SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as
[ ] Definitive Proxy Statement permitted by Rule
14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
MERCER INTERNATIONAL INC.
(Name of Registrant as Specified in its Charter)
GREENLIGHT CAPITAL, L.L.C.
GREENLIGHT CAPITAL, INC.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
PRELIMINARY COPY. SUBJECT TO COMPLETION. JUNE 20, 2003.
ANNUAL MEETING OF SHAREHOLDERS OF
MERCER INTERNATIONAL INC.
TO BE HELD ON JULY 15, 2003
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PROXY STATEMENT OF
THE GREENLIGHT ENTITIES
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This proxy statement and the enclosed GREEN proxy card are being
furnished to you, the shareholders of Mercer International Inc. ("Mercer
International" or the "Company"), in connection with the solicitation of proxies
by Greenlight Capital, L.L.C. and Greenlight Capital, Inc. (together with its
affiliates, the "Greenlight Entities" or "Greenlight") for use at the 2003
annual meeting of shareholders of Mercer International, and at any adjournments
or postponements thereof (the "2003 Annual Meeting").
Greenlight is proposing and soliciting proxies in support of a slate of
two nominees, referred to as the Greenlight Nominees, to stand for election to
the Board of Trustees at the 2003 Annual Meeting. The Greenlight nominees are
Guy W. Adams and Saul E. Diamond, and they will be standing for election in
opposition to the nominees of the Board of Trustees. We believe that there are
three seats on the Board of Trustees that are to be filled at the 2003 Annual
Meeting. The Board of Trustees, however, stated in its proxy statement dated
June 19, 2003, that there are two positions on the Board of Trustees that are
open for election at the 2003 Annual Meeting and that the trustees elected to
these positions will serve until the 2006 Annual Meeting and until their
respective successors are duly elected.
GREENLIGHT URGES YOU TO VOTE "FOR" THE GREENLIGHT NOMINEES ON THE
ENCLOSED GREEN PROXY CARD.
As discussed in more detail under the heading "Election of Trustees" in
this proxy statement, shareholders who vote on the GREEN proxy card furnished by
Greenlight will be able to vote for the election of the two Greenlight Nominees.
The Greenlight Nominees, if elected, will constitute a minority of the members
of the Board of Trustees and accordingly, if the full Board of Trustees is
present at a meeting, the Greenlight Nominees, by themselves, will not be able
to cause any action to be taken or not to be taken by the Board of Trustees.
There is no assurance that any of the nominees of the Board of Trustees will
serve as trustees of Mercer International if any of the Greenlight Nominees are
elected.
Mercer International has announced that the 2003 Annual Meeting will be
held on Tuesday, July 15, 2003 at 8:00 a.m., Europe Central Time at Hauptstrasse
16, D 07365, Blankenstein, Germany. Mercer International has set May 21, 2003 as
the record date for determining shareholders entitled to notice of and to vote
at the 2003 Annual Meeting. Mercer International has reported that 16,874,899
shares of beneficial interest were issued and outstanding as of the record date.
As of the record date, Greenlight was the beneficial owner of 2,517,500 shares
of beneficial interest of Mercer International, which represents approximately
14.9% of the issued and outstanding shares of Mercer International.
Information concerning Greenlight, the Greenlight Nominees and other
persons who are participants in its solicitation of proxies is provided in this
proxy statement under the headings "Election of Trustees" and "Information About
the Participants" and in Annex A attached hereto.
* * * * * * *
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE 2003
ANNUAL MEETING, YOU ARE URGED TO SIGN AND DATE THE ENCLOSED GREEN PROXY CARD AND
RETURN IT IN THE POSTAGE-PAID ENVELOPE PROVIDED. PROPERLY VOTING THE ENCLOSED
GREEN PROXY CARD WILL REVOKE ANY PROXY PREVIOUSLY SIGNED BY YOU. WE URGE YOU NOT
TO RETURN ANY PROXY SENT TO YOU BY MERCER INTERNATIONAL.
* * * * * * *
The date of this proxy statement is June 20, 2003. This proxy statement
and the enclosed GREEN proxy card are first being sent or given to shareholders
of Mercer International on or about June ___, 2003.
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THIS SOLICITATION IS BEING MADE BY GREENLIGHT, AND NOT BY OR ON BEHALF
OF THE BOARD OF TRUSTEES OF MERCER INTERNATIONAL.
If you have any questions concerning this proxy statement or need help
voting your shares, please call the firm assisting Greenlight in its
solicitation of proxies:
D.F. KING & CO., INC.
48 WALL STREET
NEW YORK, NEW YORK 10005
CALL TOLL FREE: (800) 848-3416
ALL OTHERS CALL COLLECT: (212) 269-5550
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BACKGROUND; REASONS FOR THE SOLICITATION
Greenlight believes that there is a need for new trustees on the Board
of Trustees of Mercer International. Greenlight believes that Mercer
International has excellent assets, but suffers significant deficiencies in
corporate governance. The reasons for Greenlight's belief are numerous and
include the following:
WE BELIEVE THAT THE BOARD OF TRUSTEES IS IN DISARRAY AND IS NOT DOING ITS JOB IN
PROPERLY SUPERVISING MANAGEMENT ACTIVITIES.
o THE BOARD OF TRUSTEES HAS NOT MET ONCE IN THE LAST THREE YEARS,
according to the proxy statements filed on June 19, 2003, April 30,
2002, and April 30, 2001.
o The Board of Trustees has been a revolving door. There are four
candidates (including the newest nominee) that have been replaced since
January 2003. In addition, Mr. J.L. Ryu resigned having served less
than one year. The Company stated in a press release dated May 7, 2003
that two of its trustees would not be seeking reelection, although one
has mysteriously remained in the latest proxy statement filed by the
Company.
o As reported in the Form 8-K filed June 18, 2003, the former chief
financial officer and trustee has resigned due to an ongoing criminal
investigation in Germany. He was CFO from 1996 to 1999, and again from
November 2002 until June 2003, and has been a trustee since 1996.
o The Company shuffled the delegated Board terms of certain trustees
without shareholder approval between filing its Annual Report on Form
10-K on March 31, 2003, and its Definitive Proxy Statement on Schedule
14A on June 19, 2003. The result of the shuffle was to improperly
reduce the number of trustees to be elected at the 2003 Annual Meeting
from three to two.
As reported in last year's election results set forth in the Form 10-Q
filed November 14, 2002, 71% of the votes cast were withheld from
trustees, Jimmy S.H. Lee and R. Ian Rigg. In fact, LESS THAN 8% OF
SHAREHOLDERS VOTED FOR MESSRS. LEE AND RIGG. As only 26% of the total
shares outstanding voted, it is doubtful whether the 2002 election had
a valid quorum.
WE BELIEVE THAT MANAGEMENT HAS ENGAGED IN TRANSACTIONS THAT ARE NOT IN THE BEST
INTERESTS OF SHAREHOLDERS. FOR EXAMPLE:
o The Company purchased the Landqart AG swiss mill business in December
2001. At the time, the Company stated that "Landqart became the
cornerstone of its planned expansion into the security and specialty
papers sections" (2001 Annual Report). As late as October 2002, the
Company stated that the "recent acquisition of Landqart AG strengthens
positioning" (Form 8-K/A filed October 4, 2002). However:
o The Company deconsolidated Landqart AG in December 2002, but did
not bother to announce the transaction until its Annual Report
on Form 10-K filed on March 31, 2003. The complex transaction
contributed Landqart to a Limited Partnership for a 49% stake to
Mercer International (valued at $10 million). Another 49% of the
partnership is owned by MFC Bancorp, a spin-out from Mercer
International, which contributed unspecified assets with a
carrying value of CAD $7.3 million.
o The General Partner of the partnership, disclosed by Jimmy S.H.
Lee in the first quarter conference call on May 5, 2003 as Cade
Struktur Corporation(1), is controlled by MFC Bancorp
(1) The General Partner is technically Equitable Industries, Ltd., as disclosed
in Mercer International's Annual Report on Form 10-K, exhibit 10.17. Cade
Struktur Corporation listed in its Audited Annual Financial Statements
filed on May 20, 2003 with the Canadian Securities Administrators (CSA)
that Equitable Industries Ltd., a Turks and Caicos company, is a
beneficially-owned subsidiary acquired on December 20, 2002 for a nominal
amount. Jimmy S.H. Lee was President and Director of Cade Struktur from
July 31, 2001 until his resignation on December 20, 2002. Prior to this
period, the CEO of MFC Bancorp (Michael J. Smith) was President and
Director.
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(25%) and Babington Ltd. (26.6%), a Liberian company SOLELY
CONTROLLED BY MR. LEE (as per the Cade Struktur Management Proxy
filed with CSA on October 16, 2002). Mercer International's most
recent Annual Report on Form 10-K does not list Babington Ltd.
as a subsidiary, although Cade Struktur's proxy filed on May 23,
2003 lists it as a wholly-owned subsidiary.
o THE DECONSOLIDATION TRANSACTION NEVER RECEIVED A FAIRNESS
OPINION, NOR WAS IT APPROVED BY AN INDEPENDENT COMMITTEE OF THE
BOARD OF TRUSTEES.
WE BELIEVE THAT MERCER INTERNATIONAL'S CHIEF EXECUTIVE OFFICER HAS MULTIPLE
CONFLICTS OF INTEREST:
o Jimmy S.H. Lee is, or has been, a director of MFC Merchant Bank S.A.
(an affiliate of MFC Bancorp), with whom Mercer International has
existing business relationships, including a bridge loan for the amount
of E30 million.
o Jimmy S.H. Lee is the Chairman of Med Net International, Ltd. ("Med
Net"), a Canadian corporation of which Mercer International is a
significant shareholder (owns 23% of the stock)
o MFC Bancorp issued a takeover bid for Med Net on November 7,
2002.
o Med Net's Board, in its Director's Circular filed with the CDA
on November 27, 2002, reached the conclusion that the offer was
inadequate from a financial point, but did not make any
recommendation to shareholders. In addition, the Circular
stated that "None of the directors or senior officers of Med Net
is a director or senior officer of the Offeror [MFC Bancorp] or
any of its subsidiaries".
o Not only has Jimmy S.H. Lee had an extensive relationship with
MFC Bancorp and its officers in the past, but has also served as
director of MFC Merchant Bank S.A., and at the time of the offer
was a director of Sasamat Capital Corporation (see Annual
Information Form filed with CDA on May 20, 2003), an affiliate
of MFC Bancorp.
o Although Greenlight is not aware of the current status of the
tender offer for Med Net, it is likely that the $5.5 million
permanent impairment loss in Mercer International's Form 10-Q
for the first quarter of 2003 is largely related to its Med Net
holdings.
NOT ONLY HAS MANAGEMENT RUN MERCER INTERNATIONAL WITH LITTLE GOVERNANCE, BUT IT
HAS PRODUCED POOR FINANCIAL RESULTS. MERCER INTERNATIONAL'S FIVE-YEAR TOTAL
RETURN FOR THE PERIOD ENDED DECEMBER 31, 2002 HAS BEEN (-37.0%), VERSUS (-13.1%)
FOR THE NASDAQ MARKET INDEX AND +9.6% FOR THE INDUSTRY INDEX USED BY MERCER
INTERNATIONAL FOR COMPARISON PURPOSES (SIC 262). MERCER INTERNATIONAL'S STOCK
PRICE IS TRADING AT ITS LOWEST HISTORICAL RANGE.
GREENLIGHT'S OBJECTIVES
GREENLIGHT'S OBJECTIVES
Greenlight's objectives are to:
o Establish and implement corporate governance guidelines that conform
to evolving best practices being implemented by public companies;
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o Separate the roles of Chief Executive Officer and Chairman of
the Board of Trustees and elect an independent trustee as the
Chairman;
o Urge the Board to declassify the Board of Trustees and
eliminate any poison pill;
o Institute better Board independence;
o Restore Mercer International's credibility with investors,
through greater transparency and better corporate governance;
o Ensure that transactions between the Company and its affiliates and
with other related companies are considered and approved by a
committee of independent trustees; and
GREENLIGHT'S COMMITMENT
The Greenlight Nominees have decades of collective management and
investment experience. They are wholly independent of Mercer International's
current management and are committed to increasing shareholder value through the
proposed plan. No assurance can be given that electing the Greenlight Nominees
will enhance shareholder value. The Greenlight Nominees, if elected, are
committed to acting in the best interest of Mercer International's shareholders
and, subject to their fiduciary duties as trustees of Mercer International, will
pursue the proposed objection diligently and promptly. No shareholder vote will
be required for implementation of Greenlight's plan and none is contemplated.
Greenlight believes that Mercer International's Board of Trustees needs more
independent voices to represent the interests of all shareholders and to
advocate for maximizing shareholder value.
GREENLIGHT URGES YOU TO VOTE "FOR" THE GREENLIGHT NOMINEES BY SIGNING,
DATING AND RETURNING THE ENCLOSED GREEN PROXY CARD (AND NOT TO RETURN ANY PROXY
CARD SENT TO YOU BY MERCER INTERNATIONAL).
ELECTION OF TRUSTEES
Mercer International's Board of Trustees is divided into three classes
of trustees, with each class serving a three year term. Two trustees are to be
elected at the 2003 Annual Meeting, each to hold office until the 2006 annual
meeting of shareholders and thereafter until his or her successor is elected and
qualified. Although only two trustees are to be elected, we believe that there
are actually three seats on the Board of Trustees that are to be filled at the
2003 Annual Meeting.
Greenlight has nominated two members to stand for election to the Board
of Trustees, and the incumbent Board of Trustees has designated two nominees to
stand for election, referred to as the Mercer Nominees.
Accordingly, there will be four nominees (two Greenlight Nominees and
two Mercer Nominees) for two trustee positions on the Board of Trustees.
Shareholders who vote on the GREEN proxy card furnished by Greenlight will be
able to vote for the two Greenlight Nominees. There is no assurance that any of
the Mercer Nominees will serve on the Board of Trustees if any of the Greenlight
Nominees are elected. Shareholders who use Mercer International's proxy card
will not be able to vote for any of the Greenlight Nominees. Accordingly, any
shareholder who wishes to vote for the Greenlight Nominees should vote on
Greenlight's GREEN proxy card.
The two Mercer Nominees are identified in the proxy statement filed by
Mercer International on June 19, 2003. Any shareholder who wishes to vote for
one or more of the Greenlight Nominees and for one or more of the Mercer
Nominees will be unable to do so on either Greenlight's GREEN proxy card or
Mercer International's proxy card, and may only do so by voting by ballot at the
2003 Annual Meeting. Shareholders who use the GREEN proxy card may vote for or
against any Greenlight Nominee by putting an X in the space provided.
Greenlight's Nominees are Guy W. Adams and Saul E. Diamond. Based on
their extensive business and professional experience, we believe that the
Greenlight Nominees are highly qualified to serve as trustees of Mercer
International. Each Greenlight Nominee has consented to serve as a trustee of
Mercer International if elected and to be named in this proxy statement and in
Greenlight's other soliciting materials as a Greenlight Nominee.
INFORMATION ABOUT GREENLIGHT NOMINEES
Each Greenlight Nominee has furnished the information about him or her
that is provided in this proxy statement. Additional disclosure regarding the
Greenlight Nominees and the other participants in our solicitation can be found
in Annex A to this proxy statement. None of the Greenlight Nominees is an
affiliate of Mercer International.
NAME AND BUSINESS ADDRESS AGE PRESENT PRINCIPAL OCCUPATION
-------------------------- --- -------------------------------------------------
Guy W. Adams 52 Managing Member, GWA Advisors, LLC, GWA Capital
55 South Lake Avenue Partners, LLC and GWA Investments, LLC
Suite 720
Pasadena, CA 91101
Saul E. Diamond 37 Principal, Diamond Capital Partners, LLC
535 Fifth Avenue
33rd Floor
New York, NY 10017
Guy W. Adams is the managing member of GWA Advisors, LLC, GWA
Investments, LLC and GWA Capital Partners, LLC, where he has served since 2002.
GWA Advisors, LLC is a private equity investment firm and a holding company for
Mr. Adams' private equity investments. GWA Investments, LLC is an investment
fund investing in publicly traded securities managed by GWA Capital Partners,
LLC, a registered investment advisor. Prior to 2002, Mr. Adams was the President
of GWA Capital, which he founded in 1996 to invest his own capital in public and
private equity transactions, and a business consultant to entities seeking
refinancing or recapitalization. From 1989 to 1995, Mr. Adams was an investment
manager and financial advisor to the Forman family owned Pacific Theatres
Corporation and its affiliates, where he had investment authority over funds in
excess of twenty million dollars investing in public and private equity
transactions. Mr. Adams earned an MBA form Harvard Business School in 1984 and a
Bachelor's of Science in Engineering from Louisiana State University in 1974.
Saul E. Diamond is a Principal of Diamond Capital Partners, LLC, which
he founded in April 2002. Diamond Capital Partners is a middle market private
equity and advisory firm. From 1996 to 2002, Mr. Diamond was a Principal with
Value Added Capital, LLC, a New York based private equity company. Prior to
1996, Mr. Diamond was an Associate at The Blackstone Group, LP, a merchant
banking firm where Mr. Diamond performed private equity and merger and
acquisition advisory assignments. From 1988 to 1990, Mr. Diamond was an Analyst
in the Mergers and Acquisitions Department of Drexel Burnham Lambert, an
investment bank. Mr. Diamond has an MBA in Finance and Management from Columbia
Business School and a Bachelors of Arts in Liberal Arts from Northwestern
University. In addition, Mr. Diamond was a Director of Kane Magnetics
International, Inc., a privately held manufacturer of permanent magnets and
magnetic systems, from 1996 to 2002.
Each Greenlight Nominee has entered into an agreement with Greenlight
that provides that Greenlight will indemnify and hold harmless such nominee from
any and all damages, judgments, fines, settlements, losses and expenses incurred
by such nominee resulting from any action, suit or proceeding based upon or
arising from the solicitation of proxies to which this proxy statement relates
and such trustees' ongoing services as a trustee to the extent not otherwise
indemnified by Mercer International, other than claims resulting from the
nominee's recklessness or willful misconduct.
In addition, Guy W. Adams has entered into an agreement with Greenlight
that provides that Greenlight will (1) give Mr. Adams a one-time payment of
$75,000, (2) grant Mr. Adams a one year option to purchase 100,000 shares of
beneficial interest of Mercer International held by Greenlight with an exercise
price of $4.53 per share, and (3) grant GWA Investments LLC an option to
purchase 225,000 shares of beneficial interest of Mercer International held by
Greenlight with an exercise price of $4.53 per share, which option expires upon
the later to occur of 60 days from the date of the agreement or 30 days after
the 2003 Annual Meeting. This option for 225,000 shares expires if Mr. Adams is
not elected to the Board of Trustees.
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Saul E. Diamond has entered into an agreement with Greenlight that
provides that Greenlight will (1) give Mr. Diamond a one-time payment of
$100,000 and (2) grant Mr. Diamond a one year option to purchase 50,000 shares
of beneficial interest of Mercer International held by Greenlight with an
exercise price of $4.53 per share.
Each of Greenlight's Nominees, if elected, will be entitled to receive
compensation customarily paid by Mercer International to its trustees, which is
described in the annual report on Form 10-K filed by Mercer International on
March 31, 2003.
We have no reason to believe that any of the Greenlight Nominees will
be disqualified or unwilling or unable to serve if elected. Greenlight reserves
the right to nominate substitute persons if Mercer International makes or
announces any changes to its Declaration of Trust or takes or announces any
other action that has, or if consummated would have, the effect of disqualifying
any of the Greenlight Nominees.
* * * * * *
GREENLIGHT URGES YOU TO VOTE "FOR" THE GREENLIGHT NOMINEES BY SIGNING,
DATING AND RETURNING THE ENCLOSED GREEN PROXY CARD (AND NOT TO RETURN ANY PROXY
CARD SENT TO YOU BY MERCER INTERNATIONAL).
VOTING PROCEDURES
To support the Greenlight Nominees at the 2003 Annual Meeting, please
sign and date the enclosed GREEN proxy card and return it to D.F. King & Co.,
Inc. in the enclosed postage-paid envelope. Submitting a proxy will not affect
your right to attend the 2003 Annual Meeting and vote in person.
HOW DO I VOTE IN PERSON?
If you owned shares of beneficial interest of Mercer International on
the record date, May 21, 2003, you may attend the 2003 Annual Meeting and vote
in person. If you are not the record holder of your shares, please refer to the
discussion following the question "What if I am not the record holder of my
shares?"
HOW DO I VOTE BY PROXY?
To vote by proxy, you should complete, sign and date the enclosed GREEN
proxy card and return it promptly in the enclosed postage-paid envelope.
To be able to vote your shares in accordance with your instructions at
the 2003 Annual Meeting, we must receive your proxy as soon as possible but in
any event prior to the shares being voted at the meeting.
WHAT IF I AM NOT THE RECORD HOLDER OF MY SHARES?
If your shares are held in the name of a brokerage firm, bank nominee
or other institution, only it can give a proxy with respect to your shares. You
should receive a proxy card from your bank or broker, which you must return in
the envelope provided in order to have your shares voted. If you need
assistance, please contact our solicitor, D.F. King & Co., Inc., by telephone at
1-800-848-3416. Banks and brokers may call D.F. King collect at (212) 269-5550.
If you do not have record ownership of your shares and want to vote in
person at the 2003 Annual Meeting, you may obtain a document called a "legal
proxy" from the record holder of your shares and bring it to the 2003 Annual
Meeting in order to vote in person. If you need assistance, please contact our
solicitor, D.F. King & Co., Inc., by telephone at 1-800-848-3416. Banks and
brokers may call D.F. King collect at (212) 269-5550.
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WHAT SHOULD I DO IF I RECEIVE A PROXY CARD SOLICITED BY THE INCUMBENT BOARD OF
TRUSTEES OF MERCER INTERNATIONAL?
If you submit a proxy to us by signing and returning the enclosed GREEN
proxy card, do not sign or return the proxy card solicited by Mercer
International's incumbent Board of Trustees or follow any voting instructions
provided by Mercer International unless you intend to change your vote, because
only your latest-dated proxy will be counted.
If you have already sent a proxy card to Mercer International, you may
revoke it and provide your support to the Greenlight Nominees by signing, dating
and returning the enclosed GREEN proxy card.
WHAT IF I WANT TO REVOKE MY PROXY?
If you give a proxy, you may revoke it at any time before it is voted
on your behalf by:
o submitting a duly executed new proxy bearing a later date; or
o giving written notice of revocation to either D.F. King & Co., Inc.
at 48 Wall Street, New York, New York 10005 or to Mercer
International at Suite 1620, 400 Burrard Street, Vancouver, British
Columbia, Canada V6C 3A6, Attn: Secretary; or
o attending and voting in person at the 2003 Annual Meeting.
If you choose to revoke a proxy by giving written notice or by
submitting a later-dated proxy to the Secretary of Mercer International, we
would appreciate if you would assist us in representing the interests of
shareholders on an informed basis by sending us a copy of your revocation or
proxy or by calling D.F. King & Co., Inc. at 1-800-848-3416. Banks and brokers
may call D.F. King collect at (212) 269-5550. REMEMBER, YOUR LATEST-DATED PROXY
IS THE ONLY ONE THAT COUNTS.
IF I PLAN TO ATTEND THE 2003 ANNUAL MEETING, SHOULD I STILL SUBMIT A PROXY?
Whether or not you plan to attend the 2003 Annual Meeting, we urge you
to submit a proxy. Returning the enclosed proxy card will not affect your right
to attend the 2003 Annual Meeting and vote.
WHO CAN VOTE?
You are eligible to vote or to execute a proxy only if you owned shares
of beneficial interest of Mercer International on the record date for the 2003
Annual Meeting, May 21, 2003. Even if you sell your shares after the record
date, you will retain the right to execute a proxy in connection with the 2003
Annual Meeting. It is important that you grant a proxy regarding shares you held
on the record date, or vote those shares in person, even if you no longer own
those shares. Based upon the definitive proxy statement filed by Mercer
International on June 19, 2003, 16,874,899 shares of beneficial interest of
Mercer International were outstanding on the record date for the 2003 Annual
Meeting.
HOW MANY VOTES DO I HAVE?
With respect to each matter to be considered at the 2003 Annual
Meeting, each shareholder will have one vote for each share of beneficial
interest of Mercer International held by it on the record date. Based on
documents publicly filed by Mercer International, Mercer International has no
outstanding voting securities other than its shares of beneficial interest.
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HOW WILL MY SHARES BE VOTED?
If you give an executed proxy on the accompanying GREEN proxy card,
your shares will be voted as you direct. If you submit an executed proxy to us
without instructions, our representatives will vote your shares "FOR" the two
Greenlight Nominees (as discussed in the "Election of Trustees" section of this
proxy statement) and will "ABSTAIN" with respect to the ratification of the
independent auditors. Submitting a GREEN proxy card will entitle our
representatives to vote your shares in accordance with their discretion on
matters not described in this proxy statement that may arise at the 2003 Annual
Meeting.
Unless a proxy specifies otherwise, it will be presumed to relate to
all shares held of record on the record date by the person who submitted it.
WHAT IS A QUORUM AND WHY IS IT NECESSARY?
Conducting business at the 2003 Annual Meeting requires a quorum.
Shareholders representing one-third of the outstanding shares entitled to vote
at the 2003 Annual Meeting represented in person or by proxy shall constitute a
quorum. Under the Washington Business Corporation Act and Mercer International's
Declaration of Trust, abstentions and broker non-votes are treated as present
for purposes of determining whether a quorum exists.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AND HOW WILL VOTES BE COUNTED?
If a quorum is present, trustees will be elected by the votes of a
majority of the shares cast in person or by proxy at the 2003 Annual Meeting.
Under applicable Washington law and Mercer International's Declaration of Trust,
abstentions and broker non-votes will have no effect on the vote of the election
of the trustees. Shareholders do not have the right to cumulate their votes.
Each other proposal will be adopted by the votes of a majority of the
shares cast in person or by proxy at the 2003 Annual Meeting. Under applicable
Washington law and Mercer International's Declaration of Trust, abstentions and
broker non-votes will have no effect on the vote of such proposals.
Required information concerning the necessary vote to approve any other
matters being voted upon at the 2003 Annual Meeting and the effects, if any, of
abstentions and broker non-votes on such other matters, will be set forth in the
proxy statement filed by Mercer International and, in accordance with Rule
14a-5(c) under the Exchange Act, reference is made to such proxy statement for
such information.
HOW CAN I RECEIVE MORE INFORMATION?
If you have any questions about giving your proxy or about our
solicitation, or if you require assistance, please call D.F. King & Co., Inc. at
1-800-848-3416. Banks and brokers may call D.F. King collect at (212) 269-5550.
PROXY SOLICITATION AND EXPENSES
The solicitation to which this proxy statement relates is being made by
the Greenlight Entities and the Greenlight Nominees (the "Participants"). The
Participants may solicit proxies in person and by mail, press release,
advertisements in newspapers, magazines and/or trade publications, telephone,
telecopier, telegraph, electronic mail, Internet (World Wide Web) publication,
television, radio and newspapers. No person identified above has or will receive
compensation for soliciting proxies.
The Participants will ask banks, brokers, custodians, nominees, other
institutional holders and other fiduciaries to forward all soliciting materials
to the beneficial owners of the shares that those institutions hold of record.
Greenlight will reimburse those institutions for reasonable expenses that they
incur in connection with forwarding our materials.
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Greenlight has retained D.F. King & Co., Inc. to solicit proxies on its
behalf in connection with the 2003 Annual Meeting. D.F. King may solicit proxies
from individuals, banks, brokers, custodians, nominees, other institutional
holders and other fiduciaries and will employ approximately 20 people in its
efforts. Greenlight has agreed to reimburse D.F. King for its reasonable
expenses (subject to certain limitations), to indemnify it against certain
losses, costs and expenses, and to pay it fees of $25,000.
The entire expense of this proxy solicitation is being borne by the
Greenlight. Greenlight may, particularly if the Greenlight Nominees are elected
to Mercer International's Board of Trustees, seek reimbursement of our expenses
from Mercer International. Greenlight does not intend to seek shareholder
approval of any such reimbursement.
In addition to the costs related to the engagement of D.F. King & Co.,
Inc., costs related to our solicitation of proxies include expenditures for
printing, postage, legal services and other related items. Total expenditures
are expected to be approximately $10,000. To date, Greenlight has not paid any
costs in furtherance of its proxy solicitation.
INFORMATION ABOUT THE PARTICIPANTS
The Greenlight Entities and the Greenlight Nominees are participants in
Greenlight's solicitation of proxies for the 2003 Annual Meeting within the
meaning of the federal securities laws. Information related to the Participants,
including their beneficial ownership of Mercer International's shares of
beneficial interest, is set forth on Annex A to this proxy statement and is
incorporated into this proxy statement by reference. Except as set forth on
Annex A, none of the Participants is party to any commercial dealing with Mercer
International or its subsidiaries that is required to be discussed in this proxy
statement by the federal securities laws. Information in this proxy statement
about each Participant was provided by that Participant.
INFORMATION ABOUT MERCER INTERNATIONAL
Based upon Mercer International's Definitive Proxy Statement filed with
the SEC on June 19, 2003, the mailing address of the principal executive offices
of Mercer International is 14900 Interurban Avenue South, Suite 282, Seattle,
Washington 98168.
Annex B sets forth information obtained from Mercer International's
public filings related to the beneficial ownership of shares of beneficial
interest of Mercer International and is incorporated in this proxy statement by
reference.
Except as otherwise noted herein, the information in this proxy
statement concerning Mercer International has been taken from or is based upon
documents and records on file with the Securities and Exchange Commission (the
"SEC") and other publicly available information. Although Greenlight does not
have any knowledge indicating that any statement contained herein is untrue, we
do not take any responsibility for the accuracy or completeness of statements
taken from public documents and records that were not prepared by or on behalf
of Greenlight, or for any failure by Mercer International to disclose events
that may affect the significance or accuracy of such information.
OTHER MATTERS TO BE VOTED UPON
At the 2003 Annual Meeting, in addition to electing trustees, Mercer
International intends to ask shareholders to ratify the appointment of Deloitte
& Touche LLP as its independent auditors for the fiscal year ending December 31,
2003. Greenlight does not make any recommendation with respect to the
ratification of Deloitte & Touche LLP as Mercer International's independent
auditors for the fiscal year ending December 31, 2003. If shareholders provide
instructions regarding the ratification of the auditors on the enclosed GREEN
proxy card, Greenlight will vote the shares as directed; if no instructions are
given, shares represented by Greenlight's GREEN proxy card will abstain on this
matter.
8
Submitting a GREEN proxy card will entitle the named proxies to vote
your shares in accordance with their sole discretion on matters not described in
this proxy statement that may arise at the 2003 Annual Meeting.
FUTURE SHAREHOLDER PROPOSALS
Based on information set forth in Mercer International's definitive
proxy statement filed with the SEC on June 19, 2003, any proposal that a
shareholder intends to present at the next annual meeting of shareholders of
Mercer International must be received by the Company on or before January 30,
2004. A shareholder must submit such a proposal to the Company for inclusion in
the proxy statement for the next annual shareholders' meeting on or before April
16, 2004, or the Company's management will have discretionary authority to vote
proxies received for such meeting with respect to any such proposal.
* * * * * *
GREENLIGHT URGES YOU TO VOTE "FOR" THE GREENLIGHT NOMINEES BY SIGNING,
DATING AND RETURNING THE ENCLOSED GREEN PROXY CARD (AND NOT TO RETURN ANY PROXY
CARD SENT TO YOU BY MERCER INTERNATIONAL).
Questions or requests for additional copies of this proxy statement or
if you need assistance in voting for the Greenlight Nominees, please contact our
proxy solicitator:
D.F. KING & CO., INC.
48 WALL STREET
NEW YORK, NEW YORK 10005
CALL TOLL FREE: (800) 848-3416
ALL OTHERS CALL COLLECT: (212) 269-5550
9
ANNEX A
INFORMATION CONCERNING GREENLIGHT AND OTHER
PARTICIPANTS IN ITS SOLICITATION OF PROXIES
The following persons are participants (the "Participants" and, each, a
"Participant") in the solicitation of proxies in support of electing the
Greenlight Nominees to the Board of Trustees of Mercer International: (i) the
Greenlight Entities; and (ii) the Greenlight Nominees. The Greenlight Entities
consist of Greenlight Capital, L.L.C., Greenlight Capital, Inc. and David
Einhorn. The Greenlight Nominees are Guy W. Adams and Saul E. Diamond.
Greenlight Capital, L.L.C. is a Delaware limited liability company and
its principal place of business is New York, New York and its address is 420
Lexington Avenue, Suite 875, New York, New York 10170. Greenlight Capital, Inc.
is a Delaware corporation and its principal place of business is New York, New
York and its address is 420 Lexington Avenue, Suite 875, New York, New York
10170. David Einhorn is the Senior Managing Member of Greenlight Capital L.L.C.
and the President and Sole Director of Greenlight Capital, Inc. Mr. Einhorn's
business address is 420 Lexington Avenue, Suite 875, New York, New York 10170.
The present principal occupation or employment of each Greenlight Nominee is
described in this proxy statement under the heading "Election of Trustees."
SECURITY OWNERSHIP
The Participants and their associates may be deemed to have beneficial
ownership of shares of beneficial interest of Mercer International as set forth
below.
AMOUNT OF BENEFICIAL
OWNERSHIP THROUGH PERCENT
NAME OPTIONS AND OTHERWISE OF CLASS
--------------------------- ------------------------ -------------
Greenlight Capital, L.L.C. 1,286,700(1) 7.6%
Greenlight Capital, Inc. 1,230,800(1) 7.3%
David Einhorn 2,517,600(1) 14.9%
Guy W. Adams 325,000(2) *
Saul E. Diamond 50,000(3) *
*less than 1%
(1) Greenlight Capital, L.L.C. serves as general partner of Greenlight
Capital, L.P. and Greenlight Capital Qualified, L.P. Greenlight
Capital Inc. is the investment manager of Greenlight Capital
Offshore, Ltd.
(2) In connection with becoming a nominee for trustee, Mr. Adams
received from Greenlight an option to purchase 100,000 shares of
beneficial interest of Mercer International currently held by
Greenlight. GWA Investments LLC, which is managed by Mr. Adams,
also received an option to purchase 225,000 shares of beneficial
interest currently held by Greenlight, which option expires if he
is not elected as a trustee.
(3) In connection with becoming a nominee for trustee, Mr. Diamond
received from Greenlight an option to purchase 50,000 shares of
beneficial interest of Mercer International currently held by
Greenlight.
No Participant and no associate of any Participant (within the meaning
of the federal proxy rules) beneficially owns any securities of Mercer
International other than shares of beneficial interest (and the accompanying
rights under Mercer International's rights agreement) and the options described
above. No Participant beneficially owns any securities of any parent or
subsidiary of Mercer International. No Participant has record but not beneficial
ownership with respect to any securities of Mercer International.
TRANSACTIONS IN MERCER INTERNATIONAL'S SECURITIES
Other than the transactions described below, no Participant has
purchased or sold any securities of Mercer International in the past two years.
Annex A-1
TRANSACTIONS IN MERCER INTERNATIONAL
SHARES OF BENEFICIAL OWNERSHIP BY GREENLIGHT
NUMBER OF SHARES OF BENEFICIAL
DATE OF TRANSACTION NATURE OF TRANSACTION INTEREST OF MERCER INTERNATIONAL
------------------- --------------------- --------------------------------
Grant of Options to Greenlight
June 20, 2003 Nominees 375,000
TRANSACTIONS IN MERCER INTERNATIONAL
SHARES OF BENEFICIAL OWNERSHIP BY GUY W. ADAMS
NUMBER OF SHARES OF BENEFICIAL
DATE OF TRANSACTION NATURE OF TRANSACTION INTEREST OF MERCER INTERNATIONAL
------------------- --------------------- --------------------------------
June 20, 2003 Receipt of Option from Greenlight 100,000
June 20, 2003 Receipt of Option from Greenlight 225,000
TRANSACTIONS IN MERCER INTERNATIONAL
SHARES OF BENEFICIAL OWNERSHIP BY SAUL E. DIAMOND
NUMBER OF SHARES OF BENEFICIAL
DATE OF TRANSACTION NATURE OF TRANSACTION INTEREST OF MERCER INTERNATIONAL
------------------- --------------------- --------------------------------
June 20, 2003 Receipt of Option from Greenlight 50,000
ARRANGEMENTS, INTERESTS AND TRANSACTIONS
Except for the agreements entered into between the Greenlight Nominees
and Greenlight described in Greenlight's proxy statement under the heading
"Election of Trustees - Information on Greenlight Nominees," no Participant is,
or was within the past year, a party to any contract, arrangement or
understanding with any person with respect to any securities of Mercer
International, including, but not limited to, joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
division of losses or profits, or the giving or withholding of proxies.
No Participant, no associate of any Participant and no person who is a
party to any arrangement or understanding pursuant to which a Greenlight Nominee
is proposed to be elected has any arrangement or understanding with any person
with respect to any future employment by Mercer International or its affiliates
or with respect to any future transactions to which Mercer International or any
of its affiliates will or may be a party.
Greenlight has an interest in the solicitation of proxies in support of
the Greenlight Nominees from either direct or indirect beneficial ownership of
the shares of beneficial interests of Mercer International. Participants who are
Greenlight Nominees are expected to receive customary compensation from Mercer
International in exchange for their services as trustees, if elected. The
Greenlight Nominees also have an interest in the solicitation through the
agreements described in Greenlight's proxy statement under the heading "Election
of Trustees."
There has been no transaction or series of similar transactions since
the beginning of Mercer International's last completed fiscal year, and there is
no currently proposed transaction or series of similar proposed transactions, to
which Mercer International or any of its subsidiaries was or is to be a party,
in which the amount involved exceeds $60,000 and in which any Participant or any
associate of any Participant had, or will have, a direct or indirect material
interest.
Annex A-2
ADDITIONAL INFORMATION ABOUT THE GREENLIGHT NOMINEES
No Greenlight Nominee presently holds any positions with Mercer
International. Other than the agreements described in Greenlight's proxy
statement under the heading "Election of Trustees," there is no arrangement or
understanding between any Greenlight Nominee and any other person pursuant to
which the Greenlight Nominee was selected as a nominee.
There is no family relationship (within the meaning of the federal
securities laws) between any Greenlight Nominee and (i) any other Greenlight
Nominee or (ii) any trustee of Mercer International, executive officer of Mercer
International or person nominated by Mercer International to become a trustee or
executive officer.
There is, and has been, no legal or other proceeding involving any
Greenlight Nominee that is required to be disclosed under the federal proxy
rules.
No Greenlight Nominee (i) has any business relationship with Mercer
International that is required to be disclosed by the federal proxy rules; (ii)
has had any such relationship since the beginning of Mercer International's most
recently completed fiscal year; or (iii) has, since the beginning of Mercer
International's last completed fiscal year, been indebted to Mercer
International or any of its subsidiaries in an amount that exceeds $60,000.
No Greenlight Nominee and no associate of any Greenlight Nominee has
received any compensation from Mercer International as a trustee or executive
officer of Mercer International. Had the Greenlight Nominees been trustees of
Mercer International and members of the compensation committee of Mercer
International's Board of Trustees during Mercer International's last completed
fiscal year, there would have been no compensation committee interlocks within
the meaning of the federal proxy rules.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
No Greenlight Nominee has failed to file reports related to Mercer
International that are required by Section 16(a) of the Securities Exchange Act
of 1934, as amended.
Annex A-3
ANNEX B
STOCK OWNERSHIP BY CERTAIN BENEFICIAL OWNERS
The following table sets forth information, based on the Definitive
Proxy Statement filed by Mercer International on June 19, 2003 and statements of
beneficial ownership on Schedule 13D and/or 13G, as amended, as of June 16,
2003, regarding the beneficial ownership of Mercer International shares of
beneficial interest by each person, or group of affiliated persons, other than
trustees and executive officers, known by Greenlight to own beneficially 5% or
more of the outstanding common stock:
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF
OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS (ROUNDED)
---------------------------------------- ------------------ ---------------
Greenlight Capital, Inc.(1) 2,517,500 14.9%(2)
Greenlight Capital, L.L.C.
David Einhorn
420 Lexington Avenue
Suite 875
New York, NY 10170
Cramer Rosenthal McGlynn(3) 1,729,700 10.3%
707 Westchester Avenue
White Plains, NY 10604
Merrill Lynch & Co., Inc.(4) 1,596,700 9.5%
4 World Financial Center
New York, NY 10080
Peter R. Kellogg(5) 893,300 5.3%
120 Broadway, 6th Floor
New York, NY 10271
CCM Master Fund, Ltd.(6) 891,679 5.3%
Coghill Capital Management, L.L.C.
Coghill Clint D.
One North Wacker Drive
Suite 4725
Chicago, IL 60606
----------
(1) Greenlight Capital, L.L.C. serves as general partner of Greenlight Capital,
L.P. and Greenlight Capital Qualified, L.P. Greenlight Capital Inc. is the
investment manager of Greenlight Capital Offshore, Ltd..
(2) Based on the Definitive Proxy Statement filed by Mercer International with
the SEC on June 19, 2003.
(3) Based on the Definitive Proxy Statement filed by Mercer International with
the SEC on June 19, 2003.
(4) Based on the Definitive Proxy Statement filed by Mercer International with
the SEC on June 19, 2003.
(5) Based on a Schedule 13G filed with the SEC on April 4, 2003 by Peter R.
Kellogg. Peter R. Kellogg has sole voting power and sole dispositive power
over 83,900 shares, and shared voting power and shared dispositive power
over 809,400 shares.
(6) Based on a Schedule 13G filed with the SEC on May 2, 2003 by CCM Master
Fund, Ltd., Coghill Capital Management, L.L.C., and Coghill Clint D. Coghill
Capital Management, L.L.C., Coghill Clint D., and CCM Master Fund, Ltd. have
shared voting power and shared dispositive power over 891,679 shares. CCM
Master Fund, Ltd., Coghill Capital Management, L.L.C., and Coghill Clint D.
disclaim beneficial ownership of the securities except to the extent of
their pecuniary interest therein. Coghill Capital Management, L.L.C. and
Coghill Clint D. are principals of the investment manager or investment
manager to the investment management entity in whose account the reported
securities are held.
Annex B-1
BOARD AND MANAGEMENT OWNERSHIP
The following table sets forth, based solely on the Definitive Proxy
Statement filed by Mercer International on June 19, 2003, certain information
regarding the ownership of the Company's shares of beneficial interest as of
June 16, 2003 for (i) each trustee, nominee trustee and named executive officer
of Mercer International and (ii) all trustees and executive officers of Mercer
International as a group. Except as otherwise noted, each trustee has sole
voting and sole dispositive power with respect to the shares shown as
beneficially owned.
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
----------------------------------------------- ------------------------ ----------------
Jimmy S.H. Lee(1) 1,619,800 8.8%
C.S. Moon(2) 29,000 *
Michel Arnulphy(2) 23,000 *
Maarten Reidel(3) 153,333 *
R. Ian Rigg(2) 60,000 *
Jong L. Ryu -- --
Per Gundersby -- --
William McCartney -- --
Graeme Witts -- --
Wolfram Ridder(2) 60,000 *
Trustees and Officers as a Group (8 persons)(4) 1,791,800 9.6%
----------
* Less than 1%.
(1) Includes presently exercisable stock options to acquire up to 1,585,000
shares.
(2) Represents presently exercisable stock options.
(3) Includes presently exercisable stock options to acquire up to 33,333 shares,
which expire in September 2003 as a result of the resignation of Mr. Reidel
as a Trustee and officer of the Company in June 2003.
(4) Includes presently exercisable stock options to acquire up to 1,757,000
shares, but excludes the 153,333 shares and stock options held by Maarten
Reidel due to his resignation as a trustee and officer of the Company in
June 2003.
Annex B-2
P
R
O
X
Y
PRELIMINARY COPY. SUBJECT TO COMPLETION. JUNE 20, 2003.
GREEN PROXY CARD APPENDIX
MERCER INTERNATIONAL INC.
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
JULY 15, 2003 AT 8:00 A.M. CENTRAL EUROPE TIME
THIS PROXY IS SOLICITED BY THE GREENLIGHT ENTITIES
AND NOT BY THE BOARD OF TRUSTEES OF MERCE INTERNATIONAL INC.
The undersigned shareholder of Mercer International Inc. hereby
appoints [_____________________ and _____________________], and each of them, as
attorneys and proxies, each with power of substitution and revocation, to
represent the undersigned at the Annual Meeting of Shareholders of Mercer
International Inc. to be held on July 15, 2003, and at any adjournment,
postponement or rescheduling thereof, with authority to vote all shares held or
owned by the undersigned in accordance with the directions indicated herein.
Receipt of the Proxy Statement is hereby acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL CAUSE YOUR SHARES TO BE VOTED
AS YOU DIRECT. IF YOU RETURN THIS PROXY, PROPERLY EXECUTED, WITHOUT SPECIFYING A
CHOICE, YOUR SHARES WILL BE "FOR" THE NOMINEES IDENTIFIED ON THE REVERSE SIDE
AND WILL "ABSTAIN" ON ITEM TWO.
(Continued and to be signed on the reverse side) See reverse side
Appendix-1
THE GREENLIGHT ENTITIES RECOMMEND A VOTE "FOR" THE NOMINEES LISTED BELOW.
1. Election of Trustees.
NOMINEES: Guy W. Adams and Saul E. Diamond.
GUY W. ADAMS SAUL E. DIAMOND
[ ] FOR [ ] FOR
[ ] AGAINST [ ] AGAINST
[ ] ABSTAIN [ ] ABSTAIN
2. Ratification of the appointment of Deloitte & Touche LLP as the
independent auditors of Mercer International Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Other Matters.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY BE PRESENTED TO THE MEETING OR ANY ADJOURNMENT,
POSTPONEMENT OR RESCHEDULING THEREOF AND IS UNKNOWN TO THE GREENLIGHT
ENTITIES AND ITS REPRESENTATIVES A REASONABLE TIME BEFORE THE
COMMENCEMENT OF THE GREENLIGHT ENTITIES' SOLICITATION OF PROXIES.
Date , 2003
---------------------------
---------------------------------------
Signature (Please sign exactly as your
name appears to the left)
---------------------------------------
Additional Signature (if held jointly)
---------------------------------------
Title
Please sign exactly as your name appears above. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person. The signer hereby revokes all proxies previously
given by the signer to vote at the 2003 Annual Meeting of Shareholders
of Mercer International Inc., and any adjournment, postponement or
rescheduling thereof.
Appendix-2