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-11(c) or Rule 14a-12
Mercer International Inc.
(Names of Registrant as Specified in Its Charter)
(Names of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check appropriate box):
|X| No filing fee.
|_| Fee computed on table below per Exchange Act rules 14a-6(i)(4) 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 computes
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:
|_| 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:
<PAGE>
MERCER INTERNATIONAL INC.
Giesshubelstrasse 15
8045 Zurich
Switzerland
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
Mercer International Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of Mercer
International Inc., a Massachusetts trust organized under the laws of the State
of Washington (the "Company"), will be held at Hauptstraae 16, D 07365
Blankenstein, Germany at 9:00 a.m., Central Europe Time, July 11, 2000, for the
following purposes:
1. To elect one (1) Trustee of the Company.
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Trustees have fixed the close of business on May 22, 2000, as the
record date for the determination of Shareholders entitled to notice of and to
vote at the Annual Meeting.
By Order of the Trustees
Jimmy S.H. Lee
President
June __, 2000
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE REQUESTED TO COMPLETE,
SIGN, DATE AND RETURN THE PROXY IN THE ENCLOSED ENVELOPE. INSTRUCTIONS FOR THE
PROPER EXECUTION OF PROXIES ARE SET FORTH IN THE PROXY STATEMENT.
<PAGE>
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 Annual Meeting of Shareholders to be held at Hauptstraae 16, D 07365
Blankenstein, Germany on July 11, 2000, and any adjournments thereof. If the
Proxy is properly executed and received by the Company prior to the meeting or
any adjournment thereof, the Shares represented by your Proxy will be voted in
the manner directed. In the absence of voting instructions, the shares will be
voted for each of the proposals. The 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 Secretary of the Company, Mr. Ian Rigg, c/o Suite 1620, 400 Burrard
Street, Vancouver, British Columbia, Canada V6C 3A6, bearing a date later than
the date of the Proxy or by giving oral notice of revocation at the meeting. You
may also revoke your Proxy in person at the meeting. If you attend the meeting
and have submitted a Proxy, you need not revoke your Proxy and vote in person
unless you elect to do so. The Proxy Statement and form of Proxy are being
mailed to Shareholders commencing on or about June __, 2000.
The affirmative vote of at least a majority of the shares of beneficial
interest ("Shares") cast in person or by proxy at the Annual Meeting is required
to approve the election of Trustees. The holders of one-third of the outstanding
Shares and entitled to vote at the Annual Meeting, present in person or
represented by proxy, constitute a quorum. Under applicable Washington law,
abstentions and broker non-votes will be counted for purposes of establishing a
quorum, but will have no effect on the vote on the election of the Trustee.
Proxies will be solicited primarily by mail and may also be solicited
personally and by telephone by Trustees and regular employees of the Company
without additional remuneration therefor. The Company may also reimburse banks,
brokers, custodians, nominees and fiduciaries for their reasonable charges and
expenses in forwarding Proxies and Proxy materials to the beneficial owners of
the Shares. All costs of solicitation of Proxies will be borne by the Company.
The Company does not presently intend to employ any other party to assist in the
solicitation process.
The close of business on May 22, 2000, has been fixed as the record date
(the "Record Date") for the determination of Shareholders entitled to notice of
and to vote at the Annual Meeting.
Voting Securities and Principal Shareholders
The holders of record of 16,635,399 Shares of the Company issued and
outstanding on the Record Date will be entitled to one vote per Share at the
meeting. Under the Company's Declaration of Trust, cumulative voting in the
election of Trustees is not permitted. Trustees will be elected by the majority
of votes cast at the meeting.
<PAGE>
The following table sets forth certain information regarding the beneficial
ownership of the Company's Shares as of April 30, 2000, by each shareholder who
is known by the Company to own more than five percent of the outstanding Shares.
The following is based solely on statements on filings with the Securities and
Exchange Commission or other information the Company believes to be reliable.
<TABLE>
<CAPTION>
Name and Address Number Percent of
of Beneficial Owner of Shares Outstanding Shares
- ------------------- --------- ------------------
<S> <C> <C>
FMR Corp.<F1> 1,917,650 11.5%
82 Devonshire Street
Boston, MA 02109
Schneider Capital Management Corporation 1,380,100 8.3%
460 E. Swedesford Street
Suite 1080
Wayne, PA 19087
Princeton Services Inc.<F2> 1,341,985 8.1%
800 Scudders Mill Road
Plainsboro, NY 08536
Greenlight Capital, L.L.C. 1,687,000 10.1%
420 Lexington Ave.
Suite 875
New York, NY 10170
</TABLE>
<F1> Filed jointly with Edward C. Johnson 3d and Abigail P. Johnson.
<F2> Filed on behalf of Merrill Lynch Asset Management Group, together Merrill
Lynch Special Value Fund, Inc. ("MLF"). MLF claims shared voting and
dispositive power with respect to 1,609,000 shares.
<PAGE>
PROPOSAL 1
ELECTION OF TRUSTEES
Pursuant to resolutions of the Trustees under authority granted by the
Company's Declaration of Trust, the number of Trustees of the Company is
established at five. The votes of a majority of the Shares cast in person or by
Proxy at the Annual Meeting are required to elect the Trustees.
The Board of Trustees is divided into three classes. Each class of Trustee
is elected for a three-year term. The nominee for Trustee, Mr. Michel Arnulphy,
is member of Class III, and is to be elected to the Board of Trustees for a
three-year term to serve until the annual meeting of shareholders in 2003, or
until his successor is elected and qualified. Mr. Arnulphy currently serves as a
Trustee.
Mr. Arnulphy has indicated that he is willing and able to serve as a
Trustee. If he is unable or unwilling to serve, the accompanying proxy may be
voted for the election of such other person as shall be designated by the
Trustees. Proxies received by the Trustees on which no designation is made will
be voted FOR the nominee.
Trustees
The following table sets forth information regarding each nominee for
election as a Trustee and each Trustee whose term of office will continue after
the Annual Meeting.
<TABLE>
<CAPTION>
Expiration of
Name Current Position with the Company Age Term as a Trustee
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jimmy S. H. Lee Chairman, President and Trustee 43 2002
C. S. Moon Trustee 53 2001
Maarten Reidel Trustee 36 2001
Michel Arnulphy Trustee 66 2000
R. Ian Rigg Secretary and Chief Financial
Officer and Trustee 56 2002
</TABLE>
Jimmy S.H. Lee has been a Trustee since May, 1985, and Chief Executive
Officer of the Company since 1992. Mr. Lee is a director of Med Net
International Ltd. and Pine Resources Corporation.
C. S. Moon has been a Trustee since June 1994. Mr. Moon is an independent
consultant. From 1990 until 1998, he was Executive Director of Shin Ho Group of
Korea, an international paper manufacturer headquartered in Korea. Prior to
joining Shin Ho in 1990, Mr. Moon previously served in managerial positions with
Moo Kim Paper Manufacturing Co., Ltd. and Sam Yung Pulp Co., Ltd., both in
Korea.
Maarten Reidel has been a Trustee since December 1996, a Managing Director
of Spezialpapierfabrik Blankenstein GmbH ("SBG") from 1994 to 1999 and the
Chairman of the Management Board of Dresden Papier AG ("DPAG") from 1995 to
1998, a member of the German government agency responsible for the privatization
of government-owned companies from 1992 to 1994, and an accountant with Arthur
Andersen & Co. from 1987 to 1992. He has been the Chief Financial Officer of
Ision Internet AG since August 1999.
Michel Arnulphy has been a Trustee since June 1995. From 1998 to the
present, Mr. Arnulphy has been the Managing Director of Electro Orient Ltd., a
merchandising trading company located in Hong Kong. From 1975 to 1998, Mr.
Arnulphy was Managing Director of J. Mortenson & Co., Ltd., a manufacturer of
water treatment equipment in Hong Kong.
<PAGE>
R. Ian Rigg has been a Trustee since 1999 and was named Chief Financial
Officer in October 1999. He has been the chief financial officer and a director
of Advanced Project Ltd. since 1996 and of Terrawest Industries, Inc. since
1989. He is a director of Carlin Resources Corp. and a nominee director and
officer for Bank Gospodarki of Poland. He is also a director of Pine Resources
Corporation. Mr. Rigg is a chartered accountant in Canada.
During the fiscal year ended December 31, 1999, the Trustees held no board
meetings but acted on seven occasions by resolution adopted by unanimous written
consent. Under the Declaration of Trust of the Company, resolutions may be
adopted by written consent signed by a majority of the Trustees.
Committees of the Board
The Company has established an Audit Committee. The function of the Audit
Committee is to meet with and review the results of the audit of the Company's
financial statements performed by the independent public accountants and to
recommend the selection of independent public accountants. The members of the
Audit Committee are Mr. Michel Arnulphy and Mr. C. S. Moon. The Audit Committee
did not meet during 1999. The Audit Committee did meet in March 2000 to discuss
the 1999 financial statements.
The Company has also established a Compensation Committee. The members of
the Compensation Committee are Mr. C. S. Moon and Mr. Michel Arnulphy. The
primary duty of the Compensation Committee is to grant stock options under the
Company's 1992 Non-Qualified Stock Option Plan and to award bonuses to employees
and consultants under the Company's Incentive Bonus Plan. The Compensation
Committee did not meet during 1999.
The Company does not have a Nominating Committee.
Security Ownership of Management
The following table sets forth information regarding ownership of the
Company's Shares on the April 30, 2000, by (i) each Trustee, nominee for Trustee
and Named Executive Officer (as defined below); and (ii) all Trustees and
executive officers of the Company as a group. Unless otherwise indicated, each
Named Executive Officer and Trustee has sole voting and disposition power with
respect to the Shares set forth opposite his name. Each such person has
indicated that he will vote all Shares owned by him in favor of the nominees for
Trustee and in favor of each of the other proposals.
Shares
Beneficially Percent
Name of Owner Owned of Ownership
- ------------------- ------------ ------------
Jimmy S.H. Lee(1) 762,333 4.4%
C.S. Moon(2) 17,000 *
Michel Arnulphy(2) 11,000 *
Maarten Reidel 120,000 *
Ron Aurell(3) 87,600 *
Ian Rigg(2) 20,000 *
Trustees and Officers as a
Group
(5 persons)(4) 1,017,933 5.8%
<PAGE>
* Less than 1%.
(1) Includes presently exercisable stock options to acquire 748,333 shares.
(2) Represents presently exercisable stock options.
(3) Includes presently exercisable stock options to acquire 10,000 shares.
(4) Includes presently exercisable stock options to acquire 806,333 shares.
Executive Compensation
The following table sets forth information on the annual compensation for
each of the Company's last three fiscal years of the chief executive officer (
the "CEO") and each of the Company's other most highly compensated executive
officers other than the CEO who received aggregate annual remuneration from the
Company in excess of $100,000 during the fiscal year ended December 31, 1999
(collectively, with the CEO, the "Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------------------------------ ------------
Securities
Underlying
Name and Principal Other Annual Options/ All Other
Position Year Salary($) Bonus($) Compensation($) SARs(#) Compensation($)
------------------ ---- --------- -------- --------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jimmy S.H. Lee 1999 213,227 118,141 0 0
Chief Executive Officer 1998 221,326 151,200 0 90,000 0
1997 263,781 101,540 0 160,000 0
Maarten Reidel 1999 98,045 59,070 0 0 0
Chief Financial Officer(1) 1998 287,799 105,000 0 50,000 0
1997 224,790 105,000 0 120,000 0
Dr. Ron Aurell 1999 98,045 136,173 0 0 0
Managing Director 1998 68,224 13,617 0 0 0
of Pulp Operations 1997 69,280 109,159 0 0 0
Ian Rigg 1999 41,205 0 0 0 0
Chief Financial Officer(2)
</TABLE>
(1) Mr. Reidel ceased to be Chief Financial Officer in July 1999.
(2) Mr. Rigg was appointed as Chief Financial Officer in October 1999.
Employment Agreement
Mr. Lee and the Company are parties to an employment agreement dated July
1, 1994. The agreement generally provides, subject to certain termination
provisions, for continued employment of Mr. Lee for a period of 36 months with
automatic one month renewals, so that the contract at all times has a remaining
term of 36 months. The agreement provides for a base salary and other
compensation as determined by the board of directors. The agreement contains
change in control provisions pursuant to which, if a change in control (as
defined in the agreement) occurs, Mr. Lee may only be discharged for cause. In
the event Mr. Lee is terminated without cause or resigns for good reason (as
defined in the agreement) within eighteen months of the change in control, he
shall be entitled to a severance payment of three times his annual salary under
the agreement and all unvested rights in any stock option or other benefit plans
shall vest in full. If Mr. Lee is terminated without cause or resigns for good
reason after eighteen months of the change in control, he shall be entitled to a
severance payment of a proportionate amount based on the length of time
remaining in the term of the agreement of three times his annual salary under
the agreement and all unvested rights in any stock option or other benefit plans
shall vest in full. In addition, Mr. Lee will continue to receive equivalent
benefits as were provided at the date of termination for the remaining term of
the agreement.
<PAGE>
Stock Options
No stock options were granted to the Named Executive Officers during fiscal
1999. In January 2000, Mr. Jimmy Lee and Mr. Ian Rigg were granted options to
acquire 1,360,000 and 60,000 shares of common stock, respectively at a price of
$6.375 per share. One-third of these options are vested and the remainder vest
equally at the next two anniversaries of the grant.
The table below provides information on exercises of options during 1999 by
the Named Executive Officers and information with respect to unexercised options
held by the Named Executive Officers at December 31, 1999
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised in-the-money
Options/SARs at Options/SARs at
Fiscal Year-End (#) Fiscal Year-End ($)
Shares Acquired on Exercisable/ Exercisable/
Name Exercise (#) Value Realized ($) Unexercisable Unexercisable
---- ------------ ------------------ ------------- -------------
<S> <C> <C> <C> <C>
Jimmy S.H. Lee 0 0 295,000/30,000 0/0
Maarten Reidel 0 0 88,333/16,667 0/0
Dr. R. Aurell 0 0 0/0 0/0
</TABLE>
Compensation of Trustees
The Trustees do not receive cash compensation for service as a Trustee. The
Company reimburses the Trustees and officers for their expenses incurred in
connection with their duties as Trustees and officers of the Company.
Non-employee Trustees who are in office at the end of a fiscal year receive
options to acquire 6,000 shares of common stock at an exercise price equal to
the closing price of the Company's shares on The Nasdaq Stock Market's National
Market on the last trading day of the fiscal year.
Report of the Trustees on Executive Compensation
Compensation of the Company's executive officers is determined on an annual
basis by either the Trustees as a whole or the Compensation Committee in
consultation with management. For 1999, compensation of executive officers was
determined by the Trustees as a whole. The Company's goal is to compensate the
Company's executive officers in a manner which is consistent with the Company's
strategic plan and which rewards executive officers in a fair manner for
performance which forwards the strategic plan. To this end, the Company's basic
compensation philosophy is to maintain annual base salaries for executive
officers at relatively low amounts and to award bonuses and long-term incentives
in the form of stock options based on annual performance of the Company and of
the executive.
The financial results from operating the Company's businesses are the major
factor in determining levels of executive compensation.
<PAGE>
The Company adopted an Employee Incentive Plan ("EIP") in 1994 in which the
Company's executive officers and other employees may participate. Under the EIP,
5% of the Company's Net Income for each fiscal year is set aside as a bonus
pool. During the course of the fiscal year, the Trustees may grant interests in
the bonus pool to employees, officers and trustees of the Company and its
subsidiaries. Bonuses are to be paid within 120 days of the end of the fiscal
year.
In evaluating the performance of the Company's executive officers in
awarding grants under the EIP, the Trustees considered factors such as the
growth in earnings of the Company, the effectiveness of cost reduction and
productivity-enhancement measures in the operating subsidiaries, the growth in
assets, and the performance of the Company's Common Stock. The Trustees also
considered the contribution of the Company's executive officers toward the
accomplishment of those goals.
In determining the compensation of the Company's Chief Executive Officer,
Mr. Lee, for 1999, the Trustees evaluated Mr. Lee based on the criteria set
forth above. In determining Mr. Lee's salary and his bonus award under the EIP,
the Trustees considered the operating performance of the Company in a difficult
economic environment for pulp and paper companies and the progress made by the
Company in transitioning its pulp production from sulphite pulp to kraft pulp.
/s/ Michel Arnulphy /s/ Jimmy S. H. Lee /s/ C. S. Moon
/s/ Maarten Reidel /s/ Ian Rigg
<PAGE>
Performance Graph
The following graph compares the cumulative total stockholder return (stock
price appreciation plus dividends) on the Company's Common Stock with the
cumulative total return of NASDAQ Market Index and an additional group of peer
companies which comprise Standard Industrial Classification Code 262--Paper
Mills for comparison over the five years ending December 31, 1999. The companies
which comprise SIC Code 262 are Abitibi-Consolidated Inc.; American Israeli
Paper; Badger Paper Mills Inc.; Boise Cascade Corporation; Bowater Inc.; Bunzl
PLC ADS; Champion International; Chesapeake Corporation; Consolidated Papers
Inc.; Domtar Inc.; Fibermark Inc.; Fletcher Challenger Forests; Fletcher
Challenger Building; Fletcher Challenger Paper; Fort James Corp.; Johns Manville
Corporation; Kimberly-Clark Corporation; Mercer International Inc.; P.H.
Glatelter Co.; Pope & Talbot Inc.; Potlatch Corporation; Sappi Ltd. ADS;
Schweitzer Mauduit International; UPM Kymmene Corp. ADS; Wausau-Mosinee Paper
Corporation; Westvaco Corporation; Weyerhauser Company; and Willamette
Industries.
Comparison of Cumulative Total Return
of Company Industry Index and Broad Market
<TABLE>
<CAPTION>
COMPANY 1995 1996 1997 1998 1999
------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Mercer International Inc. SBI 150.46 75.23 64.85 50.34 34.44
Industry Index 131.76 147.48 152.54 159.14 193.17
Broad Market 129.71 161.18 197.16 278.08 490.46
</TABLE>
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act") requires that the Company's officers and directors, and persons
who own more than 10% of a registered class of the Company's equity securities,
file reports of ownership and changes of ownership with the Securities and
Exchange Commission (the "SEC"). Officers, directors and greater than 10%
shareholders are required by SEC regulation to furnish the Company with copies
of all such reports they file.
Based solely on the review of the copies of such reports received by the
Company, and on written representations by the Company's officers and Trustees
regarding their compliance with the applicable reporting requirements under
Section 16(a), the Company believes that all of its officers and Trustees filed
all required reports under Section 16(a) in a timely manner for the year ended
December 31, 1999.
INDEPENDENT ACCOUNTANTS AND AUDITORS
Peterson Sullivan P.L.L.C., Certified Public Accountants, has been selected
by the Trustees to examine the consolidated financial statements of the Company
and its subsidiaries for the fiscal year ending December 31, 2000. Peterson
Sullivan P.L.L.C. have examined the consolidated financial statements of the
Company and its subsidiaries each year since 1989. Representatives of Peterson
Sullivan P.L.L.C. are not expected to be present at the Annual Meeting.
FUTURE SHAREHOLDER PROPOSALS
Any proposal which a Shareholder intends to present at the next Annual
Meeting of Shareholders must be received by the Company on or before February 2,
2001. A shareholder must notify the Company on or before April 17, 2001 that he
or she intends to introduce a proposal at the 2001 shareholder meeting or
management will have discretionary authority to vote its proxies with respect to
any such proposal.
<PAGE>
CHANGE OF TRANSFER AGENT
In July 1999, the Company retained a new transfer agent for its shares of
Common Stock. The name, address and telephone number of the new transfer agent
is:
CIBC Mellon Trust Company
2001 University Street
Montreal, Quebec, Canada H3A 2A6
(514) 285-3609
OTHER MATTERS
The Trustees know of no matter other than those mentioned in the Proxy
Statement to be brought before the meeting. If other matters properly come
before the meeting, it is the intention of the Proxy holders to vote the Proxies
in accordance with their judgment. If there are insufficient votes to approve
any of the proposals contained herein, the Trustees may adjourn the meeting to a
later date and solicit additional Proxies. If a vote is required to approve such
adjournment, the Proxies will be voted in favor of such adjournment.
A copy of the Company's Annual Report to the Securities and Exchange
Commission will be provided to Shareholders without charge upon written request
directed to Mercer International Inc., Shareholders Information,
Giesshubelstrasse 15, 8045 Zurich, Switzerland.
By Order of the Trustees,
DATE: June __, 2000.
<PAGE>
PROXY
MERCER INTERNATIONAL INC.
Giesshubelstrasse 15
8045 Zurich
Switzerland
This Proxy is solicited on behalf of the Trustees of Mercer International
Inc.
The undersigned hereby appoints Jimmy S.H. Lee as proxy, with the power of
substitution to represent and to vote as designated below, all the shares of
beneficial interest of Mercer International Inc. held of record by the
undersigned on May 22, 2000, at the Annual Meeting of Shareholders to be held on
July 11, 2000, or any adjournment thereof.
1. ELECTION OF TRUSTEES
FOR the nominees listed WITHHOLD AUTHORITY to vote
below (except as marked for the nominees listed
to the contrary below) |_| below |_|
(Instruction: To withhold authority to vote for a nominee, strike a line
through the nominee's name in the list below.)
Michel Arnulphy
2. In his discretion, the Proxy holder 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 stockholder. If no direction is made, this Proxy will
be voted FOR Proposal 1.
Please sign exactly as name appears on your share certificates. 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: _______________, 2000
_________________________________________
Signature
_________________________________________
Print Name
_________________________________________
Signature, if jointly held
_________________________________________
Print Name
_________________________________________
Number of shares held
Please mark, sign, date and return this Proxy promptly using the enclosed
envelope.
