Mercer International Completes Project Financing Arrangement

On August 26, 2002, Mercer International Inc. completed financing arrangements for the construction of a kraft pulp mill near Stendal, Germany. The project is expected to be completed in 2004. The financing consists of an euro-denominated $1,291,602,000 senior secured credit facility arranged by HypoVereinsbank of Munich, Germany. Mercer is a public company based in Washington State.

Mercer also entered into two euro-denominated bridge loan arrangements through MFC Merchant Bank SA and Babcock & Brown Investment Management Partners LP in the aggregate amount of $70.2 million to finance, in part, its equity contribution to the project. The total funding required for the mill’s completion is approximately $1,617,720,000.

The Mercer legal team was led by Harjit Sangra, Kim Moller, Winston Yee and Cheri Bocking of Sangra, Moller in Vancouver, and by Thomas Buhl, Alan Dunning, Werner Meier and Daniel Weyde of Cleary, Gottlieb, Steen & Hamilton in Frankfurt.

HypoVereinsbank was represented by Clifford Chance Pünder in Frankfurt, with a team led by Rodney Short, Rossana Mazzilli, Martina Kuppel, Beda Wortmann and Nick Wong. Babcock & Brown Investment Management Partners LP was represented by Allen & Overy in Frankfurt, with a team led by Heather McCallum, Charles Lindsay, Neil Weiand and Cornelia Summ.