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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 8, 2000
MERCER INTERNATIONAL INC.
(Exact Name of Registrant as Specified in Its Charter)
Washington
(State of Incorporation)
0-9409 91-6087550
(Commission File Number) (I.R.S. Employer Identification No.)
Burglistrasse 6, Zurich, Switzerland, 8002
(Address of Principal Executive Offices, including Zip Code)
41 (1) 201 7710
(Registrant's Telephone Number, including Area Code)
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ITEM 5. OTHER EVENTS
Mercer International Inc. presented investor relations material during the
week of February 7, 2000. The investor relations material is attached hereto
as Exhibit No. 99.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibit(s).
Exhibit
Number Description
- ------- -----------
99.1 Mercer International Inc. investor relations material.
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MERCER INTERNATIONAL INC.
By: /s/ Jimmy S.H. Lee
----------------------
Jimmy S.H. Lee
Chairman
Date: February 8, 2000
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MERCER INTERNATIONAL INC.
FORM 8-K
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
99.1 Mercer International Inc. investor relations material.
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MERCER INTERNATIONAL INC.
[Mercer Symbol]
NASDAQ - MERCS
EASDAQ - MERC
<PAGE> 2
MERCER INTERNATIONAL INC.
Pulp and Paper Operations
[Map of Germany showing location of operations in Stendal, and in Trebsen,
Rosenthal, Fahrbrucke, Hainberg and Heidenau]
<PAGE> 3
PAPER OPERATIONS
[Photograph of paper machine]
<PAGE> 4
ANALYSIS: PAPER AND PULP ASSET PURCHASE
<TABLE>
<S> <C>
Purchase Price US$ 1,177,000
Loan 24,000,000
Capital Expenditures 115,000,000
Gov't Supplements 82,000,000
Gov't Debt Forgiveness 121,000,000
Severance Costs Paid by Government
Env. Indemnity 17,500,000
Tax Loss Carry forwards 188,000,000
</TABLE>
(at historic exchange rate)
<PAGE> 5
MERCER INTERNATIONAL INC.
Operations Profile
<TABLE>
<CAPTION>
Current Status
--------------
<S> <C> <C>
Rosenthal Kraft Pulp 280,000 tonnes/annum Operating at
Designed Capacity
Paper Operations 170,000 tonnes/annum Rationalization
Stendal Pulp Project 550,000 tonnes/annum 25% interest
(Greenfield)
Fibre Feasability
Study Started
Option to 51%
interest
</TABLE>
<PAGE> 6
ROSENTHAL
[Photograph of Rosenthal operations]
<PAGE> 7
MERCER SHARE PRICE RELATIONSHIP TO WORLD NBSK PRICES 1993-2000
[Graph]
<TABLE>
<CAPTION>
Mercer
Share Price Pulp Price
Year Quarter (US$) (US$/tonne)
- ---- ------- ----------- -----------
<S> <C> <C> <C>
1993 Q1 6.00 420
Q2 10.00 410
Q3 400
Q4 15.00 410
1994 Q1 500
Q2 9.75 570
Q3 710
Q4 12.50 760
1995 Q1 880
Q2 20.00 920
Q3 24.75 1,000
Q4 20.00 690
1996 Q1 22.00 500
Q2 12.50 540
Q3 570
Q4 10.00 560
1997 Q1 560
Q2 9.00 590
Q3 600
Q4 8.00 520
1998 Q1 530
Q2 10.50 510
Q3 10.00 480
Q4 7.00 470
1999 Q1 490
Q2 4.25 510
Q3 580
Q4 5.00 600
2000 Q1 6.50 630
</TABLE>
<PAGE> 8
PRICE PROJECTIONS FOR NBSK PULP TO 2004
[Graph]
<TABLE>
<CAPTION>
NBSK Pulp
(US$/tonne)
----------
<S> <C> <C>
1993 Q1 420
Q2 410
Q3 400
Q4 410
1994 Q1 500
Q2 570
Q3 710
Q4 760
1995 Q1 880
Q2 920
Q3 1,000
Q4 690
1996 Q1 500
Q2 540
Q3 570
Q4 560
1997 Q1 560
Q2 590
Q3 600
Q4 520
1998 Q1 530
Q2 510
Q3 480
Q4 470
1999 Q1 490
Q2 510
Q3 580
Q4 600
2000 Q1 630
Q2 660
Q4 700
2001 Q2 730
Q4 750
2002 Q2 740
Q4 740
2003 Q2 700
</TABLE>
Forecast is the Average Data from:
Jaakko Poyry, Hawkins Wright, Botnia Pulps, NLK, Equity Research Associates
<PAGE> 9
[Photograph of control room]
<PAGE> 10
ROSENTHAL 2000
German Market Pulp
<TABLE>
<S> <C>
Total Market (imported) 4 million tonnes/annum
Imported Softwood Kraft 1.9 million tonnes/annum
Rosenthal Production 280,000 tonnes/annum
</TABLE>
<PAGE> 11
ROSENTHAL PLANT PROJECT
* Production Capacity to 280,000 tonnes from 160,000 tonnes
* Start-up of New Facility December 1999
* Financed by Project Financing
* Produced Higher Margin, High Quality Product
* Reduce Operating and Effluent Cost
* Only Domestic Producer in High-Demand Market
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ROSENTHAL ATTRACTIVE FINANCING
US$334 Million Conversion Project Financed Through
- State Subsidies
- Federal / State Loan Guarantees
Mercer's Total Equity Contribution: US$22 million
Expected IRR 20% to 25%
(Base Price Pulp US$615 / tonnes)
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ASSUMPTIONS FOR ROSENTHAL CONVERSION
280,000 tonnes/annum
<TABLE>
<CAPTION>
Pulp Price (US$)
-------------------------------
520 600 700
-------------------------------
(in thousands of US dollars)
<S> <C> <C> <C>
Revenue 145,600 168,000 196,000
Wood cost 48,533 48,533 48,533
Chemical cost 12,444 12,444 12,444
Other manufacturing cost 6,690 6,690 6,690
Total variable cost 67,667 67,667 67,667
Overhead (admin, maintenance, etc.) 21,436 21,436 21,436
Depreciation 25,323 25,323 25,323
Finance cost 14,108 14,108 14,108
</TABLE>
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ROSENTHAL PULP PRODUCTION
[Graph]
<TABLE>
<CAPTION>
% of Capacity
Month Actual/Projected Projections per ZPR Budget
- ----- ---------------- --------------------------
<S> <C> <C>
December 1999 40 40
January 2000 73 50
February 2000 85 70
March 2000 90 75
April 2000 95 77
May 2000 98 77
June 2000 100 80
July 2000 100 87
August 2000 100 90
September 2000 100 95
October 2000 100 95
November 2000 100 95
December 2000 100 95
</TABLE>
<PAGE> 15
ROSENTHAL TRADE ADVANTAGES IN EUROPEAN MARKETS
* All Other Suppliers
- Freight costs + Delivery time
* North American Suppliers to Europe
- Lower Fibre Costs
- Language, Time Zones
- Smaller Delivery Lots
- Common Currency
- Local Customer Service
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ROSENTHAL
[Photograph of Rosenthal operations]
<PAGE> 17
GERMAN FORESTS
[Map of German forests showing locations of Berlin, Stendal and Rosenthal]
<PAGE> 18
BLEACHED PULP SUPPLY/DEMAND BALANCE (1996 - 2004)
[Graph]
<TABLE>
<CAPTION>
Demand Available Capacity
% Capacity Utilization (millions of tonnes) (millions of tonnes)
---------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
1996 Q2 92 22.0 25.0
Q4 93 22.6
1997 Q2 88 23.2 25.5
Q4 92 23.4
1998 Q2 90 23.0 26.2
Q4 92 23.2
1999 Q2 94 24.8 26.2
Q4 92 23.4
2000 Q2 93 25.1 26.7
Q4 95 25.2
2001 Q2 96 26.0 26.7
Q4 98 26.2
2002 Q2 99 26.6 27.0
Q4 101 27.0
2003 Q2 103 27.8 27.0
Q4 106 28.1
2004 Q2 108 28.6 27.0
Q4 108 29.0
</TABLE>
Source: NLK Pulp Price Trends Study November 1999
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STENDAL SITE
[Photograph of Stendal site]
<PAGE> 20
STENDAL PROJECT
Size 550,000 tonnes/annum US$790 million
Preliminary Capital Budget
Partners Thyssen Rheinstahl Technik GmbH
Tessag Industrieanlagen GmbH
AIG Altmark Industrie AG
Infrastructure Rail, Highway and River Access
All Services to Site: Power, Water, Gas, Sewer
All Permits in Place
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STENDAL PARTNERS
* Thyssen Rheinstahl Technik GmbH
- A daughter company of ThyssenKrupp Material and
Services, a part of the ThyssenKrupp group with 180,000
employees and annual sales of US$32 billion
* Tessag Industrieanlagen GmbH
- Part of Tessag Technische System and Services AG
belonging to RWE group with 18,000 employees and
annual sales of US$2.5 billion
* AIG Altmark Industrie AG
- The original sponsor of the project responsible for
the site acquisition
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STENDAL FOREST RESOURCES
[Map of Northeastern German forests showing location of Zellstoff Stendal
GmbH]
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STENDAL FINANCING MODEL
<TABLE>
<CAPTION>
millions
<S> <C>
Equity
Mercer US$40
Thyssen, Tessag, AIG 40
Preferred Equity (to be identified) 40
------
Total Equity 120
Grants, Subsidies 150
Limited Recourse Debt 520
------
US$790
======
</TABLE>
Project IRR 17% with base case US$590/tonne pulp
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PULP PRICE AND COST PROJECTION
[Graph]
<TABLE>
<CAPTION>
Pulp Price Cost Rosenthal Cost Stendal
Year (US$/tonne) (US$/tonne) (US$/tonne)
- ---- ----------- -------------- ------------
<S> <C> <C> <C>
2000 600 475 n/a
2001 650 460 n/a
2002 700 460 n/a
2003 690 460 580
2004 680 460 500
</TABLE>
(Stendal costs as presented by Project Sponsors, not confirmed by Mercer)
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MERCER INTERNATIONAL INC.
FIRST AND ONLY KRAFT PULP PROVIDER IN GERMANY, THE LARGEST PULP MARKET IN
EUROPE
[Mercer logo]
<TABLE>
<CAPTION>
Production
(tonnes/annum) Status
-------------- ------
<S> <C> <C>
1998 160,000 Sulphite
2001 280,000 Only German kraft
pulp producer
2003 900,000 World top 10
(producer of NBSK market pulp)
</TABLE>
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SAFE HARBOR
This presentation includes statements which constitute forward looking
statements as provided for by the "Safe Harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These statements appear in a
number of places and include statements regarding the intent, belief, or
current expectations of future operating performance. These statements
involve known and unknown risks and uncertainties which may cause the
Company's actual results in future periods to differ materially from
forecasted results. For a review of these risk factors, please refer to the
company's filings with the SEC during the past 12 month.
