Exhibit 99.1

FOR: MERCER INTERNATIONAL INC.

APPROVED BY: Jimmy S.H. Lee

Chairman & President

(604) 684-1099

David M. Gandossi

Executive Vice-President &

Chief Financial Officer

(604) 684-1099

For Immediate Release

Financial Dynamics

Investors: Eric Boyriven, Alexandra Tramont

Media: Kathleen Tanzy

(212) 850-5600

MERCER INTERNATIONAL INC. REPORTS 2005 SECOND QUARTER RESULTS

NEW YORK, NY, August 9, 2005 -- Mercer International Inc. (NASDAQ: MERCS, TSX: MRI.U) today reported results for the second quarter of 2005.

Summary Selected Highlights

	Three Months Ended June 30,
	2005			2004
	(in thousands)
Results of Operations	(unaudited)
Revenues	€	129,609		€	50,335
Income (loss) from operations		9,201			(978	)
Operating EBITDA⁽¹⁾		23,097			5,336
Interest expense		(22,200	)		(2,366	)
Unrealized gain (loss) on derivative financial instruments, net⁽²⁾		(69,451	)		29,473
Unrealized foreign exchange loss on debt		(9,806	)		-
Income tax (provision) benefit⁽³⁾		24,447			(219	)
Net income (loss)		(62,151	)		16,241
Income (loss) per share
Basic		(1.88	)		0.94
Diluted		(1.88	)		0.57

Other Data
Total pulp sales volume⁽⁴⁾ (ADMTs)		278,752			74,841
Mill net pulp price realizations (per ADMT)	€	408		€	471

______________________

(1)	For a definition of Operating EBITDA, see page 6 of this press release and for a reconciliation of net loss to Operating EBITDA, see page 11 of the financial tables included in this press release.

(2)	Non-cash marked to market valuation loss.

(3)	Non-cash benefit for income taxes to our deferred income tax asset.

(4) Excluding intercompany sales volumes of 4,105 and 1,540 ADMTs of pulp in the three months ended June 30, 2005 and 2004, respectively.

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Mercer Reports 2005 Second Quarter Results Page 2

Certain key factors affecting our 2005 second quarter results include:

·	Revenues in the second quarter of 2005 increased by €79.3 million over the comparative period of 2004 to €129.6 million, primarily from the inclusion of production and sales from our Stendal and Celgar pulp mills.

Interest expense increased to €22.2 million in the second quarter of 2005 from €2.4 million in the comparative period of 2004. The completion of the Stendal mill resulted in our expensing €14.5 million of the associated interest in the second quarter of 2005 versus capitalizing almost all of such interest expense in the prior period. In the current quarter, we also had interest expense of €5.7 million relating to our $310 million 9.25% senior notes issued in February 2005.

Operating EBITDA increased to €23.1 million in the current quarter from €5.3 million in the prior quarter reflecting higher pulp sales and a contribution to income from operations of €6.3 million resulting from the sale of excess carbon emission credits by our German pulp mills. For a definition of Operating EBITDA, see page 6 of this press release and for a reconciliation of net loss to Operating EBITDA, see page 11 of the financial tables included in this press release.

We recorded net unrealized non-cash holding losses on the marked-to-market valuation of our interest rate and currency derivatives of €20.8 million and €48.3 million in the second quarter of 2005 due to a decline in long-term European interest rates and the strengthening of the U.S. dollar versus the Euro. We also recorded an unrealized non-cash foreign exchange loss on our long-term debt of €9.8 million.

·	We recorded a non-cash benefit for income taxes of €24.4 million in the second quarter of 2005 to our deferred income tax asset.

·	Pulp markets in Europe were generally stable in the second quarter of 2005. List prices for NBSK pulp in Europe decreased to $613 per ADMT, but such decrease was partially offset by the strengthening of the U.S. dollar versus the Euro.

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Mercer Reports 2005 Second Quarter Results Page 3

Results of Operations - 2005 Second Quarter

Selected production and sales data for the three months ended June 30, 2005 and 2004 is as follows:

	Three Months Ended June 30,
	2005		2004
	(ADMTs)
Production by Product Class:
Pulp production by mill:
Rosenthal		81,443		80,317
Celgar		111,071		-
Stendal		123,738		-
Total pulp production		316,252		80,317
Paper production		17,979		15,339
Total production		334,231		95,656

Revenues by Product Class:	(in thousands)
Pulp revenues by mill:
Rosenthal	€	31,840	€	36,022
Celgar		40,864		-
Stendal		40,808		927
Total pulp revenues⁽¹⁾		113,512		36,949
Paper revenues		16,097		13,386
Total revenues⁽¹⁾	€	129,609	€	50,335

____________

(1) Excluding intercompany net sales revenues of approximately €1.8 million and €0.8 million in the three months ended June 30, 2005 and 2004, respectively.

Revenues for the three months ended June 30, 2005 increased to €129.6 million from €50.3 million in the comparative period of 2004, primarily because of higher pulp sales resulting from the inclusion of sales from our Stendal and Celgar mills. Pulp sales by volume were 278,752 ADMTs in the second quarter of 2005, compared to 74,841 ADMTs in the comparative period of 2004. In the three months ended June 30, 2005, the Stendal and Celgar mills sold 202,756 ADMTs of NBSK pulp and had sales of €81.7 million.

Cost of sales and general, administrative and other expenses in the second quarter of 2005 increased to €120.4 million from €51.3 million in the comparative period of 2004, primarily as a result of the inclusion of production from our Stendal mill and the operations of the Celgar mill.

For the second quarter of 2005, revenues from our pulp operations increased to €113.5 million from €36.9 million in the same period a year ago, primarily as a result of the inclusion of production from our Stendal and Celgar mills. List prices for NBSK pulp in Europe were approximately €487 ($613) per ADMT in the second quarter of 2005, compared to approximately €535 ($645) per ADMT in the comparative period of last year. The decrease in NBSK pulp prices was partially offset by the strengthening of the U.S. dollar versus the Euro during the current period.

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Mercer Reports 2005 Second Quarter Results Page 4

Pulp sales realizations decreased to €408 per ADMT on average in the second quarter of 2005 from €471 per ADMT in the second quarter of 2004, primarily as a result of lower price realizations of the Stendal and Celgar mills. The Stendal mill sold pulp at a discounted price as a result of its start up, which we expect will be eliminated during the year, and the Celgar mill sells a large portion of its production in Asian markets which had lower sales prices than European markets.

Cost of sales and general, administrative and other expenses for the pulp operations increased to €102.9 million in the second quarter of 2005 from €34.2 million in the comparative period of 2004, primarily as a result of the inclusion of €77.6 million of operating costs related to the Stendal and Celgar mills. In the second quarter of 2005, we recorded a contribution to income from operations of €6.3 million resulting from the sale of excess carbon emission credits by our German pulp mills.

Depreciation for the pulp operations increased to €13.4 million in the current quarter, from €5.6 million in the second quarter of 2004, primarily as a result of the inclusion of €10.0 million of depreciation from the Stendal and Celgar mills.

For the second quarter of 2005, our pulp operations generated operating income of €12.4 million, versus operating income of €3.5 million in the comparative quarter of 2004, primarily as a result of the inclusion of the results of the Stendal and Celgar mills, the sale of excess carbon emission credits by our German pulp mills and lower costs and expenses at our Rosenthal mill.

Revenues from our paper operations in the current quarter were €16.1 million, compared with €13.4 million in the same quarter of last year. For the second quarter of 2005, total paper sales volumes were 17,840 ADMTs, versus 15,383 ADMTs in the comparative quarter of 2004 primarily as a result of a shift in the product mix at our paper mills. Average prices realized on our paper products in the current quarter increased slightly, reflecting the shift in the product mix.

Cost of sales and general, administrative and other expenses for the paper operations in the second quarter of 2005 increased to €16.9 million from €15.9 million in the comparative quarter of 2004, primarily as a result of the shift in the product mix.

For the second quarter of 2005, our paper operations generated an operating loss of €0.8 million, compared to an operating loss of €2.5 million in the second quarter of 2004.

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Mercer Reports 2005 Second Quarter Results Page 5

In the second quarter of 2005, we had income from operations of €9.2 million, compared to a loss from operations of €1.0 million in the same quarter last year.

Interest expense in the second quarter of 2005 increased to €22.2 million from €2.4 million in the year ago period, due to interest expense of €14.5 million relating to the Stendal mill and higher borrowings resulting primarily from our $310 million senior note issue in February 2005. In the second quarter of 2004, almost all of the interest associated with the Stendal mill was capitalized during its construction.

Stendal had entered into certain foreign currency derivatives to swap a portion of its long-term bank indebtedness from Euros to U.S. dollars and certain currency forwards in the first quarter of 2005. In the second quarter of 2005, Stendal entered into foreign currency derivatives to swap the balance of its long-term indebtedness from Euros to U.S. dollars and a currency forward. We recorded a net unrealized non-cash holding loss of €48.3 million before minority interests upon the marked to market valuation of such currency derivatives due to the strengthening of the U.S. dollar versus the Euro at the end of the quarter. In the comparative quarter of 2004, we recorded a net unrealized non-cash holding gain of €13.7 million before minority interests on the then outstanding currency derivatives of Rosenthal and Stendal. In the second quarter of 2005, as a result of a decrease in long-term European interest rates, we also recorded a net unrealized non-cash holding loss of €20.8 million before minority interests on the marked to market valuation of the Stendal interest rate derivatives versus a net unrealized non-cash holding gain of €15.8 million before minority interests on the interest rate derivatives of Stendal and Rosenthal in the second quarter of 2004.

In the second quarter of 2005, minority interest, representing the two minority shareholders' proportionate interest in the Stendal mill, was €4.9 million, compared to €(10.2) million in the second quarter of 2004.

We reported a net loss for the second quarter of 2005 of €62.2 million, or €1.88 per basic and diluted share, which reflected the net unrealized non-cash holding losses on our currency and interest rate derivatives of €69.5 million and the unrealized non-cash foreign exchange loss on our long-term debt of €9.8 million, partially offset by the non-cash benefit for income taxes of €24.4 million, and interest expense related to our Stendal mill of €14.5 million. In the second quarter of 2004, we reported net income of €16.2 million, or €0.94 per basic share and €0.57 per diluted share.

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Mercer Reports 2005 Second Quarter Results Page 6

We generated "Operating EBITDA" of €23.1 million and €5.3 million in the three months ended June 30, 2005 and 2004, respectively. Operating EBITDA is defined as income (loss) from operations 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 (loss), 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 (loss) 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.

Liquidity

	As at June 30,			As at December 31,
	2005			2004
	(in thousands)
	(unaudited)
Financial Position Cash and cash equivalents	€	105,874		€	49,568
Cash restricted		37,951			45,295
Receivables		75,344			54,687
Inventories		92,037			52,898
Prepaid expenses and other		7,057			4,961
Accounts payable and accrued expenses		101,399			56,542
Construction costs payable		34,090			65,436
Debt, current portion		97,618			107,090
Working capital (deficit)		85,156	(1)		(21,659	)
Property, plant and equipment		1,109,394			936,035
Total assets		1,538,829			1,255,649
Long-term liabilities		1,125,857	(2)		863,840
Shareholders' equity		179,865			162,741

(1)	Does not include €88.5 million of government grants related to the Stendal mill from the federal and state governments of Germany, which we expect to receive in 2005.

(2) Includes €28.6 million outstanding under the revolving credit facilities for the Rosenthal and Celgar mills.

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Mercer Reports 2005 Second Quarter Results Page 7

We had good liquidity at June 30, 2005. Certain key factors affecting our liquidity include:

·	We had unrestricted cash and cash equivalents of €105.9 million.

·	The current Stendal construction costs payable of €34.1 million will be paid from restricted cash of €38.0 million held for such purpose.

We qualified for investment grants relating to the Stendal mill totaling approximately €88.5 million at June 30, 2005 from the federal and state governments of Germany, which we expect to receive in 2005. These grants, when received, will be applied to repay the €95.0 million of the current portion of our debt of €97.6 million that has been drawn under a dedicated tranche of the Stendal loan facility. Under our accounting policies, we do not record these government grants until they are received. The balance outstanding under this dedicated tranche of the Stendal loan facility will be substantially paid from VAT credits we expect to receive in the ordinary course.

·	Without giving effect to any government grants we expect to receive for the Stendal mill, we had net working capital of €85.2 million at June 30, 2005.

Results of Operations - Six Months Ended June 30, 2005

For the six months ended June 30, 2005, revenues increased to €227.5 million from €100.7 million in the prior period, primarily because of higher pulp sales. We generated income from operations of €8.3 million in the six months ended June 30, 2005, compared to a loss from operations of €2.9 million in the six months ended June 30, 2004. We generated Operating EBITDA of €33.2 million and €9.7 million in the six months ended June 30, 2005 and 2004, respectively. For a reconciliation of net income (loss) to Operating EBITDA, see page 11 of the financial tables included in this press release. We reported a net loss of €81.8 million or €2.80 per diluted share for the six months ended June 30, 2005, compared to a net loss of €2.7 million or €0.16 per diluted share for the six months ended June 30, 2004, which reflected an unrealized non-cash holding loss of €73.2 on our interest rate and currency derivatives and an unrealized non-cash foreign exchange loss on our long-term debt of €7.5 million, partially offset by the non-cash benefit for income taxes of €21.4 million, and the inclusion of certain non-capitalized interest of approximately €26.3 million related to the Stendal mill in the current period.

President's Comments

Mr. Jimmy S.H. Lee, President and Chairman, stated: "We are generally pleased with the operating performance of our pulp mill facilities in the quarter. The Celgar mill had very good production of 111,071 ADMTs, the Stendal mill ramped up production according to plan and the Rosenthal mill operated at a high rate of efficiency."

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Mercer Reports 2005 Second Quarter Results Page 8

Mr. Lee continued: "Pulp prices were softer in the quarter with list prices in Europe averaging €487 per ADMT. Pulp pricing in Asia, and particularly China where Celgar has a large portion of its sales, remained weak with prices averaging around €390 per ADMT in the quarter."

He further stated: "We currently expect pulp prices to remain around current levels in the third quarter as a result of the traditional summer slowdown with demand in China improving in the fourth quarter, which may permit some price improvement."

He added: "We are pleased with the addition of Eric Heine and David Cooper, both of whom are senior experienced pulp marketing professionals, to lead our global pulp marketing strategy. Our added depth and leadership in our pulp marketing side should permit us to increase our price realizations over time."

Mr. Lee said: "The recent strengthening of the U.S. dollar versus the Euro will improve our operating performance as NBSK pulp is priced in U.S. dollars. A higher dollar generally results in increased Euro revenues."

He further stated: "Our results for the quarter reflect significant non-cash charges on the marked to market valuation of Stendal's currency derivatives of €48.3 million and its interest rate swap of €20.8 million, as well as a non-cash foreign exchange loss on our long-term debt of €9.8 million."

Mr. Lee added: "I am also very pleased to announce that we have recently approved an approximately C$28.5 million strategic capital plan for our Celgar mill. The plan provides for additional washers, increases to the mill's drying capacity and other smaller high return capital improvements. When completed, the plan is expected to increase the Celgar mill's annual production capacity to approximately 470,000 ADMTs, reduce operating costs such as chemicals and energy, improve pulp quality and mill reliability. We expect the cost of such plan to be met from cash on hand, cash flow from operations and our existing credit facilities."

Mr. Lee concluded: "We intend to continue to focus on further improving the efficiency of our mills, including ramping up the Stendal mill to its full production capacity and integrating and improving our NBSK pulp marketing activities. We believe this will position us as a leading world class NBSK pulp production and sales company."

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Mercer Reports 2005 Second Quarter Results Page 9

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 Tuesday, August 9, 2005 at 10:00 AM (Eastern Time). Listeners can access the conference call live and archived over the Internet through a link at the company's web site at http://www.mercerinternational.com, or at http://phx.corporate-ir.net/playerlink.zhtml?c=62074&s=wm&e=1113630. 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 August 16, 2005 at 11:59 p.m. (Eastern Time). The replay number is (800) 642-1687, and the passcode is 8411532.

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

The preceding includes forward looking statements which involve known and unknown risks and uncertainties which may cause the company's 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: market conditions, competition and other risk factors listed from time to time in the company's SEC reports.

-FINANCIAL TABLES FOLLOW-

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MERCER INTERNATIONAL INC.

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2005 AND DECEMBER 31, 2004

(Euros in thousands)

	June 30, 2005			December 31, 2004
ASSETS
Current Assets
Cash and cash equivalents	€	105,874		€	49,568
Cash restricted		37,951			45,295
Receivables		75,344			54,687
Inventories		92,037			52,898
Prepaid expenses and other		7,057			4,961
Total current assets		318,263			207,409
Long-Term Assets
Cash restricted		19,074			47,538
Property, plant and equipment		1,109,394			936,035
Investments		4,728			5,079
Deferred note issuance and other costs		9,132			5,069
Deferred income tax		78,238			54,519
		1,220,566			1,048,240
Total assets	€	1,538,829		€	1,255,649
LIABILITIES
Current Liabilities
Accounts payable and accrued expenses	€	101,399		€	56,542
Construction costs payable		34,090			65,436
Debt, current portion		97,618			107,090
Total current liabilities		233,107			229,068
Long-Term Liabilities
Debt, less current portion		952,555			777,272
Unrealized foreign exchange rate derivative losses		47,685			-
Unrealized interest rate derivative losses		95,946			75,471
Pension and other post-retirement benefit obligations		15,728			-
Capital leases and other		9,800			9,035
Deferred income tax		4,143			2,062
		1,125,857			863,840
Total liabilities		1,358,964			1,092,908
Minority Interest		-			-
SHAREHOLDERS' EQUITY
Shares of beneficial interest		180,916			83,397
Additional paid-in capital, stock options		14			14
Retained earnings (deficit)		(12,642	)		69,176
Accumulated other comprehensive income		11,577			10,154
Total shareholders' equity		179,865			162,741
Total liabilities and shareholders' equity	€	1,538,829		€	1,255,649

(1)

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MERCER INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Six Months Ended June 30, 2005 and 2004

(Unaudited)

(Euros in thousands, except per share data)

	2005			2004

Revenues	€	227,502		€	100,651

Costs and expenses:
Cost of sales		210,167			88,628
General and administrative expenses		15,316			14,228
Gain on sale of emission credits		(6,288	)		-
Flooding losses and expenses, less grant income		-			669
Total costs and expenses		219,195			103,525
Income (loss) from operations		8,307			(2,874	)

Other income (expense):
Interest expense		(41,463	)		(5,354	)
Investment income		981			1,464
Realized loss on derivative financial instruments		(295	)		-
Unrealized gain (loss) on derivative financial instruments		(73,015	)		7,028
Unrealized foreign exchange loss on debt		(7,509	)		-
Impairment of investments		(1,645	)		-
Total other (income) expense		(122,946	)		3,138

Income (loss) before income taxes and minority interest		(114,639	)		264
Income tax (provision) benefit		21,412			(199	)
Income (loss) before minority interest		(93,227	)		65
Minority interest		11,409			(2,790	)
Net loss		(81,818	)		(2,725	)

Retained earnings, beginning of period		69,176			49,196
Retained earnings (deficit), end of period	€	(12,642	)	€	46,471

Loss per share
Basic and diluted	€	(2.80	)	€	(0.16	)

(2)

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MERCER INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended June 30, 2005 and 2004

(Unaudited)

(Euros in thousands, except per share data)

	2005			2004

Revenues	€	129,609		€	50,335

Costs and expenses:
Cost of sales		119,178			43,210
General and administrative expenses		7,518			7,687
Gain on sale of emission credits		(6,288	)		-
Flooding losses and expenses, less grant income		-			416
Total costs and expenses		120,408			51,313
Income (loss) from operations		9,201			(978	)

Other income (expense):
Interest expense		(22,200	)		(2,366	)
Investment income		806			530
Unrealized gain (loss) on derivative financial instruments		(69,451	)		29,473
Unrealized foreign exchange loss on debt		(9,806	)		-
Total other income (expense)		(100,651	)		27,637

Income (loss) before income taxes and minority interest		(91,450	)		26,659
Income tax (provision) benefit		24,447			(219	)
Income (loss) before minority interest		(67,003	)		26,440
Minority interest		4,852			(10,199	)
Net income (loss)		(62,151	)		16,241

Retained earnings, beginning of period		49,509			30,230
Retained earnings (deficit), end of period	€	(12,642	)	€	46,471

Income (loss) per share
Basic	€	(1.88	)	€	0.94
Diluted	€	(1.88	)	€	0.57

(3)

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MERCER INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2005 and 2004

(Unaudited)

(Euros in thousands, except per share data)

	2005			2004
Cash Flows from (used in) Operating Activities:
Net loss	€	(81,818	)	€	(2,725	)
Adjustments to reconcile net loss to cash flows from operating activities
Cumulative unrealized losses (gains) on derivatives		73,015			(7,028	)
Depreciation and amortization		25,299			12,607
Unrealized foreign exchange loss on debt		7,509			-
Impairment of investments and securities		1,645			-
Minority interest		(11,409	)		2,790
Deferred income taxes		(21,638	)		-
Stock compensation expense		72			616
Other		125			204

Changes in current assets and liabilities
Receivables		(20,742	)		(2,489	)
Inventories		(16,757	)		(17,995	)
Accounts payable and accrued expenses		41,319			12,166
Other		(1,853	)		(1,224	)
Net cash used in operating activities		(5,233	)		(3,078	)

Cash Flows from (used in) Investing Activities:
Purchase of property, plant and equipment		(8,493	)		(117,327	)
Acquisition of Celgar pulp mill		(146,608	)		-
Sale of available-for-sale securities		-			1,161
Other		-			115
Net cash used in investing activities		(155,101	)		(116,051	)

Cash Flows from (used in) Financing Activities:
Cash restricted		35,808			(7,468	)
Decrease in construction costs payable		(31,346	)		(22,974	)
Proceeds from borrowings of notes payable and debt		325,195			126,000
Repayment of notes payable and debt		(183,691	)		(14,782	)
Proceeds from investment grants		342			28,710
Repayment of capital lease obligations		(1,907	)		(633	)
Issuance of shares of beneficial interest		66,645			582
Net cash from financing activities		211,046			109,435

Effect of exchange rate changes on cash and cash equivalents		5,594			(63	)
Net increase (decrease) in cash and cash equivalents		56,306			(9,757	)
Cash and cash equivalents, beginning of period		49,568			51,993
Cash and cash equivalents, end of period	€	105,874		€	42,236

(4)

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MERCER INTERNATIONAL INC.

BUSINESS SEGMENT INFORMATION

For the Six Months Ended June 30, 2005 and 2004

(Unaudited)

(Euros in thousands)

	Rosenthal Pulp			Celgar⁽¹⁾ Pulp		Stendal Pulp			Total Pulp			Paper			Corporate, Other and Eliminations			Consolidated Total
Six Months Ended June 30, 2005
Sales to external customers	€	65,936		€	48,480	€	81,606		€	196,022		€	31,480		€	-		€	227,502
Intersegment net sales		-			-		3,340			3,340			-			(3,340	)		-
		65,936			48,480		84,946			199,362			31,480			(3,340	)		227,502
Operating costs		47,405			40,554		71,546			159,505			29,601			(3,822	)		185,284
Depreciation and amortization		6,630			4,097		13,454			24,181			379			323			24,883
General and administrative		3,810			2,837		1,677			8,324			2,562			4,430			15,316
Emission credits		(2,135	)		-		(4,153	)		(6,288	)		-			-			(6,288	)
		55,710			47,488		82,524			185,722			32,542			931			219,195
Income (loss) from operations		10,226			992		2,422			13,640			(1,062	)		(4,271	)		8,307
Interest expense																			(41,463	)
Investment income																			981
Derivative financial instruments, net																			(73,310	)
Foreign exchange gain on debt																			(7,509	)
Impairment of investments																			(1,645	)
																			(122,946	)
Loss before income taxes and minority interest																		€	(114,639	)

Segment assets	€	347,935		€	244,361	€	906,244		€	1,498,540		€	24,294		€	15,995		€	1,538,829

Six Months Ended June 30, 2004
Sales to external customers	€	71,031	€	-	€	927		€	71,958	€	28,693		€	-		€	100,651
Intersegment net sales		1,179		-		-			1,179		-			(1,179	)		-
		72,210		-		927			73,137		28,693			(1,179	)		100,651
Operating costs		49,125		-		-			49,125		27,213			(317	)		76,021
Depreciation and amortization		11,136		-		12			11,148		1,141			318			12,607
General and administrative		4,636		-		5,448			10,084		2,643			1,501			14,228
Flooding grants, less losses and expenses		-		-		-			-		669			-			669
		64,897		-		5,460			70,357		31,666			1,502			103,525
Income (loss) from operations		7,313		-		(4,533	)		2,780		(2,973	)		(2,681	)		(2,874	)
Interest expense																	(5,354	)
Investment and other income																	1,464
Derivative financial instruments, net																	7,028
																	3,138
Income before income taxes and minority interest																€	264
Segment assets	€	365,342	€	-	€	663,193		€	1,028,535	€	28,320		€	(10,899	)	€	1,045,956

_________________________

(1) The results of the Celgar pulp mill are from the date of its acquisition on February 14, 2005.

(5)

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MERCER INTERNATIONAL INC.

BUSINESS SEGMENT INFORMATION

For the Three Months Ended June 30, 2005 and 2004

(Unaudited)

(Euros in thousands)

	Rosenthal Pulp			Celgar⁽¹⁾ Pulp		Stendal Pulp			Total Pulp			Paper			Corporate, Other and Eliminations			Consolidated Total
Three Months Ended June 30, 2005
Sales to external customers	€	31,840		€	40,864	€	40,808		€	113,512		€	16,097		€	-		€	129,609
Intersegment net sales		-			-		1,786			1,786			-			(1,786	)		-
		31,840			40,864		42,594			115,298			16,097			(1,786	)		129,609
Operating costs		22,217			35,419		34,411			92,047			15,370			(2,135	)		105,282
Depreciation and amortization		3,362			3,274		6,773			13,409			198			289			13,896
General and administrative		1,909			1,162		702			3,773			1,326			2,419			7,518
Emission credits		(2,135	)		-		(4,153	)		(6,288	)		-			-			(6,288	)
		25,353			39,855		37,733			102,941			16,894			573			120,408
Income (loss) from operations		6,487			1,009		4,861			12,357			(797	)		(2,359	)		9,201

Interest expense																			(22,200	)
Investment income																			806
Derivative financial instruments, net																			(69,451	)
Foreign exchange(loss) on debt																			(9,806	)
Impairment of investments																			-
																			(100,651	)
Loss before income taxes and minority interest																		€	(91,450	)

Three Months Ended June 30, 2004
Sales to external customers	€	36,022	€	-	€	927		€	36,949	€	13,386		€	-		€	50,335
Intersegment net sales		750		-		-			750		-			(750	)		-
		36,772		-		927			37,699		13,386			(750	)		50,335
Operating costs		23,318		-		-			23,318		13,455			123			36,896
Depreciation and amortization		5,554		-		12			5,566		589			159			6,314
General and administrative		2,648		-		2,707			5,355		1,469			863			7,687
Flooding grants, less losses and expenses		-		-		-			-		416			-			416
		31,520		-		2,719			34,239		15,929			1,145			51,313
Income (loss) from operations		5,252		-		(1,792	)		3,460		(2,543	)		(1,895	)		(978	)
Interest expense																	(2,366	)
Investment and other income																	530
Derivative financial instruments, net																	29,473
																	27,637
Income before income taxes and minority interest																€	26,659

_______________________

(1) The results of the Celgar pulp mill are from the date of its acquisition on February 14, 2005.

(6)

-more-

MERCER INTERNATIONAL INC.

RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE

Combined Condensed Balance Sheet

As at June 30, 2005

(Unaudited)

(Euros in thousands)

The terms of the indenture governing our 9.25% senior unsecured notes requires that we provide the results of operations and financial condition of Mercer Inc. and our restricted subsidiaries under the indenture, collectively referred to as the "Restricted Group". As at and during the six and three months ended June 30, 2005, the Restricted Group was comprised of Mercer Inc., certain holding subsidiaries and Rosenthal, and the Celgar mill from the date of its acquisition on February 14, 2005. During the six and three months ended June 30, 2004 and as at December 31, 2004, the Restricted Group was comprised of Mercer Inc., certain holding subsidiaries and Rosenthal, which was the only member of the Restricted Group with material operations during this period. We acquired the Celgar mill in February 2005 and, as a result, its operations for the six and three months ended June 30, 2004 and financial condition at December 31, 2004 are not included for such periods. The Restricted Group excludes our paper operations and the Stendal mill.

	June 30, 2005
	Restricted Group		Unrestricted Subsidiaries		Eliminations		Consolidated Group
ASSETS
Current assets
Cash and cash equivalents	€	62,792	€	43,082	€	-	€	105,874

Cash restricted		-		37,951				-			37,951
Receivables		42,748		32,665				(69	)		75,344
Inventories		54,127		37,910				-			92,037
Prepaid expenses and other		3,631		3,426				-			7,057
Total current assets		163,298		155,034				(69	)		318,263
Cash restricted		-		19,074				-			19,074
Property, plant and equipment		393,047		716,785				(438	)		1,109,394
Other		9,741		4,119				-			13,860
Deferred income tax		22,855		55,383				-			78,238
Due from unrestricted group		44,621		-				(44,621	)		-
Total assets	€	633,562	€	950,395			€	(45,128	)	€	1,538,829

LIABILITIES
Current liabilities
Accounts payable and accrued expenses	€	43,780	€	57,688			€	(69	)	€	101,399
Construction costs payable		-		34,090				-			34,090
Debt, current portion		-		97,618				-			97,618
Total current liabilities		43,780		189,396				(69	)		233,107

Debt, less current portion		353,033		599,522				-			952,555
Due to restricted group		-		44,621				(44,621	)		-
Unrealized derivatives loss		-		143,631				-			143,631
Other		18,555		6,973				-			25,528
Deferred income tax		1,883		2,260				-			4,143
Total liabilities		417,251		986,403				(44,690	)		1,358,964

SHAREHOLDERS' EQUITY
Total shareholders' equity		216,311		(36,008	)	⁽¹⁾		(438	)		179,865
Total liabilities and shareholders' equity	€	633,562	€	950,395			€	(45,128	)	€	1,538,829

_______________

(1) Shareholders' equity does not include government grants received or receivable related to the Stendal mill. Shareholders' equity is impacted by the unrealized non-cash marked to market valuation losses on derivative financial instruments.

(7)

MERCER INTERNATIONAL INC.

RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE

Combined Condensed Balance Sheet

As at December 31, 2004

(Unaudited)

(Euros in thousands)

	December 31, 2004
	Restricted Group		Unrestricted Subsidiaries		Eliminations			Consolidated Group
ASSETS
Current assets
Cash and cash equivalents	€	45,487	€	4,081	€	-		€	49,568
Cash restricted		-		45,295		-			45,295
Receivables		21,791		33,060		(164	)		54,687
Inventories		13,911		38,987		-			52,898
Prepaid expenses and other		1,995		2,966		-			4,961
Total current assets		83,184		124,389		(164	)		207,409
Cash restricted		28,464		19,074		-			47,538
Property, plant and equipment		213,678		722,394		(37	)		936,035
Other		5,936		4,212		-			10,148
Deferred income tax		26,592		27,927		-			54,519
Due from unrestricted group		43,467		-		(43,467	)		-
Total assets	€	401,321	€	897,996	€	(43,668	)	€	1,255,649

LIABILITIES
Current liabilities
Accounts payable and accrued expenses	€	19,615	€	37,091	€	(164	)	€	56,542
Construction costs payable		-		65,436		-			65,436
Debt, current portion		15,089		92,001		-			107,090
Total current liabilities		34,704		194,528		(164	)		229,068
Debt, less current portion		224,542		552,730		-			777,272
Due to restricted group		-		43,467		(43,467	)		-
Unrealized interest rate derivative		-		75,471		-			75,471
Other		1,878		7,157		-			9,035
Deferred income tax		1,719		343		-			2,062
Total liabilities		262,843		873,696		(43,631	)		1,092,908

SHAREHOLDERS' EQUITY
Total shareholders' equity		138,478		24,300		(37	)		162,741
Total liabilities and shareholders' equity	€	401,321	€	897,996	€	(43,668	)	€	1,255,649

(8)

MERCER INTERNATIONAL INC.

RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE

Combined Condensed Statements of Operations

For the Six Months Ended June 30, 2005 and 2004

(Unaudited)

(Euros in thousands)

	Six Months Ended June 30, 2005
	Restricted Group			Unrestricted Subsidiaries			Eliminations			Consolidated Group
Revenues	€	114,416		€	113,086		€	-		€	227,502
Operating costs		87,260			98,024			-			185,284
Operating depreciation and amortization		10,829			13,616			438			24,883
General and administrative		11,077			4,239			-			15,316
Gain on sale of emission credits		(2,135	)		(4,153	)		-			(6,288	)
		107,031			111,726			438			219,195
Income (loss) from operations		7,385			1,360			(438	)		8,307
Other income (expense)
Interest expense		(15,985	)		(26,571	)		1,093			(41,463	)
Investment income		1,297			777			(1,093	)		981
Derivative financial instruments, net		(463	)		(72,847	)		-			(73,310	)
Unrealized foreign exchange loss on debt		(7,509	)		-			-			(7,509	)
Impairment of investments		(1,645	)		-			-			(1,645	)
Total other expense		(24,305	)		(98,641	)		-			(122,946	)
Loss before income taxes and minority interest		(16,920	)		(97,281	)		(438	)		(114,639	)
Income tax (provision) benefit		(4,776	)		26,188			-			21,412
Loss before minority interest		(21,696	)		(71,093	)		(438	)		(93,227	)
Minority interest		-			11,409			-			11,409
Net loss	€	(21,696	)	€	(59,684	)	€	(438	)	€	(81,818	)

	Six Months Ended June 30, 2004
	Restricted Group			Unrestricted Subsidiaries			Eliminations			Consolidated Group
Revenues	€	72,210		€	29,620		€	(1,179	)	€	100,651
Operating costs		48,675			27,213			133			76,021
Operating depreciation and amortization		11,136			1,153			318			12,607
General and administrative		6,295			8,091			(158	)		14,228
Flooding grants, less losses and expenses		-			669			-			669
		66,106			37,126			293			103,525
Income (loss) from operations		6,104			(7,506	)		(1,472	)		(2,874	)
Other income (expense)
Interest expense		(6,023	)		(452	)		1,121			(5,354	)
Investment and other income (expense)		1,745			(214	)		(67	)		1,464
Derivative financial instruments, net		(5,272	)		12,300			-			7,028
Total other expense		(9,550	)		11,634			1,054			3,138
Income (loss) before income taxes and minority interest		(3,446	)		4,128			(418	)		264
Income tax provision		(199	)		-			-			(199	)
Income (loss) before minority interest		(3,645	)		4,128			(418	)		65
Minority interest		-			(2,790	)		-			(2,790	)
Net income (loss)	€	(3,645	)	€	1,338		€	(418	)	€	(2,725	)

(9)

MERCER INTERNATIONAL INC.

RESTRICTED GROUP SUPPLEMENTAL DISCLOSURE

Combined Condensed Statements of Operations

For the Three Months Ended June 30, 2005 and 2004

(Unaudited)

(Euros in thousands)

	Three Months Ended June 30, 2005
	Restricted Group			Unrestricted Subsidiaries			Eliminations			Consolidated Group
Revenues	€	72,704		€	56,905		€	-		€	129,609
Operating costs		57,287			47,995			-			105,282
Operating depreciation and amortization		6,704			6,971			221			13,896
General and administrative		5,490			2,028			-			7,518
Gain on sale of emission credits		(2,135	)		(4,153	)		-			(6,288	)
		67,346			52,841			221			120,408
Income (loss) from operations		5,358			4,064			(221	)		9,201
Other income (expense)
Interest expense		(8,314	)		(14,585	)		699			(22,200	)
Investment income		970			467			(631	)		806
Derivative financial instruments, net		(358	)		(69,093	)		-			(69,451	)
Unrealized foreign exchange loss on debt		(9,806	)		-			-			(9,806	)
Impairment of investments		(467	)		-			467			-
Total other income (expense)		(17,975	)		(83,211	)		535			(100,651	)
Income (loss) before income taxes and minority interest		(12,617	)		(79,147	)		314			(91,450	)
Income tax (provision) benefit		(1,661	)		26,108			-			24,447
Income (loss) before minority interest		(14,278	)		(53,039	)		314			(67,003	)
Minority interest		-			4,852			-			4,852
Net income (loss)	€	(14,278	)	€	(48,187	)	€	314		€	(62,151	)

	Three Months Ended June 30, 2004
	Restricted Group			Unrestricted Subsidiaries			Eliminations			Consolidated Group
Revenues	€	36,772		€	14,313		€	(750	)	€	50,335
Operating costs		23,318			13,455			123			36,896
Operating depreciation and amortization		5,554			601			159			6,314
General and administrative		3,181			4,176			330			7,687
Flooding grants, less losses and expenses		-			416			-			416
		32,053			18,648			612			51,313
Income (loss) from operations		4,719			(4,335	)		(1,362	)		(978	)
Other income (expense)
Interest expense		(1,947	)		114			(533	)		(2,366	)
Derivative financial instruments, net		(382	)		29,855			-			29,473
Investment and other income (expense)		639			(364	)		255			530
Total other income (expense)		(1,690	)		29,605			(278	)		27,637
Income (loss) before income taxes and minority interest		3,029			25,270			(1,640	)		26,659
Income tax provision		(199	)		(20	)		-			(219	)
Income (loss) before minority interest		2,830			25,250			(1,640	)		26,440
Minority interest		-			(10,199	)		-			(10,199	)
Net income (loss)	€	2,830		€	15,051		€	(1,640	)	€	16,241

(10)

MERCER INTERNATIONAL INC.

COMPUTATION OF OPERATING EBITDA

For the Six and Three Months Ended June 30, 2005 and 2004

(Unaudited)

(Euros in thousands)

	Six Months Ended June 30,
	2005			2004
Net loss	€	(81,818	)	€	(2,725	)
Minority interest		(11,409	)		2,790
Income taxes (benefit)		(21,412	)		199
Interest expense		41,463			5,354
Investment income		(981	)		(1,464	)
Derivative financial instruments, net		73,310			(7,028	)
Foreign exchange loss on debt		7,509			-
Impairment of investments		1,645			-
Income (loss) from operations		8,307			(2,874	)
Add: Depreciation and amortization		24,883			12,607
Operating EBITDA	€	33,190		€	9,733

	Three Months Ended June 30,
	2005			2004
Net income (loss)	€	(62,151	)	€	16,241
Minority interest		(4,852	)		10,199
Income taxes (benefit)		(24,447	)		219
Interest expense		22,200			2,366
Investment income		(806	)		(530	)
Derivative financial instruments, net		69,451			(29,473	)
Foreign exchange loss on debt		9,806			-
Income (loss) from operations		9,201			(978	)
Add: Depreciation and amortization		13,896			6,314
Operating EBITDA	€	23,097		€	5,336

________________

(1)

Operating EBITDA does not reflect the impact of a number of items that affect our net income (loss), 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) 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.

(11)

MERCER INTERNATIONAL INC.

COMPUTATION OF RESTRICTED GROUP OPERATING EBITDA

For the Six and Three Months Ended June 30, 2005 and 2004

(Unaudited)

(Euros in thousands)

	Six Months Ended June 30,
	2005			2004
Restricted Group⁽¹⁾
Net loss	€	(21,696	)	€	(3,645	)
Income taxes		4,776			199
Interest expense		15,985			6,023
Investment and other income		(1,297	)		(1,745	)
Derivative financial instruments, net		463			5,272
Foreign exchange loss on debt		7,509			-
Impairment of investments		1,645			-
Income from operations		7,385			6,104
Add: Depreciation and amortization		10,829			11,136
Operating EBITDA	€	18,214		€	17,240

____________

(1) The results of the Celgar pulp mill are not included for the six months ended June 30, 2004.

	Three Months Ended June 30,
	2005			2004
Restricted Group⁽¹⁾
Net income (loss)	€	(14,278	)	€	2,830
Income taxes		1,661			199
Interest expense		8,314			1,947
Investment and other income		(970	)		(639	)
Derivative financial instruments, net		358			382
Foreign exchange loss on debt		9,806			-
Impairment of investments		467			-
Income from operations		5,358			4,719
Add: Depreciation and amortization		6,704			5,554
Operating EBITDA	€	12,062		€	10,273

____________

(1) The results of the Celgar pulp mill are not included for the three months ended June 30, 2004.

(12)

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