Mercer Ups Its Offer for Fibrek to C$1.40 per Share

April 11, 2012 - Mercer International Inc. ("Mercer") announced that, pursuant to an amended Support Agreement with Fibrek Inc. ("Fibrek"), it has increased its offer (the "Offer") to acquire all of the issued and outstanding common shares of Fibrek to C$1.40 per Fibrek share. Pursuant to the enhanced Offer, Mercer is offering to acquire all of the outstanding Fibrek shares for consideration per Fibrek share, at the election of each holder, in one of the following forms:

  • C$1.40 in cash per Fibrek share (subject to proration);
  • 0.1659 of a share of Mercer's common stock (a "Mercer Share") per Fibrek share (subject to proration); or
  • C$0.64 in cash plus 0.0903 of a Mercer Share per Fibrek share.

Under the enhanced Offer, the aggregate cash consideration has been increased to approximately C$83.0 million, while the maximum number of Mercer shares available to be issued under the Offer remains 11,741,496 Mercer shares.

The enhanced Offer represents, as at February 9, 2012, the date immediately before we announced our initial Offer, a premium of 40% over the unsolicited insider bid made by AbitibiBowater Inc. ("Abitibi"), 94% over the closing price of the Fibrek shares on November 28, 2011, the date of announcement of the Abitibi bid, and approximately 84% 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.

Jimmy S.H. Lee, Mercer's Chairman and Chief Executive Officer, stated: "Mercer's initial offer was clearly superior to the Abitibi offer, and has now been enhanced even further. The cash alternative is significantly higher, and will lock in substantial value for Fibrek shareholders who choose that option. The share alternatives give Fibrek shareholders the opportunity to participate in the significant upside potential of the combined Mercer business going forward. We urge all Fibrek shareholders to act quickly to tender their shares to our superior bid."

In connection with the enhanced Offer, Fibrek has also approved a new shareholder rights plan, in substantially the form of its shareholder rights plan dated December 19, 2011. Pursuant to the amended Support Agreement, Fibrek has also agreed, among other things, to increase the expense reimbursement fee payable to Mercer to C$2.4 million.

Mercer also announced that: (i) the United States Securities and Exchange Commission (the "SEC") declared effective on April 9, 2012, its registration statement relating to the Offer; and (ii) Mercer obtained shareholder approval at its meeting of shareholders held on April 10, 2012 for the issuance of Mercer Shares in connection with the Offer.

The Offer remains subject to customary conditions, including, among others, there being deposited (and not withdrawn) that number of Fibrek shares which, together with the Fibrek shares and special warrants, if any, held by Mercer, represent at least 50.1% of the outstanding Fibrek shares on a fully-diluted basis, and the absence of a material adverse change with respect to Fibrek. As at the date hereof, approximately 31millionFibrek shares have been deposited under the Offer, representing approximately 24% of the issued and outstanding Fibrek common shares.

A notice of change, variation and extension (the "Notice") setting forth details of the enhanced Offer will be mailed to shareholders and will be available on SEDAR at www.sedar.com in due course. The enhanced Offer will be open for acceptance for a period of not less than 10 days from the date of the Notice, or as otherwise required by applicable securities laws. The Notice should be read together with 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 and the amended Support Agreement, all of which are available on SEDAR at www.sedar.com.

Mercer International is a global pulp manufacturing company. Mercer operates three NBSK pulp mills with a consolidated annual production capacity of 1.5 million tons.

SOURCE: Mercer International Inc.