content: <PAGE>  1
  
  ==============================================================================
  
  
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549
  
  
                                     FORM 8-K
  
  
                                  CURRENT REPORT
      Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  
  
          Date of report (Date of earliest event reported): July 6, 1998
  
  
                            MERCER INTERNATIONAL INC.
              (Exact Name of Registrant as Specified in Its Charter)
  
  
                                    Washington
                             (State of Incorporation)
  
  
                   0-9409                                 91-6087550
          (Commission File Number)          (I.R.S. Employer Identification No.)
  
  
                    Burglistrasse 6, Zurich, Switzerland, 8002
           (Address of Principal Executive Offices, including Zip Code)
  
  
                                 41 (1) 201 7710
               (Registrant's Telephone Number, including Area Code)
  
  
  ==============================================================================
  
  
  <PAGE>  2
  
                                       -2-
  
  
  ITEM 5.  OTHER EVENTS.
  
  On July 6, 1998, Mercer International Inc.'s (the "Company") indirect wholly-
  owned subsidiary Zellstoff- und Papierfabrik Rosenthal GmbH & Co. KG (the 
  "Borrower") entered into a 15 year term loan agreement (the "Loan Agreement") 
  with two merging German banks (the "Lenders"), in the aggregate amount of 
  Deutsche Marks ("DM") 508.0 million (the "Loan Facility"), the proceeds of 
  which will be utilized to fund the cost of converting the Company's existing 
  pulp mill at Blankenstein, Thuringia, Germany from the production of sulphite 
  pulp to kraft pulp and increase the annual production capacity of the mill 
  from approximately 160,000 tonnes to 280,000 tonnes (the "Project").
  
  The Loan Facility of DM 508.0 million provides for a main facility of DM 453.0 
  million for costs and expenses associated with the Project (the "General 
  Tranche"), a working capital facility (the "Working Capital Tranche") of DM 
  28.0 million (which can also be utilized by the Borrower for Project costs) 
  and a cost overrun facility (the "Cost Overrun Tranche") of DM 27.0 million. 
  The German federal and Thuringia state governments have provided guarantees 
  (the "Governmental Guarantees") to the Lenders for 80% of the Loan Facility 
  and the same is also secured by liens upon substantially all of the assets of 
  the Borrower.  In addition to the Governmental Guarantees, the state 
  government of Thuringia has agreed to provide governmental grants of DM 144.0 
  million in respect of the Project.  These grants are non-repayable provided 
  that the Borrower maintains certain employment levels for a period of five 
  years after the completion of the Project.  In addition, the German federal 
  government has agreed to provide non-repayable investment subsidies and grants 
  totaling DM 37.0 million in respect of the Project.
  
  As provided for in the Loan Facility, an aggregate of DM 290.0 million will be 
  drawn by the Borrower pursuant to special credit programs (the "Special 
  Credits") established by certain German public banks for projects which 
  enhance environmental performance.  The amounts to be drawn as Special Credits 
  are part of the overall Loan Facility and repayment structure.  The rates of 
  interest for the Special Credits will be fixed for the first 10 years at an 
  annual amount equal to the lenders costs of such funds of approximately 4.58% 
  and 5.23% respectively.  The rate of interest will be adjusted and reset after 
  10 years for the balance of the term.  These Special Credits permit qualifying 
  borrowers to borrow money at favorable rates of interest.
  
  The rate of interest for the Loan Facility (other than for amounts drawn as 
  Special Credits) will be an amount equal to the three or six month LIBOR rates 
  for DM plus a margin of between 60 and 75 basis points.  In connection with 
  the Loan Facility, the Borrower will pay to the Lenders a 1% up front 
  commitment/loan fee, a quarterly standby fee of 0.375% on the undrawn portions 
  of the Loan Facility less the amount of Special Credits and certain annual 
  administration fees during the term of the Loan Facility.
  
  The Loan Facility is available for drawdown by the Borrower until the earlier 
  of the completion of the Project or February 28, 2001.  Repayment of the 
  General Tranche and the Cost Overrun Tranche
  
  
  <PAGE>  3
  
                                       -3-
  
  
  (if utilized) commences on March 31, 2001 with semi-annual payments on each of 
  March 31 and September 30 thereafter until final maturity on September 30, 
  2013.  The actual amounts of repayments will be based upon a percentage of the 
  Borrower's overall debt service profile.  The Working Capital Tranche will 
  mature on the seventh anniversary of its initial drawdown and is to be repaid 
  in four equal annual installments commencing on September 30 of the fourth 
  calendar year after the first drawdown thereunder.
  
  The Loan Agreement contains representations, warranties and covenants of the 
  Borrower customary to term project/construction loans of this nature 
  including, without limitation, covenants to maintain an Annual Debt Service 
  Cover Ratio (as defined in the Loan Agreement) of 1:1 and restrictions on 
  encumbrances, distributions, disposition of material assets and further 
  indebtedness for borrowed money.  In addition, pursuant to the Loan Agreement, 
  the Company has advanced shareholders' equity and subordinated loans to the 
  Borrower totaling DM 45.0 million for Project costs.  In the event of Project 
  cost overruns, the Loan Facility provides for a Cost Overrun Tranche of DM 
  28.0 million.  If the Borrower utilizes such tranche, the Company is required 
  to advance on a one to one basis an additional DM 28.3 million to the Borrower 
  in the form of additional shareholders' equity or subordinated loans to cover 
  Project cost overruns.  If the aggregate of the aforesaid advance by the 
  Company and the Cost Overrun Tranche are not sufficient to cover Project cost 
  overruns, the Company will be required to provide an additional DM 10.5 
  million in shareholders' equity or subordinated loans to the Borrower.  All 
  amounts advanced to the Borrower by the Company will be subordinated to 
  amounts owing or payable to the Lenders under the Loan Agreement and 
  repayments of amounts advanced in the case of cost overruns will be postponed 
  until the maturity and repayment of the Loan Facility.
  
  The Loan Agreement contains various events of default customary for term 
  project/construction loans of this type which (after expiry of any applicable 
  curative periods) permit the Lenders to accelerate the Loan Facility, 
  including failure to make required payments, failure to comply with the 
  covenants in the Loan Agreement, failure by the Company to comply with its 
  obligations and the Company ceasing, without the prior consent of the Lenders 
  not to be unreasonably withheld, to own directly or indirectly 51% or more of 
  the outstanding voting securities of the Borrower unless a new third party 
  owns at least 51% of the voting securities of the Borrower and assumes all of 
  the Company's obligations to the Lenders.
  
  As at the date hereof, the exchange rate for DM to U.S. dollars was 
  approximately1.8116:1.
  
  
  <PAGE>  4
  
  
                                       -4-
  
  
  ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS.
  
  (c)  Exhibit(s).
  
  Exhibit
  Number            Description
  -------           -----------
  
  5.1               English Translation of a Loan Agreement in the amount of DM
                    508,000,000 between Zellstoff- und Papierfabrik Rosenthal
                    GmbH & Co. KG, Blankenstein on the one hand and Bayerische
                    Hypotheken- und Wechsel-Bank Aktiengesellschaft, Munich and
                    Bayerische Vereinsbank Aktiengesellschaft, Munich on the
                    other hand dated July 6, 1998.
  
  
  <PAGE>  5
  
  
                                       -5-
  
  
                                    SIGNATURES
                                    ----------
  
  
  Pursuant to the requirements of the Securities Exchange Act of 1934, the 
  Registrant has duly caused this report to be signed on its behalf by the 
  undersigned, thereunto duly authorized.
  
  
  
  
                                            MERCER INTERNATIONAL INC.
  
                                            By:   /s/ Jimmy S.H. Lee
                                                ----------------------
                                                Jimmy S.H. Lee
                                                Chairman
  
  Date:   July 16, 1998
  
  
  
  <PAGE>  6
  
  
                             MERCER INTERNATIONAL INC.
                                      FORM 8-K
  
                                   EXHIBIT INDEX
  
  Exhibit
  Number            Description
  -------           -----------
  
  5.1               English Translation of a Loan Agreement in the amount of DM
                    508,000,000 between Zellstoff- und Papierfabrik Rosenthal
                    GmbH & Co. KG, Blankenstein on the one hand and Bayerische
                    Hypotheken- und Wechsel-Bank Aktiengesellschaft, Munich and
                    Bayerische Vereinsbank Aktiengesellschaft, Munich on the
                    other hand dated July 6, 1998.
metadata_documents: [{"type": "8-K", "sequence": "1", "description": "FORM 8-K OF MERCER INTERNATIONAL INC.", "secsgml_size_bytes": 9383}]
metadata_filer: {"company-data": {"conformed-name": "MERCER INTERNATIONAL INC", "cik": "0000075659", "assigned-sic": "2621", "irs-number": "916087550", "state-of-incorporation": "WA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-09409", "film-number": "98668231"}, "business-address": {"street1": "BRNDSCHENKE STR 64", "city": "ZURICH SWITZERLAND C", "state": "V6", "phone": "4112017710"}, "mail-address": {"street1": "400 BURRARD ST STE 1250", "street2": "VANCOUVER PROVINCE", "city": "B C V6C 3A6"}}
text: 1
  
  ==============================================================================
  
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549
  
                                     FORM 8-K
  
                                  CURRENT REPORT
      Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  
          Date of report (Date of earliest event reported): July 6, 1998
  
                            MERCER INTERNATIONAL INC.
              (Exact Name of Registrant as Specified in Its Charter)
  
                                    Washington
                             (State of Incorporation)
  
                   0-9409                                 91-6087550
          (Commission File Number)          (I.R.S. Employer Identification No.)
  
                    Burglistrasse 6, Zurich, Switzerland, 8002
           (Address of Principal Executive Offices, including Zip Code)
  
                                 41 (1) 201 7710
               (Registrant's Telephone Number, including Area Code)
  
  ==============================================================================
  2
  
                                       -2-
  
  ITEM 5.  OTHER EVENTS.
  
  On July 6, 1998, Mercer International Inc.'s (the "Company") indirect wholly-
  owned subsidiary Zellstoff- und Papierfabrik Rosenthal GmbH & Co. KG (the 
  "Borrower") entered into a 15 year term loan agreement (the "Loan Agreement") 
  with two merging German banks (the "Lenders"), in the aggregate amount of 
  Deutsche Marks ("DM") 508.0 million (the "Loan Facility"), the proceeds of 
  which will be utilized to fund the cost of converting the Company's existing 
  pulp mill at Blankenstein, Thuringia, Germany from the production of sulphite 
  pulp to kraft pulp and increase the annual production capacity of the mill 
  from approximately 160,000 tonnes to 280,000 tonnes (the "Project").
  
  The Loan Facility of DM 508.0 million provides for a main facility of DM 453.0 
  million for costs and expenses associated with the Project (the "General 
  Tranche"), a working capital facility (the "Working Capital Tranche") of DM 
  28.0 million (which can also be utilized by the Borrower for Project costs) 
  and a cost overrun facility (the "Cost Overrun Tranche") of DM 27.0 million. 
  The German federal and Thuringia state governments have provided guarantees 
  (the "Governmental Guarantees") to the Lenders for 80% of the Loan Facility 
  and the same is also secured by liens upon substantially all of the assets of 
  the Borrower.  In addition to the Governmental Guarantees, the state 
  government of Thuringia has agreed to provide governmental grants of DM 144.0 
  million in respect of the Project.  These grants are non-repayable provided 
  that the Borrower maintains certain employment levels for a period of five 
  years after the completion of the Project.  In addition, the German federal 
  government has agreed to provide non-repayable investment subsidies and grants 
  totaling DM 37.0 million in respect of the Project.
  
  As provided for in the Loan Facility, an aggregate of DM 290.0 million will be 
  drawn by the Borrower pursuant to special credit programs (the "Special 
  Credits") established by certain German public banks for projects which 
  enhance environmental performance.  The amounts to be drawn as Special Credits 
  are part of the overall Loan Facility and repayment structure.  The rates of 
  interest for the Special Credits will be fixed for the first 10 years at an 
  annual amount equal to the lenders costs of such funds of approximately 4.58% 
  and 5.23% respectively.  The rate of interest will be adjusted and reset after 
  10 years for the balance of the term.  These Special Credits permit qualifying 
  borrowers to borrow money at favorable rates of interest.
  
  The rate of interest for the Loan Facility (other than for amounts drawn as 
  Special Credits) will be an amount equal to the three or six month LIBOR rates 
  for DM plus a margin of between 60 and 75 basis points.  In connection with 
  the Loan Facility, the Borrower will pay to the Lenders a 1% up front 
  commitment/loan fee, a quarterly standby fee of 0.375% on the undrawn portions 
  of the Loan Facility less the amount of Special Credits and certain annual 
  administration fees during the term of the Loan Facility.
  
  The Loan Facility is available for drawdown by the Borrower until the earlier 
  of the completion of the Project or February 28, 2001.  Repayment of the 
  General Tranche and the Cost Overrun Tranche
  3
  
                                       -3-
  
  (if utilized) commences on March 31, 2001 with semi-annual payments on each of 
  March 31 and September 30 thereafter until final maturity on September 30, 
  2013.  The actual amounts of repayments will be based upon a percentage of the 
  Borrower's overall debt service profile.  The Working Capital Tranche will 
  mature on the seventh anniversary of its initial drawdown and is to be repaid 
  in four equal annual installments commencing on September 30 of the fourth 
  calendar year after the first drawdown thereunder.
  
  The Loan Agreement contains representations, warranties and covenants of the 
  Borrower customary to term project/construction loans of this nature 
  including, without limitation, covenants to maintain an Annual Debt Service 
  Cover Ratio (as defined in the Loan Agreement) of 1:1 and restrictions on 
  encumbrances, distributions, disposition of material assets and further 
  indebtedness for borrowed money.  In addition, pursuant to the Loan Agreement, 
  the Company has advanced shareholders' equity and subordinated loans to the 
  Borrower totaling DM 45.0 million for Project costs.  In the event of Project 
  cost overruns, the Loan Facility provides for a Cost Overrun Tranche of DM 
  28.0 million.  If the Borrower utilizes such tranche, the Company is required 
  to advance on a one to one basis an additional DM 28.3 million to the Borrower 
  in the form of additional shareholders' equity or subordinated loans to cover 
  Project cost overruns.  If the aggregate of the aforesaid advance by the 
  Company and the Cost Overrun Tranche are not sufficient to cover Project cost 
  overruns, the Company will be required to provide an additional DM 10.5 
  million in shareholders' equity or subordinated loans to the Borrower.  All 
  amounts advanced to the Borrower by the Company will be subordinated to 
  amounts owing or payable to the Lenders under the Loan Agreement and 
  repayments of amounts advanced in the case of cost overruns will be postponed 
  until the maturity and repayment of the Loan Facility.
  
  The Loan Agreement contains various events of default customary for term 
  project/construction loans of this type which (after expiry of any applicable 
  curative periods) permit the Lenders to accelerate the Loan Facility, 
  including failure to make required payments, failure to comply with the 
  covenants in the Loan Agreement, failure by the Company to comply with its 
  obligations and the Company ceasing, without the prior consent of the Lenders 
  not to be unreasonably withheld, to own directly or indirectly 51% or more of 
  the outstanding voting securities of the Borrower unless a new third party 
  owns at least 51% of the voting securities of the Borrower and assumes all of 
  the Company's obligations to the Lenders.
  
  As at the date hereof, the exchange rate for DM to U.S. dollars was 
  approximately1.8116:1.
  4
  
                                       -4-
  
  ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS.
  
  (c)  Exhibit(s).
  
  Exhibit
  Number            Description
  -------           -----------
  
  5.1               English Translation of a Loan Agreement in the amount of DM
                    508,000,000 between Zellstoff- und Papierfabrik Rosenthal
                    GmbH & Co. KG, Blankenstein on the one hand and Bayerische
                    Hypotheken- und Wechsel-Bank Aktiengesellschaft, Munich and
                    Bayerische Vereinsbank Aktiengesellschaft, Munich on the
                    other hand dated July 6, 1998.
  5
  
                                       -5-
  
                                    SIGNATURES
                                    ----------
  
  Pursuant to the requirements of the Securities Exchange Act of 1934, the 
  Registrant has duly caused this report to be signed on its behalf by the 
  undersigned, thereunto duly authorized.
  
                                            MERCER INTERNATIONAL INC.
  
                                            By:   /s/ Jimmy S.H. Lee
                                                ----------------------
                                                Jimmy S.H. Lee
                                                Chairman
  
  Date:   July 16, 1998
  6
  
                             MERCER INTERNATIONAL INC.
                                      FORM 8-K
  
                                   EXHIBIT INDEX
  
  Exhibit
  Number            Description
  -------           -----------
  
  5.1               English Translation of a Loan Agreement in the amount of DM
                    508,000,000 between Zellstoff- und Papierfabrik Rosenthal
                    GmbH & Co. KG, Blankenstein on the one hand and Bayerische
                    Hypotheken- und Wechsel-Bank Aktiengesellschaft, Munich and
                    Bayerische Vereinsbank Aktiengesellschaft, Munich on the
                    other hand dated July 6, 1998.