Mercer International (MERC) 8-K Mercer International Inc. Reports Record Annual Pulp Production

Exhibit 99.1

For Immediate Release

MERCER INTERNATIONAL INC. REPORTS RECORD ANNUAL PULP PRODUCTION

AND ENERGY SALES AND 2011 FOURTH QUARTER AND YEAR END RESULTS

NEW YORK, NY, February 15, 2012 - Mercer International Inc. (Nasdaq: MERC, TSX: MRI.U) today reported results for the fourth quarter and for the year ended December 31, 2011. Operating EBITDA in the fourth quarter of 2011 was €17.0 million ($22.9 million), compared to €64.6 million ($87.8 million) in the last quarter of 2010 and €49.2 million ($69.5 million) in the third quarter of 2011. Current quarter results were negatively impacted by weak pulp markets and:

• a €13.0 million negative impact to Operating EBITDA at our Stendal mill resulting from: (i) 15 days (27,915 ADMTs) of scheduled annual maintenance downtime which was a longer shut than usual due to work on the recovery boiler (we had no maintenance downtime in the fourth quarter of 2010 and only nine days (8,343 ADMTs) in the third quarter of 2011); and (ii) €3.1 million in a one-time charge for municipal infrastructure costs at our Stendal mill in connection with a settlement with the local municipality for projects completed in prior periods; and

• €1.5 million in lost energy revenue at our Celgar mill due to turbine maintenance and a one-time charge relating to an electricity rate dispute with the mill’s utility provider.

For 2011, Operating EBITDA was €167.1 million ($232.6 million), compared to €224.0 million ($297.3 million) in 2010. Operating EBITDA is defined on page 5 of this press release and reconciled to net income (loss) on page 8 of the financial tables in this press release.

For the fourth quarter of 2011, we had a net loss of €1.8 million ($2.4 million), or €0.03 ($0.04) per basic share, compared to net income of €35.3 million ($48.0 million), or €0.84 ($1.14) per basic share, in the last quarter of 2010 and €8.4 million ($11.9 million), or €0.15 ($0.21) per basic share, for the third quarter of 2011. For 2011, we reported net income of €50.1 million ($69.7 million), or €1.00 ($1.39) per basic share, compared to net income of €86.3 million ($114.5 million), or €2.24 ($2.97) per basic share, in 2010.

Summary Financial Highlights

		September 30,			September 30,			September 30,			September 30,			September 30,
	Q4			Q3			Q4			Year			Year
	2011			2011			2010			2011			2010
	(in millions of Euros, except where otherwise stated)
Pulp revenues	€	213.2		€	190.4		€	232.2		€	831.4		€	856.3
Energy revenues		16.0			14.4			13.4			58.0			44.2
Operating income		3.0			35.3			50.4			111.1			167.7
Operating EBITDA		17.0			49.2			64.6			167.1			224.0
Unrealized gain (loss) on derivative instruments		(0.8	)		(10.5	)		12.4			(1.4	)		1.9
Foreign exchange gain (loss) on debt		(0.1	)		(0.2	)		(1.5	)		1.2			(6.1	)
Income tax benefit (provision)		8.3			(3.1	)		0.2			0.7			5.9
Net income (loss) attributable to common shareholders		(1.8	)		8.4			35.3			50.1			86.3
Net income (loss) per share attributable to common shareholders
Basic	€	(0.03	)	€	0.15		€	0.84		€	1.00		€	2.24
Diluted	€	(0.03	)	€	0.15		€	0.63		€	0.89		€	1.56
Common shares outstanding at period end (000s)		55,779			55,779			43,000			55,779			43,000

Summary Operating Highlights

		September 30,		September 30,		September 30,		September 30,		September 30,
	Q4		Q3		Q4		Year		Year
	2011		2011		2010		2011		2010
Pulp Production (‘000 ADMTs)		364.9		362.3		356.2		1,453.7		1,426.3
Scheduled Production Downtime (‘000 ADMTs)		27.9		8.3		—		52.4		43.5
Pulp Sales (‘000 ADMTs)		400.0		321.3		386.0		1,427.9		1,428.6
Average NBSK pulp list price in Europe ($/ADMT)		868		980		957		956		938
Average NBSK pulp list price in Europe (€/ADMT)		644		694		704		687		707
Average pulp sales realizations (€/ADMT)(1)		527		584		593		574		591
Energy Production (‘000 MWh)		409.5		402.5		393.0		1,640.4		1,444.1
Energy Sales (‘000 MWh)		169.0		149.3		149.7		652.1		520.0
Average Spot Currency Exchange Rates:
€ / $(2)		0.7425		0.7084		0.7361		0.7186		0.7541
C$ / $(2)		1.0227		0.9803		1.0129		0.9887		1.0298
C$ / €(3)		1.3788		1.3835		1.3766		1.3761		1.3671

(1) Average realized pulp prices for the periods indicated reflect customer discounts and pulp price movements between the order and shipment date.

(2) Average Federal Reserve Bank of New York noon spot rate over the reporting period.

(3) Average Bank of Canada noon spot rate over the reporting period.

President’s Comments

Mr. Jimmy S.H. Lee, President and Chairman, stated: “Overall, we are generally pleased with our strong yearly performance. During 2011, we reduced our indebtedness by €94.5 million through principal repayments, note buybacks and the conversion of notes. Additionally, our cash and holdings of short term German government bonds increased by approximately €18.3 million. Generally, our mills performed well in 2011 as our German mills achieved record annual pulp production and all of our mills set energy sales records. However, difficult market conditions in the second half of the year, a one-time charge and mill downtime negatively impacted our fourth quarter results.”

Mr. Lee continued: “Overall, pulp prices in the fourth quarter of 2011 declined, primarily as a result of economic uncertainty in Europe and credit tightening in China, which were only partially offset by a stronger U.S. dollar over the period. At the end of 2011, list prices in Europe were approximately $825 per ADMT and in North America and China were approximately $890 and $670 per ADMT, respectively.”

2

Mr. Lee added: “We are pleased to report that in 2011, our revenues from energy sales increased by 31% to €58.0 million ($80.7 million) in 2011 from €44.2 million ($58.7 million) in 2010. Our recently announced expansion project at our Stendal mill highlights our continuing focus on increasing production and sales of green energy at all of our mills. Since there are minimal incremental costs associated with our energy production, we believe that our generation and sale of surplus renewable energy will continue to provide us with a stable income source unrelated to cyclical movements in pulp pricing.”

Mr. Lee continued: “We also intend to improve our energy profitability at our Celgar mill by rectifying what we believe is unfair and discriminatory treatment of the mill by the British Columbia regulatory authorities. In late January 2012, we served a notice of intent to submit a claim to arbitration on the Government of Canada for breaches of its obligations under the North American Free Trade Agreement. We believe that the unfair and discriminatory treatment against our Celgar mill has resulted in it losing approximately C$19 million of incremental energy sales per annum.”

Mr. Lee concluded: “Although pulp markets are still soft, we believe that the market is currently at the bottom of the cycle, and we are already seeing NBSK prices beginning to firm up. Looking ahead, we expect modest price recovery in the near- to mid-term. Further, we have no maintenance downtime scheduled for any of our mills for the first quarter of 2012. Overall, we believe that with the continued strong performance of our mills, along with our increased renewable energy revenues, we are well positioned for a positive 2012.”

Three Months Ended December 31, 2011 Compared to Three Months Ended December 31, 2010

Total revenues for the three months ended December 31, 2011 decreased slightly to €229.2 million ($308.9 million) from €245.6 million ($333.8 million) in the same period in 2010, due to lower pulp revenues, partially offset by higher energy revenues. Pulp revenues for the three months ended December 31, 2011 decreased by approximately 8% to €213.2 million from €232.2 million in the comparative period of 2010, primarily due to lower pulp prices. Revenues from the sale of excess energy increased by approximately 19% in the fourth quarter to €16.0 million from €13.4 million in the same quarter last year, as a result of increased energy sales at all our mills.

Pulp production increased to 364,876 ADMTs in the current quarter, from 356,244 ADMTs in the same quarter of 2010, primarily due to increased production levels at all of our mills.

Pulp sales volume increased to 400,005 ADMTs in the fourth quarter from 385,989 ADMTs in the comparative period of 2010, primarily as a result of stronger demand in China. Average pulp sales realizations decreased to €527 per ADMT in the fourth quarter of 2011, compared to €593 per ADMT in the same period last year, due to lower pulp prices.

3

Costs and expenses in the fourth quarter of 2011 increased to €226.3 million from €195.2 million in the comparative period of 2010, primarily due to a government grant recorded in 2010 that covered accrued wastewater fees at our Rosenthal mill and no scheduled maintenance costs in 2010. Our costs and expenses in the current quarter included approximately €7.6 million for regularly scheduled maintenance costs. Several competing producers and members of the peer group that we benchmark our performance against now report their financial results in accordance with International Financial Reporting Standards which permit a significant portion of such maintenance costs to be capitalized instead of expensed. Such costs are not charged to EBITDA by the peer group companies but instead are expensed as depreciation.

On average, our overall fiber costs in the current quarter increased by approximately 3% from the same period in 2010, primarily due to higher fiber costs at our Celgar mill resulting from increased competition for fiber, partially offset by lower fiber costs at our German mills caused by weakened demand from the European board industry.

Selling, general and administrative expenses increased to €11.4 million from €8.6 million in the fourth quarter of 2010.

For the fourth quarter of 2011, operating income decreased to €3.0 million from €50.4 million in the comparative quarter of 2010, primarily due to lower pulp prices and 15 days (27,915 ADMTs) of scheduled annual maintenance downtime at our Stendal mill.

Interest expense in the fourth quarter of 2011 decreased to €14.1 million from €16.5 million in the comparative quarter of 2010, primarily due to the conversion of our convertible notes in 2011 and reduced levels of debt associated with our Stendal mill.

Our Stendal mill recorded an unrealized loss of €0.8 million on our interest rate derivative in the current quarter, compared to an unrealized gain of €12.4 million in the same quarter of last year. We recorded a foreign exchange loss on our debt of €0.1 million in the fourth quarter of 2011 compared to a loss of €1.5 million in the same period last year.

4

During the current quarter, we recorded an €8.3 million net income tax recovery, compared to a net income tax recovery of €0.2 million in the same period last year, primarily due to the recognition of deferred tax assets in the current quarter.

In the fourth quarter of 2011, the noncontrolling shareholder’s interest in the Stendal mill’s loss was €1.2 million, compared to its share of the Stendal mill’s income of €3.5 million in the same quarter last year.

In the fourth quarter of 2011, Operating EBITDA decreased to €17.0 million from €64.6 million in the fourth quarter of 2010. Operating EBITDA is defined as operating income (loss) plus depreciation and amortization and non-recurring capital asset impairment charges. Management uses Operating EBITDA as a benchmark measurement of its own operating results, and as a benchmark relative to its competitors. Management considers it to be a meaningful supplement to operating income as a performance measure primarily because depreciation expense and non-recurring capital asset impairment charges are not an actual cash cost, and depreciation expense varies widely from company to company in a manner that management considers largely independent of the underlying cost efficiency of their operating facilities. In addition, we believe Operating EBITDA is commonly used by securities analysts, investors and other interested parties to evaluate our financial performance.

Operating EBITDA does not reflect the impact of a number of items that affect our net income, including financing costs and the effect of derivative instruments. Operating EBITDA is not a measure of financial performance under GAAP, and should not be considered as an alternative to net income or income from operations as a measure of performance, nor as an alternative to net cash from operating activities as a measure of liquidity. Operating EBITDA has significant limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. For a reconciliation of net income (loss) attributable to common shareholders to Operating EBITDA, see page 8 of the financial tables included in this press release.

We reported a net loss attributable to common shareholders of €1.8 million, or €0.03 per basic and diluted share, for the fourth quarter of 2011, which included an aggregate non-cash unrealized loss of €0.8 million on the Stendal interest rate derivative. In the fourth quarter of 2010, we reported net income attributable to common shareholders of €35.3 million, or €0.84 per basic and €0.63 per diluted share, which included aggregate net non-cash unrealized gains of €9.3 million, comprised of a non-cash gain of €12.4 million on the Stendal interest rate derivative, a non-cash foreign exchange loss of €1.5 million on our long-term debt and a non-cash loss in connection with the repurchase of our 9.25% senior notes due 2013 (the “2013 Notes”).

5

Year Ended December 31, 2011 Compared to Year Ended December 31, 2010

Total revenues for the year ended December 31, 2011 marginally decreased to €889.4 million ($1,238.0 million) from €900.5 million ($1,195.2 million) in the same period in 2010, primarily as a result of slightly lower pulp revenues, being mostly offset by higher energy revenues. Pulp revenues for the year ended December 31, 2011 decreased slightly to €831.4 million from a record €856.3 million in the year ended December 31, 2010, primarily due to a weaker U.S. dollar relative to the Euro. In 2011, revenues from the sale of excess energy increased by approximately 31% to €58.0 million from €44.2 million in 2010, due to record annual energy sales at all of our mills.

Pulp production increased to 1,453,677 ADMTs in 2011, from 1,426,286 ADMTs in 2010, primarily as a result of record annual pulp production at our German mills. We took a total of 35 and 31 days scheduled maintenance downtime at our mills in 2011 and 2010, respectively, and expect to take approximately 42 days in 2012.

Pulp sales volume marginally decreased to 1,427,924 ADMTs in 2011 compared to 1,428,638 ADMTs in 2010. Average pulp sales realizations slightly decreased to €574 per ADMT in 2011 from €591 per ADMT in 2010, primarily due to a weaker U.S. dollar relative to the Euro.

Costs and expenses in 2011 increased to €778.2 million from €732.8 million in 2010, primarily due to higher fiber costs.

Our overall fiber costs in 2011 increased by approximately 7% from the same period in 2010, primarily due to higher fiber costs at our Celgar mill caused by increased competition for fiber in the second half of 2011. Fiber prices at our German mills also increased slightly, primarily as a result of low harvesting activity and high demand from the board industry in Germany during the first half of 2011. We currently expect our fiber costs to decline slightly at all of our mills in the short- to mid-term.

During the year ended December 31, 2011, we recorded €0.7 million of net income tax recoveries, compared to net income tax recoveries of €5.9 million in 2010, primarily due to the timing of recognizing deferred tax assets.

For 2011, we recorded operating income of €111.1 million, compared to operating income of €167.7 million in 2010, primarily due to a weaker U.S. dollar relative to the Euro and higher fiber costs, partially offset by higher revenues from the sale of excess energy.

6

Interest expense in 2011 decreased to €59.0 million from €67.6 million in 2010, primarily due to the conversion of our convertible notes in 2011 and reduced levels of debt associated with our Stendal mill.

Our Stendal mill recorded an unrealized loss of €1.4 million on its interest rate derivative at the end of 2011, compared to an unrealized gain of €1.9 million last year. We recorded a foreign exchange gain on our long-term debt of €1.2 million in 2011, compared to a loss of €6.1 million in 2010.

In 2011, the noncontrolling shareholder’s interest in the Stendal mill’s income was €3.9 million, compared to €8.5 million last year.

In 2011, Operating EBITDA decreased to €167.1 million from €224.0 million in 2010. For a definition of Operating EBITDA, see page 5 of this press release and for a reconciliation of net income to Operating EBITDA, see page 8 of the financial tables included in this press release.

We recorded a loss on the extinguishment of debt of €0.1 million in 2011, primarily in connection with the repurchase and extinguishment of some of our 9.5% senior notes due 2017. In 2010, we recorded a loss of €7.5 million, primarily in connection with the redemption of all of our remaining 2013 Notes.

We reported net income attributable to common shareholders of €50.1 million, or €1.00 per basic and €0.89 per diluted share, for 2011, which included a net non-cash unrealized loss of €1.4 million on the Stendal interest rate derivative. In 2010, we reported net income attributable to common shareholders of €86.3 million, or €2.24 per basic and €1.56 per diluted share, which included aggregate net non-cash unrealized losses of €0.5 million, comprised of a non-cash gain of €1.9 million on the Stendal interest rate derivative, a non-cash foreign exchange loss of €6.1 million on our long-term debt, a non-cash loss on the extinguishment of our 2013 Senior Notes and a non-cash income tax benefit.

7

Liquidity and Capital Resources

The following table is a summary of selected financial information for the periods indicated:

		September 30,		September 30,
	Years Ended December 31,
	2011		2010
	(in thousands)
Financial Position
Cash and cash equivalents	€	105,072	€	99,022
Marketable securities(1)		12,372		275
Working capital		247,159		231,683
Property, plant and equipment		820,974		846,767
Total assets		1,217,250		1,216,075
Long-term liabilities		807,641		877,315
Total equity		283,542		213,563

(1) Principally comprised of German federal government bonds with a maturity of less than one year.

As at December 31, 2011, we had approximately €26.3 million and C$38.3 million available under our Rosenthal and Celgar facilities, respectively. As at December 31, 2011, approximately €477.5 million was outstanding under our Stendal mill’s loan facility.

Restricted Group

The following table is a summary of selected financial information for the Restricted Group for the periods indicated.

		September 30,		September 30,
	Years Ended December 31,
	2011		2010
	(in thousands)
Restricted Group Financial Position
Cash and cash equivalents	€	44,829	€	50,654
Marketable securities(1)		12,372		275
Working capital		149,973		150,667
Property, plant and equipment		353,925		362,274
Total assets		658,844		662,944
Long-term liabilities		262,770		312,631
Total equity		344,415		289,141

(1) Principally comprised of German federal government bonds with a maturity of less than one year.

Earnings Release Call

In conjunction with this release, Mercer International Inc. will host a conference call, which will be simultaneously broadcast live over the Internet. Management will host the call, which is scheduled for Thursday, February 16, 2012 at 10:00 AM (Eastern Daylight Time). Listeners can access the conference call live and archived through March 15, 2012, over the Internet athttp://investor.shareholder.com/media/eventdetail.cfm?Key=1AE35D7DABC3ECD95E2779DA87354812 or through a link on the Company’s home page at http://www.mercerint.com. Please allow 15 minutes prior to the call to visit the site and download and install any necessary audio software. A replay of this call will be available approximately two hours after the live call ends until February 16, 2012 at 11:59 PM (Eastern Standard Time) through a link on the Company’s Investors/News Releases page at http://www.mercerint.com/s/newsreleases.asp.

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Mercer International Inc. is a global pulp manufacturing company. To obtain further information on the company, please visit its web site at http://www.mercerint.com.

The preceding includes forward looking statements which involve known and unknown risks and uncertainties which may cause our actual results in future periods to differ materially from forecasted results. Among those factors which could cause actual results to differ materially are the following: as a result of the inherent uncertainty of litigation, we cannot predict whether or to what extent our NAFTA claim will be successful, delays in the process of our NAFTA claim, the highly cyclical nature of our business, raw material costs, our level of indebtedness, competition, foreign exchange and interest rate fluctuations, our use of derivatives, expenditures for capital projects, environmental regulation and compliance, disruptions to our production, market conditions and other risk factors listed from time to time in our SEC reports.

APPROVED BY:

Jimmy S.H. Lee

Chairman & President

(604) 684-1099

David M. Gandossi

Executive Vice-President &

Chief Financial Officer

(604) 684-1099

-FINANCIAL TABLES FOLLOW-

9

MERCER INTERNATIONAL INC.

CONSOLIDATED BALANCE SHEETS

(In thousands of Euros)

		September 30,			September 30,
	December 31,
	2011			2010
ASSETS
Current assets
Cash and cash equivalents	€	105,072		€	99,022
Marketable securities		12,216			—
Receivables		120,487			121,709
Inventories		120,539			102,219
Prepaid expenses and other		8,162			11,360
Deferred income tax		6,750			22,570
Total current assets		373,226			356,880
Long-term assets
Property, plant and equipment		820,974			846,767
Deferred note issuance and other		10,763			11,082
Deferred income tax		12,287			—
Note receivable		—			1,346
		844,024			859,195
Total assets	€	1,217,250		€	1,216,075
LIABILITIES
Current liabilities
Accounts payable and other	€	99,640		€	84,873
Pension and other post-retirement benefit obligations		756			728
Debt		25,671			39,596
Total current liabilities		126,067			125,197
Long-term liabilities
Debt		708,415			782,328
Unrealized interest rate derivative losses		52,391			50,973
Pension and other post-retirement benefit obligations		31,197			24,236
Capital leases and other		13,053			12,010
Deferred income tax		2,585			7,768
		807,641			877,315
Total liabilities	€	933,708		€	1,002,512
EQUITY
Shareholders’ equity
Share capital		247,642			219,211
Paid-in capital		(4,857	)		(3,899	)
Retained earnings (deficit)		37,985			(10,956	)
Accumulated other comprehensive income		21,346			31,712
Total shareholders’ equity		302,116			236,068
Noncontrolling deficit		(18,574	)		(22,505	)
Total equity		283,542			213,563
Total liabilities and equity	€	1,217,250		€	1,216,075

10

MERCER INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of Euros, except per share data)

		September 30,			September 30,			September 30,			September 30,
	Three Months Ended December 31,						Years Ended December 31,
	2011			2010			2011			2010
Revenues
Pulp	€	213,238		€	232,200		€	831,396		€	856,311
Energy		16,002			13,442			57,972			44,225
		229,240			245,642			889,368			900,536
Costs and expenses
Operating costs		200,943			172,552			683,718			643,529
Operating depreciation and amortization		13,983			14,115			55,760			55,932
		14,314			58,975			149,890			201,075
Selling, general and administrative expenses		11,357			8,555			38,771			33,332
Operating income		2,957			50,420			111,119			167,743
Other income (expense)
Interest expense		(14,089	)		(16,480	)		(58,995	)		(67,621	)
Investment income		768			164			1,501			468
Foreign exchange gain (loss) on debt		(97	)		(1,451	)		1,175			(6,126	)
Loss on extinguishment of debt		(2	)		(6,565	)		(71	)		(7,494	)
Gain (loss) on derivative instruments		(838	)		12,422			(1,418	)		1,899
Total other income (expense)		(14,258	)		(11,910	)		(57,808	)		(78,874	)
Income (loss) before income taxes		(11,301	)		38,510			53,311			88,869
Income tax benefit (provision) – current		2,172			(131	)		(1,682	)		(3,881	)
– deferred		6,084			378			2,377			9,760
Net income (loss)		(3,045	)		38,757			54,006			94,748
Less: net loss (income) attributable to noncontrolling interest		1,244			(3,468	)		(3,931	)		(8,469	)
Net income (loss) attributable to common shareholders	€	(1,801	)	€	35,289		€	50,075		€	86,279
Net income (loss) per share attributable to common shareholders
Basic	€	(0.03	)	€	0.84		€	1.00		€	2.24
Diluted	€	(0.03	)	€	0.63		€	0.89		€	1.56

11

MERCER INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of Euros)

		September 30,			September 30,			September 30,
	For the Years Ended December 31,
	2011			2010			2009
Cash flows from (used in) operating activities
Net income (loss) attributable to common shareholders	€	50,075		€	86,279		€	(62,189	)
Adjustments to reconcile net income (loss) attributable to common shareholders to cash flows from operating activities
Loss (gain) on derivative instruments		1,418			(1,899	)		5,760
Foreign exchange loss (gain) on debt		(1,175	)		6,126			(2,692	)
Loss (gain) on extinguishment of debt		71			7,494			(4,447	)
Depreciation and amortization		56,005			56,231			54,170
Accretion expense		597			2,492			181
Noncontrolling interest		3,931			8,469			(9,936	)
Deferred income taxes		(2,377	)		(9,760	)		(6,003	)
Stock compensation expense		3,310			2,394			455
Pension and other post-retirement expense, net of funding		(269	)		418			282
Other		1,308			5,190			2,482
Changes in current assets and liabilities
Receivables		(1,604	)		(40,038	)		31,907
Inventories		(17,713	)		(24,462	)		32,158
Accounts payable and accrued expenses		14,252			(3,089	)		(2,950	)
Other		3,226			(4,566	)		(1,859	)
Net cash from operating activities		111,055			91,279			37,319
Cash flows from (used in) investing activities
Purchase of property, plant and equipment		(37,809	)		(38,300	)		(28,828	)
Proceeds on sale of property, plant and equipment		813			1,138			436
Cash, restricted		—			—			13,000
Note receivable		2,865			1,113			152
Purchase of marketable securities		(12,187	)		—			—
Net cash used in investing activities		(46,318	)		(36,049	)		(15,240	)
Cash flows from (used in) financing activities
Repayment of notes payable and debt		(49,193	)		(234,582	)		(26,499	)
Repayment of capital lease obligations		(2,942	)		(2,920	)		(3,178	)
Proceeds from borrowings of notes payable and debt		—			222,177			13,511
Repayment of credit facilities, net		(14,652	)		(2,660	)		(4,272	)
Proceeds from government grants		14,199			17,952			9,058
Payment of note issuance costs		—			(6,095	)		(1,969	)
Purchase of treasury shares		(7,476	)		—			—
Net cash used in financing activities		(60,064	)		(6,128	)		(13,349	)
Effect of exchange rate changes on cash and cash equivalents		1,377			(1,371	)		109
Net increase in cash and cash equivalents		6,050			47,731			8,839
Cash and cash equivalents, beginning of year		99,022			51,291			42,452
Cash and cash equivalents, end of year	€	105,072		€	99,022		€	51,291

12

MERCER INTERNATIONAL INC.

RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE

Combined Condensed Balance Sheets

(In thousands of Euros)

The terms of the indenture governing our 9.5% senior unsecured notes requires that we provide the results of operations and financial condition of Mercer International Inc. and our restricted subsidiaries under the indenture, collectively referred to as the “Restricted Group”. As at and during the three months and years ended December 31, 2011 and 2010, the Restricted Group was comprised of Mercer International Inc., certain holding subsidiaries and our Rosenthal and Celgar mills. The Restricted Group excludes the Stendal mill.

		September 30,		September 30,			September 30,			September 30,
	December 31, 2011
	Restricted Group		Unrestricted Subsidiaries			Eliminations			Consolidated Group
ASSETS
Current assets
Cash and cash equivalents	€	44,829	€	60,243		€	—		€	105,072
Marketable securities		12,216		—			—			12,216
Receivables		62,697		57,790			—			120,487
Inventories		71,692		48,847			—			120,539
Prepaid expenses and other		5,019		3,143			—			8,162
Deferred income tax		5,179		1,571			—			6,750
Total current assets		201,632		171,594			—			373,226
Long-term assets
Property, plant and equipment		353,925		467,049			—			820,974
Deferred note issuance and other		5,971		4,792			—			10,763
Deferred income tax		8,492		3,795			—			12,287
Due from unrestricted group		88,824		—			(88,824	)		—
Total assets	€	658,844	€	647,230		€	(88,824	)	€	1,217,250
LIABILITIES
Current liabilities
Accounts payable and other	€	49,815	€	49,825		€	—		€	99,640
Pension and other post-retirement benefit obligations		756		—			—			756
Debt		1,088		24,583			—			25,671
Total current liabilities		51,659		74,408			—			126,067
Long-term liabilities
Debt		222,384		486,031			—			708,415
Due to restricted group		—		88,824			(88,824	)		—
Unrealized interest rate derivative losses		—		52,391			—			52,391
Pension and other post-retirement benefit obligations		31,197		—			—			31,197
Capital leases and other		6,604		6,449			—			13,053
Deferred income tax		2,585		—			—			2,585
Total liabilities		314,429		708,103			(88,824	)		933,708
EQUITY
Total shareholders’ equity (deficit)		344,415		(42,299	)		—			302,116
Noncontrolling interest (deficit)		—		(18,574	)		—			(18,574	)
Total liabilities and equity	€	658,844	€	647,230		€	(88,824	)	€	1,217,250

13

MERCER INTERNATIONAL INC.

RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE

Combined Condensed Balance Sheets

(In thousands of Euros)

		September 30,			September 30,			September 30,			September 30,
	December 31, 2010
	Restricted Group			Unrestricted Subsidiaries			Eliminations			Consolidated Group
ASSETS
Current assets
Cash and cash equivalents	€	50,654		€	48,368		€	—		€	99,022
Receivables		70,865			50,844			—			121,709
Inventories		60,910			41,309			—			102,219
Prepaid expenses and other		6,840			4,520			—			11,360
Deferred income tax		22,570			—			—			22,570
Total current assets		211,839			145,041			—			356,880
Long-term assets
Property, plant and equipment		362,274			484,493			—			846,767
Deferred note issuance and other		6,903			4,179			—			11,082
Due from unrestricted group		80,582			—			(80,582	)		—
Note receivable		1,346			—			—			1,346
Total assets	€	662,944		€	633,713		€	(80,582	)	€	1,216,075
LIABILITIES
Current liabilities
Accounts payable and other	€	44,015		€	40,858		€	—		€	84,873
Pension and other post-retirement benefit obligations		728			—			—			728
Debt		16,429			23,167			—			39,596
Total current liabilities		61,172			64,025			—			125,197
Long-term liabilities
Debt		273,473			508,855			—			782,328
Due to restricted group		—			80,582			(80,582	)		—
Unrealized interest rate derivative losses		—	��		50,973			—			50,973
Pension and other post-retirement benefit obligations		24,236			—			—			24,236
Capital leases and other		7,154			4,856			—			12,010
Deferred income tax		7,768			—			—			7,768
Total liabilities		373,803			709,291			(80,582	)		1,002,512
EQUITY
Total shareholders’ equity (deficit)		289,141			(53,073	)		—			236,068
Noncontrolling interest (deficit)		—			(22,505	)		—			(22,505	)
Total liabilities and equity	€	662,944		€	633,713		€	(80,582	)	€	1,216,075

14

MERCER INTERNATIONAL INC.

RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE

Combined Condensed Statements of Operations

(In thousands of Euros)

		September 30,			September 30,			September 30,			September 30,
	Three Months Ended December 31, 2011
	Restricted Group			Unrestricted Subsidiaries			Eliminations			Consolidated Group
Revenues
Pulp	€	121,894		€	91,344		€	—		€	213,238
Energy		7,805			8,197			—			16,002
		129,699			99,541			—			229,240
Operating costs		110,393			90,550			—			200,943
Operating depreciation and amortization		7,462			6,521			—			13,983
Selling, general and administrative expenses		6,554			4,803			—			11,357
		124,409			101,874			—			226,283
Operating income (loss)		5,290			(2,333	)		—			2,957
Other income (expense)
Interest expense		(5,684	)		(9,670	)		1,265			(14,089	)
Investment income (loss)		1,344			689			(1,265	)		768
Foreign exchange loss on debt		(97	)		—			—			(97	)
Loss on extinguishment of debt		(2	)		—			—			(2	)
Loss on derivative instruments		—			(838	)		—			(838	)
Total other income (expense)		(4,439	)		(9,819	)		—			(14,258	)
Income (loss) before income taxes		851			(12,152	)		—			(11,301	)
Income tax benefit		1,327			6,929			—			8,256
Net income (loss)		2,178			(5,223	)		—			(3,045	)
Less: net loss attributable to noncontrolling interest		—			1,244			—			1,244
Net income (loss) attributable to common shareholders	€	2,178		€	(3,979	)	€	—		€	(1,801	)

		September 30,			September 30,			September 30,			September 30,
	Three Months Ended December 31, 2010
	Restricted Group			Unrestricted Subsidiaries			Eliminations			Consolidated Group
Revenues
Pulp	€	135,245		€	96,955		€	—		€	232,200
Energy		6,395			7,047			—			13,442
		141,640			104,002			—			245,642
Operating costs		92,209			80,343			—			172,552
Operating depreciation and amortization		7,616			6,499			—			14,115
Selling, general and administrative expenses		5,439			3,116			—			8,555
		105,264			89,958			—			195,222
Operating income		36,376			14,044			—			50,420
Other income (expense)
Interest expense		(7,425	)		(10,259	)		1,204			(16,480	)
Investment income (loss)		1,333			35			(1,204	)		164
Foreign exchange loss on debt		(1,451	)		—			—			(1,451	)
Loss on extinguishment of debt		(6,565	)		—			—			(6,565	)
Gain on derivative instruments		—			12,422			—			12,422
Total other income (expense)		(14,108	)		2,198			—			(11,910	)
Income before income taxes		22,268			16,242			—			38,510
Income tax benefit (provision)		297			(50	)		—			247
Net income		22,565			16,192			—			38,757
Less: net income attributable to noncontrolling interest		—			(3,468	)		—			(3,468	)
Net income attributable to common shareholders	€	22,565		€	12,724		€	—		€	35,289

15

MERCER INTERNATIONAL INC.

RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE

Combined Condensed Statements of Operations

(In thousands of Euros)

		September 30,			September 30,			September 30,			September 30,
	Year Ended December 31, 2011
	Restricted Group			Unrestricted Subsidiaries			Eliminations			Consolidated Group
Revenues
Pulp	€	473,992		€	357,404		€	—		€	831,396
Energy		25,473			32,499			—			57,972
		499,465			389,903			—			889,368
Operating costs		382,555			301,163			—			683,718
Operating depreciation and amortization		29,841			25,919			—			55,760
Selling, general and administrative expenses		24,126			14,645			—			38,771
		436,522			341,727			—			778,249
Operating income		62,943			48,176			—			111,119
Other income (expense)
Interest expense		(24,886	)		(39,074	)		4,965			(58,995	)
Investment income (loss)		5,262			1,204			(4,965	)		1,501
Foreign exchange gain on debt		1,175			—			—			1,175
Loss on extinguishment of debt		(71	)		—			—			(71	)
Loss on derivative instruments		—			(1,418	)		—			(1,418	)
Total other income (expense)		(18,520	)		(39,288	)		—			(57,808	)
Income before income taxes		44,423			8,888			—			53,311
Income tax benefit (provision)		(4,614	)		5,309			—			695
Net income		39,809			14,197			—			54,006
Less: net income attributable to noncontrolling interest		—			(3,931	)		—			(3,931	)
Net income attributable to common shareholders	€	39,809		€	10,266		€	—		€	50,075

		September 30,			September 30,			September 30,			September 30,
	Year Ended December 31, 2010
	Restricted Group			Unrestricted Subsidiaries			Eliminations			Consolidated Group
Revenues
Pulp	€	490,020		€	366,291		€	—		€	856,311
Energy		15,145			29,080			—			44,225
		505,165			395,371			—			900,536
Operating costs		361,272			282,257			—			643,529
Operating depreciation and amortization		29,971			25,961			—			55,932
Selling, general and administrative expenses		20,231			13,101			—			33,332
		411,474			321,319			—			732,793
Operating income		93,691			74,052			—			167,743
Other income (expense)
Interest expense		(31,498	)		(40,852	)		4,729			(67,621	)
Investment income (loss)		5,103			94			(4,729	)		468
Foreign exchange loss on debt		(6,126	)		—			—			(6,126	)
Loss on extinguishment of debt		(7,494	)		—			—			(7,494	)
Gain on derivative instruments		—			1,899			—			1,899
Total other income (expense)		(40,015	)		(38,859	)		—			(78,874	)
Income before income taxes		53,676			35,193			—			88,869
Income tax benefit (provision)		8,651			(2,772	)		—			5,879
Net income		62,327			32,421			—			94,748
Less: net income attributable to noncontrolling interest		—			(8,469	)		—			(8,469	)
Net income attributable to common shareholders	€	62,327		€	23,952		€	—		€	86,279

16

MERCER INTERNATIONAL INC.

COMPUTATION OF OPERATING EBITDA

(Unaudited)

(In thousands of Euros)

		September 30,			September 30,			September 30,			September 30,
	Three Months Ended December 31,						Years Ended December 31,
	2011			2010			2011			2010
Net income (loss) attributable to common shareholders	€	(1,801	)	€	35,289		€	50,075		€	86,279
Net income (loss) attributable to noncontrolling interest		(1,244	)		3,468			3,931			8,469
Income taxes benefits		(8,256	)		(247	)		(695	)		(5,879	)
Interest expense		14,089			16,480			58,995			67,621
Investment income		(768	)		(164	)		(1,501	)		(468	)
Foreign exchange (gain) loss on debt		97			1,451			(1,175	)		6,126
Loss on extinguishment of debt		2			6,565			71			7,494
Loss (gain) on derivative financial instruments		838			(12,422	)		1,418			(1,899	)
Operating income		2,957			50,420			111,119			167,743
Add: Depreciation and amortization		14,045			14,179			56,005			56,231
Operating EBITDA(1)	€	17,002		€	64,599		€	167,124		€	223,974

(1) Operating EBITDA does not reflect the impact of a number of items that affect our net income (loss) attributable to common shareholders, including financing costs and the effect of derivative instruments. Operating EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States, and should not be considered as an alternative to net income (loss) attributable to common shareholders or income (loss) from operations as a measure of performance, nor as an alternative to net cash from operating activities as a measure of liquidity. Operating EBITDA has significant limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP.

COMPUTATION OF RESTRICTED GROUP OPERATING EBITDA

(Unaudited)

(In thousands of Euros)

		September 30,			September 30,			September 30,			September 30,
	Three Months Ended December 31,						Years Ended December 31,
	2011			2010			2011			2010
Restricted Group
Net income attributable to common shareholders(1)	€	2,178		€	22,565		€	39,809		€	62,327
Income taxes (benefits)		(1,327	)		(297	)		4,614			(8,651	)
Interest expense		5,684			7,425			24,886			31,498
Investment income		(1,344	)		(1,333	)		(5,262	)		(5,103	)
Foreign exchange (gain) loss on debt		97			1,451			(1,175	)		6,126
Loss on extinguishment of debt		2			6,565			71			7,494
Operating income		5,290			36,376			62,943			93,691
Add: Depreciation and amortization		7,524			7,680			30,086			30,270
Operating EBITDA(2)	€	12,814		€	44,056		€	93,029		€	123,961

(1) For the Restricted Group, net income (loss) attributable to common shareholders and net income (loss) are the same.

(2) Operating EBITDA does not reflect the impact of a number of items that affect our net income (loss) attributable to common shareholders, including financing costs and the effect of derivative instruments. Operating EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States, and should not be considered as an alternative to net income (loss) attributable to common shareholders or income (loss) from operations as a measure of performance, nor as an alternative to net cash from operating activities as a measure of liquidity. Operating EBITDA has significant limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP.

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17