The Morning Warning List · 21 October 2026
Mercer International
Its mills are running and its staff are paid. So why did it choose not to pay $25.8 million of interest?
Wood, turned into pulp and timber.
Mercer International makes wood pulp, the raw material for paper and tissue, plus timber and building wood, at mills in Germany, Canada and the United States. Its shares trade in New York.
Pay down debt. Keep cash safe.
For more than a year the company’s message to its lenders was steady: protect the cash, cut costs and bring the debt down.
- Under strain
We remain focused on our aggregate liquidity and debt reduction strategy
Juan Carlos Bueno, CEO, Q2 2025 results - Pay interest on its 2028 bonds on 1 October 2026The bond termsNot paid
- A deal with lenders “in the near term”Company filing, 2 Oct 2026Open
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- What falling pulp prices did to its sales, in a chart
- Why skipping interest is the clearest warning sign
- Three moves to stay out of court
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Free. No noise. One reply is enough to leave the list. Not investment advice.
Lower prices. A big loss. A skipped payment.
Mercer sells a product whose price it does not set. In the second quarter of 2025 its sales fell to $453.5 million from $499.4 million a year earlier, and it lost $86.1 million in those three months alone.
On 1 October 2026 it chose not to pay about $25.8 million of interest due on its 2028 bonds. The bond terms give it 30 days, to around 31 October, before that becomes a default.
Sales, April to June, $ million
Skipping interest is a decision, not an accident.
A company that skips interest while its mills still run is buying time to negotiate. Mercer says it is in advanced talks with lenders who hold more than 75% of its bonds, about a deal that could cut its debt and bring in new money.
That may well work. But missing a payment is one of the clearest warning signs there is: it means the old plan to pay as it goes no longer holds.
When you sell at the market’s price, your debt must survive the market’s bottom.
Nothing has been filed in court. The company says customers, suppliers and staff are being paid as normal.
Three moves to stay out of court.
Agree the deal before the deadline.
Lenders holding three quarters of the bonds are at the table. Sign before the grace period ends around 31 October.
Swap debt for owners.
Fewer bonds and more shareholders means less interest to pay when pulp prices fall again.
Keep only the mills that pay.
Run the strongest mills fully and sell or pause the weakest, so the business can live through a bad year.
Borrow for the Bottom, Never the Average
Somewhere in the forests of Germany, Canada and the United States, a tree comes down, and in time it becomes the tissue in your pocket. Mercer International runs the mills in between. For more than a year its message to lenders was steady: protect the cash, bring down the debt. There was one awkward detail. Mercer does not decide what pulp costs. The market does, and the market has the temperament of a cat. When prices fell, Mercer lost $86.1 million in three months of 2025. On 1 October 2026 it chose not to pay about $25.8 million of interest while it talks to its lenders. If the market sets your price, it also sets your worst year. Borrow for that year.
— Max Noble
Mercer cannot choose its price. It can choose how much it borrows.
From the book in preparationThe Laws of BANKRUPT · out 31 October 2027Read every law so far →
Every number traceable.
- Mercer filing (8-K), 2 Oct 2026: interest not paid, grace period, talks · stocktitan.net
- Mercer Q2 2025 results: sales, loss, CEO quote · sec.gov
The grade, the three moves and the law are Max Noble’s analysis. Not investment advice.