Mercer Plunges 22% Pre-Market on Reported Chapter 11 Preparations
MERC is trading near its 52-week low of $0.157 (5.2% above the low) on light trading volume (0.2× avg).
Summary
Mercer is laying the groundwork for a possible Chapter 11 filing and could seek court protection within weeks, per Bloomberg. Shares fell 22.1% pre-market Thursday on the report. This follows the 8-K on October 2nd disclosing advanced recapitalization talks with noteholders and a skipped $25.8 million interest payment, and the August 10-Q that already carried a going concern warning after a $128 million first-half loss. Creditors would likely take control in a bankruptcy; Redwood Capital Management has been buying the distressed debt and is now part of a majority bondholder group, which tells you who would end up owning the assets. For a company trading at $0.165 a share, the equity is being priced as a recovery option, not a going concern.
At the time of this announcement, MERC was trading at $0.17 on NASDAQ in the Manufacturing sector, with a market capitalization of approximately $13.8M. The 52-week trading range was $0.16 to $2.85. This news item was assessed with negative market sentiment and an importance score of 8 out of 10. Source: Seeking Alpha.