Moody's affirms Mercer notes

Moody's Investors Service said it affirmed the Caa1 rating for Mercer International, Inc.'s senior unsecured notes due 2013 and also affirmed the B2 corporate family rating and SGL-3 speculative grade liquidity rating.

The outlook remains stable.

Moody's noted the company's modest scale as the company's entire operations produce a single commodity product with a high level of price volatility, northern bleached softwood kraft pulp, and has operations in only two geographies.

Overall, however, Mercer provides a profile that remains consistent with that of a B-rated paper and forest products company mainly due to annual revenues of only approximately €330 million and the one product line.

Moody's said factors that would positively impact the ratings and/or outlook would be a sustained improvement in operating performance resulting in stronger credit metrics and increased liquidity.

However, sustained deterioration in operating performance or liquidity, due in part to an unexpected deterioration in pulp pricing, continued maintenance difficulties in the Celgar facility or higher raw material or energy costs would reflect negatively on the ratings or outlook.

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