to time. The Offer will be subject to customary conditions, including, among other things, there being deposited under the Offer, and not withdrawn at the expiry date, at least 50.1% of the Fibrek Shares, receipt of requisite regulatory consents, the Registration Statement being declared effective by the SEC and the absence of a material adverse change with respect to Fibrek.

Concurrently with the execution of the Support Agreement, Mercer has agreed to purchase 32,320,000 special warrants (the "Warrants") at a price of C$1.00 per Warrant (the "Warrant Placement"). Each Warrant is convertible into a Fibrek Share on a one-for-one basis. Conversion is automatic in certain events and otherwise at the option of Mercer. The Warrants are also redeemable, including by Fibrek, at their subscription price in certain events. Completion of the Warrant Placement is subject to, among other things, obtaining Toronto Stock Exchange approval.

Mercer intends to finance the cash portion of the Offer by way of new credit facilities to be established with Québec based capital providers.

Mercer intends to hold a special meeting of its shareholders in order to obtain shareholder approval of the issuance of the Mercer Shares, as required under the rules of the NASDAQ Global Market (the "Shareholder Approval"). In connection with such approval, Mercer has entered into voting support agreements with two institutional shareholders and its President and Chief Executive Officer, who collectively hold, directly or indirectly, approximately 44% of the outstanding Mercer Shares, to vote all of their Mercer Shares in favour of the Shareholder Approval.

Raymond James Ltd. is acting as financial advisor to Mercer, while TD Securities Inc. is acting as financial advisor to Fibrek. Sangra Moller LLP is acting as legal advisor to Mercer and Stikeman Elliott LLP is acting as legal advisor to Fibrek.

Mercer International Inc. has announced that Ken Shields has resigned as a director of the Company.

Mr. Shields stated: "It has been a great pleasure to serve as a director and vice-chairman of Mercer but, due to demands from my other business interests, including the potential for increasing overlap between them and the Company in the energy segment, I felt it was appropriate to resign at this time. I wish the Company every success in the future."

Jimmy Lee, President and CEO, stated: "We regretfully accepted Ken's resignation as a director and, on behalf of the whole board and myself, wish to thank him for his invaluable service and contribution to the Company over the past eight years. We will miss his guidance and contribution and wish Ken all the best in all his future endeavours."

Mercer International Inc. is a global pulp manufacturing company. To obtain further information on the company, please visit its web site at http://www.mercerint.com.

Mercer International Inc. has served a Notice of Intent to Submit a Claim to Arbitration (the "Notice") on the Government of Canada for breaches by it of its obligations under the North American Free Trade Agreement ("NAFTA"). Under NAFTA, Mercer's investments in Canada are to be treated on a basis that is no less favorable than the most favorable treatment afforded to Canadian investors. Mercer's NAFTA claim (the "Claim") relates to its investments in its Castlegar pulp mill (the "Mill").

Mercer's Claim arises from the treatment of the Mill's energy generation assets and operations by the Province of British Columbia, primarily through the actions of British Columbia Hydro and PowerAuthority ("BC Hydro"), a Provincially owned and controlled enterprise, and the British Columbia Utilities Commission (the "Commission"), a Provincial Government regulatory agency. Mercer's Claim is against Canada, rather than the Province of British Columbia as, under NAFTA, Canada is responsible for the actions of its Provinces.

"We have been forced to commence the NAFTA Claim following years of attempts to resolve our issues through dialogue with the Province and proceedings before the Commission because of NAFTA time period limitations relating to the expiry of our claim," said Jimmy Lee, President and CEO. He continued: "We are bringing the Claim as, under Provincial policy, the Mill's ability to effectively utilize its own generation assets and to sell and purchase energy is severely and unfairly restricted. All other competing pulp mills in British Columbia receive more favorable treatment with respect to their ability to purchase and sell energy. This puts the Mill at an unfair competitive disadvantage. In our various attempts to resolve the issue, we have sought fair treatment in order to put us on equal footing with other pulp mills within the Province that have electrical generation capacity. Unfortunately, we were not able to obtain a satisfactory resolution through these efforts."

Mr. Lee then stated that: "Mercer acquired the Mill in 2005 for an aggregate purchase price, including working capital of over Cdn. $250 million. Since then we have invested in excess of Cdn. $100 million in additional capital to upgrade the Mill and increase its electricity generation capacity. We believe that maintaining and enhancing revenues from the production of green energy and other by-products at all of our mills is critical to Mercer's future success. Mercer must maintain its competitive position vis-à-vis other less efficient mills within the Province as well as at our other mill locations. Mercer simply cannot stand idly by and allow its competitive position to be unfairly eroded."

Mr. Lee continued: "The unfair and discriminating treatment of the Mill has resulted in it losing about Cdn. $19 million of incremental energy sales per annum."

Mr. Lee concluded: "Under the NAFTA Claim, we will be seeking damages in the amount of approximately Cdn. $250 million consisting of past losses of approximately Cdn. $19 million per year accruing since 2008 and the net present value of projected losses arising from the ongoing application of discriminatory Provincial policies."

About the Claim

As background to the Claim, the Province of British Columbia is served by two regulated utilities, BC Hydro, whose service area covers approximately 90% of the Province by area, and FortisBC Inc. ("FortisBC"), whose service area covers the remainder of the Province. In the Notice, Mercer describes how the Mill has received unfair and discriminatory treatment as compared to other pulp mills and entities that generate and sell electricity within the Province of British Columbia.

The primary factual bases for the Claim are that:

o In August, 2008, the Mill entered into an agreement with FortisBC (the "2008 PPA") to purchase all of its electricity needs from FortisBC, and filed the agreement for approval with the Commission. The 2008 PPA would have enabled the Mill to sell all of its self-generated electricity to third party purchasers. At the time that the Mill entered into the 2008 PPA, the agreement complied with all existing regulatory requirements.

o At such time, BC Hydro was obliged to supply a significant portion of FortisBC's energy requirements pursuant to an energy purchase agreement between BC Hydro and FortisBC (the "3808 Agreement") at lower embedded cost rates, the benefits of which were passed on to FortisBC's customers. The energy generated by BC Hydro's hydroelectric facilities is commonly referred to as "Heritage Power" and, as a matter of Provincial policy, is supposed to be made available to all BC Hydro ratepayers, including FortisBC for the benefit of its customers.

o In September, 2008, approximately three weeks after the Mill and FortisBC filed the 2008 PPA with the Commission, BC Hydro made application to the Commission to amend the 3808 Agreement for the purpose of restricting access by customers of FortisBC, such as the Mill, to energy (inclusive of Heritage Power) purchased under the 3808 Agreement, while such customers were selling their own self-generated electricity. The Province of British Columbia argued in favor of BC Hydro's application and the Commission ordered the requested amendment. The Mill was the only pulp mill in British Columbia operationally affected by the amendment.

o The 2008 Agreement was frustrated by the Commission's order. The Mill's ability to purchase energy from FortisBC, while selling its self-generated electricity, was blocked. As a result, the Mill became the only pulp mill in the Province of British Columbia that was required to service all of its internal electricity needs, from self-generation, before being entitled to sell any of its self-generated electricity.

o Other pulp mills throughout the Province have entered into agreements with BC Hydro that entitle them to purchase electricity from BC Hydro at the same time that they sell electricity. A similar arrangement between the Mill and FortisBC was prevented by the Commission order.

o As a result, competing pulp mills within the Province have been and continue to be provided an economic and competitive advantage over the Mill, in perpetuity, not because of technological innovation, greater investment or superior infrastructure, but because of government policy and regulatory intervention. In addition, such pulp mills have been the recipients from BC Hydro of direct subsidies or low interest rate loans, together with agreements to purchase power generated by such pulp mills, below their internal requirements, at favorable, market-based rates. Similar incentives, loans and below net of load purchase arrangements have not been made available to the Mill.

Mercer has engaged in dialogue with the Province and has undertaken subsequent applications and proceedings before the Commission, seeking a reconsideration of the Commission's initial decision, and seeking other alternative remedies. However, the Mill remains barred from purchasing any energy from FortisBC, and continues to be the only pulp mill in the Province of British Columbia that is denied access to any Heritage Power, while selling energy that is not in excess of its operational needs.

Mercer International Inc. has announced a project ("Project Blue Mill") to increase production and efficiency through debottlenecking initiatives including the installation of an additional 40 MW steam turbine at its Stendal mill. The debottlenecking which, among other things, requires the new turbine in order to enhance and efficiently utilize steam production, is designed to increase the mill's annual pulp production capacity by 30,000 ADMTs to approximately 675,000 ADMTs. The new turbine is also expected to initially produce an additional 109,000 MWh of surplus renewable energy for sale at premium pricing.

"We are very pleased with this project," said Jimmy Lee, President and CEO. "The project allows us to maximize the value from the wood that we process at Stendal, increase production and efficiency, provide a backup generator on the first turbine and reduce energy costs during maintenance periods and expand power generation. We currently expect the project, in addition to enhancing mill operating results, to deliver approximately €7.5 million (U.S. $9.8 million) of additional annual power revenues."

Mr. Lee concluded: "The project is in line with our group's overall focus on enhancing revenues from the production of green energy and other by-products at all of our mills. We believe that our generation and sale of surplus renewable energy and by-products give Mercer a competitive energy advantage over less efficient mills and provides us with a stable revenue source unrelated to pulp pricing. Based upon our overall 2011 production and sales, after giving effect to Project Blue Mill, on a consolidated basis, we currently expect Mercer will produce about 760,000 MWh of annual surplus renewable green energy and generate approximately €65.5 million (U.S. $84.5 million) of associated revenues therefrom. Since our energy production is a by-product of our pulp production process there are minimal incremental costs and our surplus energy sales are highly profitable."

Project Blue Mill will require approximately €40.0 million in capital expenditures over about 21 months. The project is eligible for €12.0 million of non-refundable German government grants and the Stendal mill has secured a new €17.0 million five year amortizing secured term debt facility, of which 80% will be government guaranteed. The facility is non-recourse to Mercer. The balance of the project will be funded through operating cash flow of the Stendal mill and up to an aggregate of €8.0 million in pro-rata shareholder loans from Mercer and its minority partner. Project Blue Mill is currently designed to be completed and start to generate power revenues in or about September, 2013.

The Stendal mill is a state-of-the-art, single-line NBSK pulp mill situated near the town of Stendal, Germany with a current annual pulp production capacity of approximately 645,000 ADMTs.