Loan & DebtMay 7, 2026, 04:34 PM
Mercer German Subs Get Covenant Waiver, Face Tighter Credit Terms
AI Summary
Mercer International's German subsidiaries entered into a Waiver and Consent Request Letter for their €370.1 million revolving credit facility. The lenders waived the financial covenant requiring a Leverage Ratio not to exceed 3.50:1.00 for the first three fiscal quarters of 2026. However, the agreement introduced more restrictive covenants, including capping facility utilization at €300 million, requiring US$30 million average liquidity, limiting capital expenditures to €60 million, and restricting distributions to the parent company until September 30, 2026. Additionally, the subsidiaries must provide additional periodic reporting and security over certain assets, and the interest rate margin was adjusted.
Key Highlights
- Lenders waived Leverage Ratio covenant for Mercer's German subsidiaries for Q1-Q3 2026.
- German Facility utilization capped at €300 million if Leverage Ratio exceeds 2.00:1.00.
- Average liquidity of Mercer and its subsidiaries must be US$30 million, tested monthly.
- Capital expenditures by Loan Parties in fiscal year 2026 not to exceed €60 million without Agent consent.
- Distributions to Mercer restricted until September 30, 2026, with potential aggregate of €15 million.
- Drawdown requests for incremental borrowings capped at €20 million until initial liquidity forecast.
- Interest rate margin modified to a range of 2.50% to 4.25% based on Leverage Ratio levels.
- Loan Parties to provide security over assets with aggregate realizable value of at least 110% of utilized amount.