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Mercer International Inc. |
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain information included in this presentation contains statements that are forward-looking, such as statements relating to results of operations and financial condition and business development activities, as well as capital spending and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on behalf of Mercer. For more information regarding these risks and uncertainties, review Mercer's filings with the Securities and Exchange Commission.
July 8, 2003
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The Issues
- •
- What
is the Motive Behind the Dissident Proxy?
- •
- Independent
Directors Should Not Receive Third Party Remuneration
- •
- Mercer
is at a Critical Stage of Corporate Development
- •
- Mercer
has High Quality Assets
- •
- Extensive
Misleading Statements by Greenlight
- •
- Corporate
Governance Initiatives
- •
- Mercer Nominees
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What Is The Motive?
- •
- Greenlight
Have Refused Two New Independent Directors Unless They Have SOLE Veto Powers
- •
- Greenlight's
Nominees Have No:
- •
- Corporate
experience
- •
- Pulp &
paper experience
- •
- International
or European experience
- •
- Board-level
experience at a company as complex as Mercer
- •
- Greenlight's Nominees are Well Compensated in Cash and Stock Options by Greenlight
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What Is The Motive? (Continued)
- •
- One
of the Greenlight Nominees Violated U.S. Federal Securities Laws Relating to Proxy Solicitation
- •
- Greenlight
Has Not Presented an Alternative Refinancing Plan
- •
- Is there a plan to impose onerous financing by Greenlight?
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Third Party Remuneration of Independent Directors
- •
- Raises
the Question of Ultimate Loyalty
- •
- Mercer
or Greenlight
- •
- Amount
of Remuneration is Substantial
- •
- Guy
Adams — $75,000 cash, 325,000 options
- •
- Saul
Diamond — $100,000 cash, 50,000 options
- •
- Both Receive 100% Indemnification from Greenlight
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Mercer: A Critical Time in Development
- •
- Refinancing
of Bridge Loans
- •
- €53 million
maturing in October 2003
- •
- Refinancing
put on hold due to Greenlight actions
- •
- Stendal
Pulp Mill Project is in Mid-Construction
- •
- Any default on Bridge loans will trigger cross-defaults on Stendal and other debt
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Quality of Mercer Assets
- •
- The
High Quality of Mercer's Assets are Obvious and Acknowledged by Greenlight
- •
- Quality
will be further enhanced at completion of Stendal Project
- •
- To be Discussed in "Mercer's Current Status and Corporate Achievements"
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Extensive Misleading Statements By Greenlight
- •
- Greenlight:
Mercer reshuffled Board terms.
- •
- Fact:
Only Class III Trustees being elected.
- •
- Greenlight:
Babington Ltd. solely controlled by Mr. Lee.
- •
- Fact:
Babington Ltd. is a wholly owned subsidiary of Mercer.
- •
- Greenlight:
Mr. Lee is conflicted through his MFC Merchant Bank Directorship.
- •
- Fact:
Mr. Lee is a non-executive director with no participation in operations.
- •
- Greenlight:
Management is responsible for poor financial results and stock performance.
- •
- Fact: The Company has had solid financial results and stock performance relative to its peers.
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Corporate Governance Initiatives
- •
- Appointment
of Deloitte & Touche, LLP
- •
- Voluntary
Adoption of Code of Business Conduct & Ethics Prior to SEC mandate
- •
- Adoption
of New Audit Committee Charter
- •
- Listing
on Toronto Stock Exchange
- •
- Engagement
of Leading North American Investment Bank for Refinancing
- •
- Expansion of Board of Trustees by Two Independent Qualified Trustees
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Mercer's Slate: Provides Added Value
- •
- Per
Gundersby
- •
- 30+
Years' Experience in European Pulp and Paper
- •
- Extensive
Career at Jaako Poyry
- •
- Stendal
project director
- •
- Michel
Arnulphy
- •
- Trustee
since 1995
- •
- Extensive
knowledge of Mercer International
- •
- Proven experience with Rosenthal conversion
— Our nominees contribute relevant experience
that will benefit all shareholders. —
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Mercer's Current Status and Corporate Achievements
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Commitment To Building Shareholder Value
- •
- Key features of our corporate strategy include:
| |
|
Overview |
|
Example |
||||
|---|---|---|---|---|---|---|---|---|
Creating Value |
X |
Focus operations in grades of products where we can effectively compete |
--> --> |
NBSK Pulp Specialty Papers |
||||
Stakeholder Approach |
X |
Leverage synergistic relationships with: management & employees; customers & suppliers; communities & the environment; and government bodies |
--> --> |
Government guarantees and grants Environmental compliance |
||||
Pursuing Growth |
X |
Acquire under-performing assets and implement turn-arounds / restructurings to create shareholder value |
--> --> |
Dresden Papier 23% CAGR in production capacity post Stendal |
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Rosenthal: An Unparalleled Success
| In 1999, conversion of Rosenthal Mill to kraft pulp production created unique asset approximately €361 million invested (€101 million from grants) fastest ever start-up of an NBSK facility capacity increased from 160,000 tonnes to 300,000 tonnes Strong cost position (€312/tonne*) lowest quartile from a global delivered cost perspective |
|
|
| Rosenthal Mill |
*2002 cash production costs
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Commitment to Building Shareholder Value
- •
- Greenlight
Does Not Challenge Our Strategic Plan
- •
- They
Note That We Have Valuable Assets
- •
- These Assets Exist Because of Current Management and The Board of Trustees
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The Stendal Project
- •
- €1 billion
"greenfield" project is the largest industrial project investment in Eastern Germany
- •
- capacity
of 552,000 t/a
- •
- production
of saleable pulp scheduled for Q3, 2004
- •
- Makes
Mercer one of the world's leading NBSK pulp producers
- •
- Strong
cost position (approx. €293/tonne*)
- •
- Proximity
to Rosenthal allows for operating synergies
- •
- Triple total current NBSK pulp production
*Forecast 2005 cash production cost
Stendal Mill
| Sources of Funding: |
(MM) |
|
|---|---|---|
| Equity | €100 | |
| Grants | €274 | |
| Project debt | €637 | |
| Other | €26 | |
| Total | €1,037 | |
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Stendal Project: A Critical Time
- •
- Stendal
Project — Key to continued strategic development
- •
- Massive,
complex and time consuming project that requires in-depth experience and cohesive teamwork
- •
- Rosenthal
Conversion — Proves expertise of Management and current Board of Trustees
- •
- Refinancing — Key
to Stendal Project
- •
- Completion
is critical
- •
- Potential
default on Bridge Loans if not completed
- •
- Other refinancing alternatives less attractive
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Stendal Project: A Critical Time
- •
- Now Is Not The Time To Experiment
- •
- Election
of Two Unqualified Nominees Could Negatively Impact Stendal Project and Refinancing
- •
- Lack
of valid experience
- •
- No
knowledge of pulp and paper industry
- •
- No
experience in European marketplace
- •
- Potential dissention within the Board of Trustees
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Proven Performance vs. Peers
EBITDA per Tonne
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Share Price Performance of Comparable Pulp Companies
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Our Position
A Vote For Mercer's Slate of Trustees is a Vote For:
- •
- Qualified,
Seasoned Industry Veterans That Will Provide Value
- •
- An
Efficient, Cohesive Board
- •
- The
Continued Evolution of Our Company
- •
- Corporate
Governance
- •
- Enhanced Value For ALL Shareholders
VOTE THE WHITE CARD
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Mercer International Inc. |