Mercer International Inc. · NASDAQ:MERC
Mercer International — Investor Presentation (April 2004)
31 slides from Mercer International's investor presentation, Apr 28, 2004
Slide 1: Mercer International Inc.
Mercer International Inc. (Nasdaq: MERCS) (TSE: MRI.U)
Slide 2: Safe Harbour Statement
Safe Harbour Statement 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 cond
Slide 3: Mercer International — Investment Merits
Mercer International — Investrnent Merits «> Low Cost NBSK Producer with World Class Assets * Ideal Geographic Location Creates Unique Market Dynamics » Strategically Positioned Relative to Emerging Markets » Access to Stable, Low-Cost Fiber Sources Significant Leverage to Pulp Cycle > Rapid Organic
Slide 4: Corporate History and Facilities
Corporaite History and Facilities 4,000 Stendal 552,000 tpy NBSK pulp (63.6% owned) - Greenfield construction on iy track 1993: Acquired 1998-2000: Divested Dresden Papier ‘4non-core paper : = i Rosenthal 2 ate 300,000 tpy NBSK pulp SE | 994 acquired 41999 - Conversion & - Low cost, high quality Be
Slide 5: Industry Overview
INDUSTRY OVERVIEW
Slide 6: Global Market Pulp
Global Market Pulp Global Pulp Demand by Grade Global NBSK Pulp Demand Suir agnneia at Source: PPE “> Pulp Market at Approximately 44 Million Tonnes » Total Pulp Demand Growth Averaging Approximately 3% Per Year » 28% is NBSK (Northern Bleached Softwood Kraft) w
Slide 7: Hardwood vs. Softwood
Hardwood vs. Softwood «> Hardwood » Continuing Significant Growth in Hardwood Capacity “> Softwood » Minimal Growth in Softwood Capacity » Easy Substitution has been Completed » Sizable Capital Investments Required to Further Reduce Softwood Requirements in Value Added Paper Market pulp prices and p
Slide 8: Hardwood vs. Softwood
Hardwood vs. Softwood Confirmed bleached pulp capacity Bleached pulp (‘000 tonnes) 2003 | 2008 | 2005 | 2006 | 2007 | 2008 | Averagegromth 2003-2008 Market pulp 7 Softwood kraft zoam | 20800 | 2itee | oar? | 2ies0 | 21854 15% “Hardwood kraft zapas | 2487 | 25838 | arte | 27e77 | 28.038 4% “Suiphite
Slide 9: Market Pulp Trade Flows
Market Pulp Trade Flows Source: CEP! (2002) “> Europe is a Significant Pulp Importer “> Best Markets: Germany, Italy
Slide 10: NBSK European List Pricing
NBSK European List Pricing ol source! RIS! USS/EUROFXRate [| 5 55 4990 1992 1994 1996 1998 2000 2002 2004 * Steady Price Improvements Throughout 2003 with an Optimistic Outlook for 2004 and 2005 10
Slide 11: Global Demand Growth
Global Dernand Growth Global Demand Growth for Paper and Board by Region share of conmumetion In 2000 (828 mlllen tor), ‘wEasiern Europe caGhina Asia exel Japan & China Latin America DArioa BOceania Western Europe Japan BLNerth America * Global Demand Growth Forecast at 3% “ 2000-2015 Demand Growth
Slide 12: Business Details
BUSINESS DETAILS
Slide 13: Mercer — A Market Leader in NBSK Production
Mercer — A Market Leader in NBSK Production «> Rosenthal and Stendal » Total Tonnes (NBSK) $52,000 » Total Investment (millions) Grants €375 Project Debt at Completion € 820 Total Construction and Conversion Costs €1,176 > Number of Employees 1,090 » Annual Wood Consumption (millions) Roundwood 2.5
Slide 14: Rosenthal — An Unparalleled Success
Rosenthal — An Unparalleled Success “> In 1999, Conversion of Rosenthal Mill to Kraft es 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 “> Str
Slide 15: Stendal Project — Near Term Growth Driver
Stendal Project — Near Term Growth Driver > €1 billion “Greenfield” Project is the Largest Industrial Project Investment in Eastern Germany » Qualifies for €274 Million of Grants » Capacity of 552,000 tla » Production of Saleable Pulp Scheduled for Q3, 2004 “> Strong Cost Position (approx. €293/tonn
Slide 16: Stendal Project — On Budget and On Time
Stendal Project — On Budget and On Tire | __ Percent Complete at 12/31/03 | Average Stage of Completion 92% | | Engineering 99.2% Procurement & Equipment 99.4% | Delivery Civil Works 92.8% Mechanical Erection 70% Start-up Q3 2004
Slide 17: Competitive Strengths
COMPETITIVE STRENGTHS
Slide 18: Low Cost NBSK Pulp Producer
Low Gost NBSK Pulp Producer 700 00 soo + 400 00 200 100 DELIVERED CASH COST OF BSKP TO WESTERN EUROPE ROSENTHAL vs. ALL MARKET PULP PRODUCERS: Estimate bated on 586 COST LEVEL OF 2002 incresee of EUR v2 CAD EUR/ADE “Ente basadon (25 SDE JALL WBSKP Depreciation and Interest [Distribution to Western E
Slide 19: World Class Assets
World Glass Assets Industry Structure of NBSK Producers = @ aera Strong nat, Average Mill Capacity (1,000 tia) 30 2B a 15 0 6 0 Technical Age (years) Source: sak Fey, ly 2002 Highly efficient — Low Production Costs New facilities - Low Capital Requirements, High Runability State of the Art Environme
Slide 20: Transportation Advantage
Transportation Advantage
Slide 21: Sales By Region 2003
s By Region 2003 14.0% 9 ° Germany 16.4% 44.0% italy CEuropean Union [Eastem Europe and Other 25.5% Two-way Integrated Logistics Provides Cost Savings M 21
Slide 22: Strong Fibre Supply
Strong Fibre Supply High Quality Fibre Supply Rosenthal - Spruce Stendal — Pine Largest Consumer of Wood Chips in Germany = Typically 1 Year Contracts Numerous Suppliers Low Historical Volatility in Wood Chip Pricing No Contracts Tied to Pulp
Slide 23: Significant Leverage to Pulp Cycle
Significant Leverage to Pulp Cycle Impact on Operating Earnings (effect of a $20/tonne change in pulp pricing per $100 invested) $6.18 TED “$643 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 ‘Aracruz Canfor Tembec Pope& SFK Mercer Talbot current —-2005e1) ‘Ag at Maron 91,2004 ‘Appendix 4 contains suppor
Slide 24: Long Term, Low Cost Debt Financing
Long Term, Low Cost Debt Financing “> Project Financings Benefit Our Equity Holders » Reduced Dilution » NoCashSweep » Ring Fenced Structure “> Government Guarantees, of 80% of Debt, is Maxi » Resulting in Low Cost Financing Structure Rosenthal Stendal Size €191.7ma) €668mQ) Tem 15 years amortizing
Slide 25: Financial Highlights & Valuation
FINANCIAL HIGHLIGHTS & VALUATION
Slide 26: Historical Financial Performance
Historical Financial Performance Years Ended December 31, € millions) 2000 2001 2002 2003 Revenue €258.9 €216.4 €239.1 €194.6 Operating EBITDA 73.7 36.3 24.5 19.6 Operating Income 49.7 13.3 (1.1) (4.5) (loss) Net Income (loss) 32.0 (2.8) (6.3)2 (3.6)2 Net Cash From 43.4 30.4 40.4 314 Operating Activ
Slide 27: Investment Highlights
Gorn ive inlights One of Lowest Cost NBSK Producers in Industry J * World Class Assets *: Ideal Geographic Location . » Unique End Market Dynamics » Shipping Cost and Customer %% Service Advantage » Strong Fibre Supply * Solid Labor Relationships * Significant Leverage to Pulp Cycle “+ Hedging Activ
Slide 28: Mercer International Inc.
Mercer International Inc. (Nasdaq: MERCS) (TSE: MRI.U)
Slide 29: Appendix: Significant Leverage to Pulp Cycle
Appendix 4 Significant Leve to Pull le Impact on Operating Earnings fect of a $20/tonne change in pulp pricing per $100 invested) Pope & Mercer Aracnuz Canfor_ Tembec _ Talbot __SFK current 2005e(T)_ Capacity (000 ta) 2400) 113 2208 0 8 300 a2 Shares Outstanding (mil) 1,807 a3 8 166 «83 173 293 Leve
Slide 30: EBITDA
EBITDA EBITDA as presented herein refers to Operating EBITDA, defined as income from operations plus depreciation and amortization. Management uses Operating EBITDA as a benchmark measurement of its own operating results, and as a benchmark relative to its competitors. Operating EBITDA is not a meas
Slide 31: Searchable text section of graphics
Searchable text section of graphics shown above [ LOG O] Mercer International Inc. (Nasdaq: MERCS) (TSE: MRI.U) Saf e Harbour Statement The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in this presentation cont
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