TORONTO: Canadian pulp producer Mercer International Inc plans to file for Chapter 11 bankruptcy as part of a restructuring that would slash its debt and bring in US$400mil of new money.
The company said Monday it had entered an agreement with holders of more than 87% of its senior notes and a majority of its shareholders, according to a statement.
The deal would exchange about US$1.1bil of senior notes for equity, reducing that debt by about 88%. It plans to file a prepackaged Chapter 11 in Texas.
The new money will come through a US$400mil rights offering.
Certain members of an ad hoc group of noteholders have fully backstopped the offering, according to the statement.
Existing shareholders will receive 8.5% of the reorganised company’s new common stock and 3.5% of its new convertible preferred stock. — Bloomberg
