SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
                                (Amendment No. _)


Filed by the Registrant    |X|
Filed by a Party other than the Registrant  |_|

Check the appropriate box:

|_|      Preliminary Proxy Statement
|_|      Confidential, for Use of the Commission Only
          (as permitted by Rule 14a-6(e)(2))
|X|      Definitive Proxy Statement
|_|      Definitive Additional Materials
|_|      Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12


                            Mercer International Inc.
                (Names of Registrant as Specified in Its Charter)


    (Names of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (check appropriate box):

|X|   No filing fee.

|_|   Fee computed on table below per Exchange Act rules 14a-6(i)(4) and 0-11.

      1)       Title of each class of securities to which transaction applies:

      2) Aggregate number of securities to which transaction applies:

      3)       Per  unit  price  or other  underlying  value  of  transaction
               computes  pursuant  to  Exchange  Act Rule 0-11 (Set forth the
               amount on which the filing fee is calculated  and state how it
               was determined):
      4) Proposed maximum aggregate value of transaction:
      5) Total fee paid:

|_|   Check box if any part of the fee is offset as provided by Exchange  Act
      Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee
      was paid  previously.  Identify  the  previous  filing by  registration
      statement number, or the Form or Schedule and the date of its filing.

      1)       Amount Previously Paid:   
      2)       Form, Schedule or Registration Statement No.:
      3)       Filing Party:                   
      4)       Date Filed:       

<PAGE>

                            MERCER INTERNATIONAL INC.
                                 Burglistrasse 6
                                   8002 Zurich
                                   Switzerland

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To the Shareholders of
Mercer International Inc.:

     Notice is hereby given that the Annual  Meeting of  Shareholders  of Mercer
International  Inc., a Massachusetts trust organized under the laws of the State
of  Washington  (the  "Company"),  will  be  held at  Hauptstrasse  16,  D 07365
Blankenstein,  Germany at 9:00 a.m., Central Europe Time, July 13, 1999, for the
following purposes:

         1.       To elect two (2) Trustees of the Company.

         2.       Amendment of the Company's  Non-qualified Stock Option Plan to
                  increase  the number of shares  available  for  issuance  from
                  2,000,000 shares to 3,600,000 shares.

         3. To  transact  such other  business as may  properly  come before the
meeting or any adjournment thereof.

         The Trustees  have fixed the close of business on May 21, 1999,  as the
record date for the  determination of Shareholders  entitled to notice of and to
vote at the Annual Meeting.

                                 By Order of the Trustees


                                 Jimmy S.H. Lee
                                    President


June 1, 1999

SHAREHOLDERS  WHO DO NOT EXPECT TO ATTEND THE MEETING ARE REQUESTED TO COMPLETE,
SIGN, DATE AND RETURN THE PROXY IN THE ENCLOSED  ENVELOPE.  INSTRUCTIONS FOR THE
PROPER EXECUTION OF PROXIES ARE SET FORTH IN THE PROXY STATEMENT.



<PAGE>



                            MERCER INTERNATIONAL INC.

                                 PROXY STATEMENT

     This  statement is furnished in  connection  with the  solicitation  by the
management of Mercer  International  Inc. (the  "Company") of proxies for use at
the  Annual  Meeting  of  Shareholders  to be held at  Hauptstrasse  16, D 07365
Blankenstein,  Germany on July 13, 1999, and any  adjournments  thereof.  If the
Proxy is properly  executed and received by the Company  prior to the meeting or
any adjournment  thereof,  the Shares represented by your Proxy will be voted in
the manner directed.  In the absence of voting instructions,  the shares will be
voted for each of the  proposals.  The Proxy may be revoked at any time prior to
its use by filing a written notice of revocation of Proxy or a later dated Proxy
with the  Secretary of the Company,  Mr.  Maarten  Reidel,  c/o Suite 1250,  400
Burrard Street,  Vancouver,  British Columbia V6C 3A6, bearing a date later than
the date of the Proxy or by giving oral notice of revocation at the meeting. You
may also revoke your Proxy in person at the  meeting.  If you attend the meeting
and have  submitted  a Proxy,  you need not revoke your Proxy and vote in person
unless  you  elect to do so.  The  Proxy  Statement  and form of Proxy are being
mailed to Shareholders commencing on or about June 2, 1999.

         The affirmative vote of at least a majority of the shares of beneficial
interest ("Shares") cast in person or by proxy at the Annual Meeting is required
to approve each proposal. The holders of one-third of the outstanding Shares and
entitled  to vote at the Annual  Meeting,  present in person or  represented  by
proxy,  constitute a quorum.  Under applicable  Washington law,  abstentions and
broker non-votes will be counted for purposes of establishing a quorum, but will
have no effect on the vote on either of the proposals.

         Proxies will be  solicited  primarily by mail and may also be solicited
personally  and by telephone  by Trustees  and regular  employees of the Company
without additional  remuneration therefor. The Company may also reimburse banks,
brokers,  custodians,  nominees and fiduciaries for their reasonable charges and
expenses in forwarding  Proxies and Proxy materials to the beneficial  owners of
the Shares.  All costs of  solicitation of Proxies will be borne by the Company.
The Company does not presently intend to employ any other party to assist in the
solicitation process.

         The close of  business  on May 21,  1999,  has been fixed as the record
date (the  "Record  Date") for the  determination  of  Shareholders  entitled to
notice of and to vote at the Annual Meeting.

Voting Securities and Principal Shareholders

         The holders of record of  16,034,846  Shares of the Company  issued and
outstanding  on the Record  Date will be  entitled  to one vote per Share at the
meeting.  Under the Company's  Declaration  of Trust,  cumulative  voting in the
election of Trustees is not permitted.  Trustees will be elected by the majority
of votes cast at the meeting.




<PAGE>


         The  following  table  sets forth  certain  information  regarding  the
beneficial  ownership  of the  Company's  Shares as of April 30,  1999,  by each
shareholder  who is known by the  Company  to own more than five  percent of the
outstanding  Shares. The following is based solely on statements on filings with
the Securities and Exchange Commission or other information the Company believes
to be reliable.

<TABLE>
<CAPTION>

  Name and Address                                    Number                      Percent of
 of Beneficial Owner                                 of Shares                  Outstanding Shares
<S>                                                  <C>                               <C>
FMR Corp.1                                           1,842,000                          11.5%
82 Devonshire Street
Boston, MA 02109

Schneider Capital Management                         1,166,000                          7.3%
460 E. Swedesford Street
Suite 1080
Wayne, PA 19087

Princeton Services Inc.2                             1,610,785                          10.0%
800 Scudders Mill Road
Plainsboro, NY 08536

Kennedy Capital Management Inc.                      1,477,4013                          9.2%
425 N. New Ballas Road
Suite 181
St. Louis, MO 63141

Greenlight Capital, L.L.C.                           1,421,000                          8.9%
420 Lexington Ave.
Suite 875
New York, NY 10170

</TABLE>

<PAGE>



                                   PROPOSAL 1

                              ELECTION OF TRUSTEES

         Pursuant to resolutions of the Trustees under authority  granted by the
Company's  Declaration  of Trust,  the  number of  Trustees  of the  Company  is
established  at five. The votes of a majority of the Shares cast in person or by
Proxy at the Annual Meeting are required to elect the Trustees.

         The Board of Trustees is divided into three classes. Initially, Class I
Trustees were elected for one year, Class II Trustees were elected for two years
and Class III Trustees were elected for three years.  Successors to the class of
Trustees  whose term  expires at any annual  meeting  shall be elected for three
year terms.  One of the nominees for Trustee,  Mr. Jimmy Lee, is member of Class
II, and is to be elected to the Board of Trustees for a three-year term to serve
until the annual  meeting of  shareholders  in 2002,  or until his  successor is
elected and qualified. Mr. Lee currently serves as a Trustee. The other nominee,
Mr.R.  Ian Rigg,  is not  currently a Trustee and is nominated to be a member of
Class II and to be elected to the Board of  Trustees  for a  three-year  term to
serve until the annual meeting of  shareholders  in 2002, or until his successor
is elected and qualified.

         Mr. Lee and Mr. Rigg each have  indicated  that he is willing and able
to serve as a Trustee.  If the  nominee  is unable or  unwilling  to serve,  the
accompanying  proxy may be voted for the  election of such other person as shall
be  designated  by the  Trustees.  Proxies  received by the Trustees on which no
designation is made will be voted FOR the nominee.

Trustees

         The following table sets forth  information  regarding each nominee for
election as a Trustee and each Trustee whose term of office will continue  after
the Annual Meeting.

<TABLE>
<CAPTION>
                                                                                          Expiration of
         Name                       Current Position with the Company           Age      Term as a Trustee
         <S>                        <C>                                         <C>            <C>
         Jimmy S. H. Lee            Chairman, President and Trustee             42             1999
         C. S. Moon                 Trustee                                     52             2001
         Maarten Reidel             Secretary and Chief Financial Officer
                                     and Trustee                                35             2001
         Michel Arnulphy            Trustee                                     65             2000
         R. Ian Rigg                Nominee for Trustee                         55

</TABLE>

         Jimmy S.H. Lee has been a Trustee since May, 1985, and Chief  Executive
Officer  of  the  Company  since  1992.  Mr.  Lee  is  a  director  of  Med  Net
International Ltd.

         C.  S.  Moon  has  been a  Trustee  since  June  1994.  Mr.  Moon is an
independent consultant.  From 1990 until 1998, he was Executive Director of Shin
Ho Group of Korea, an international  paper manufacturer  headquartered in Korea.
Prior to joining  Shin Ho in 1990,  Mr.  Moon  previously  served in  managerial
positions  with Moo Kim Paper  Manufacturing  Co.,  Ltd.  and Sam Yung Pulp Co.,
Ltd., both in Korea.

         Maarten  Reidel has been Chief  Financial  Officer and a Trustee  since
December  1996, a Managing  Director of  Spezialpapierfabrik  Blankenstein  GmbH
("SBG") since November 1994 and the Chairman of the Management  Board of Dresden
Papier AG ("DPAG") from 1992 to 1994, a member of the German  government  agency
responsible for the  privatization  of  government-owned  companies from 1992 to
1994, and an accountant with Arthur Andersen & Co. from 1987 to 1992.

         Michel  Arnulphy has been a Trustee  since June 1995.  From 1998 to the
present,  Mr. Arnulphy has been the Managing  Director of Electro Orient Ltd., a
merchandising  trading  company  located  in Hong Kong.  From 1975 to 1998,  Mr.
Arnulphy was Managing  Director of J. Mortenson & Co.,  Ltd., a manufacturer  of
water treatment equipment in Hong Kong.

     R. Ian Rigg is a  nominee  for  Trustee.  He has been the  chief  financial
officer and a director  of Advanced  Project  Ltd.  since 1996 and of  Terrawest
Industries,  Inc. since 1989. He is a director of Carlin  Resources  Corp. and a
nominee  director  and  officer  of Bank  Gospodarki  of Poland.  Mr.  Rigg is a
chartered accountant in Canada.

         During the fiscal year ended  December 31, 1998,  the Trustees  held no
board  meetings but acted on six  occasions by  resolution  adopted by unanimous
written consent. Under the Declaration of Trust of the Company,  resolutions may
be adopted by written consent signed by a majority of the Trustees.

Committees of the Board

     The Company has established an Audit  Committee.  The function of the Audit
Committee  is to meet with and review the results of the audit of the  Company's
financial  statements  performed by the  independent  public  accountants and to
recommend the selection of independent  public  accountants.  The members of the
Audit  Committee are Mr. Michel Arnulphy and Mr. C. S. Moon. The Audit Committee
did not meet during 1998.

         The Company has also established a Compensation Committee.  The members
of the Compensation  Committee are Mr. C. S. Moon and Mr. Michel  Arnulphy.  The
primary duty of the  Compensation  Committee is to grant stock options under the
Company's 1992 Non-Qualified Stock Option Plan and to award bonuses to employees
and  consultants  under the Company's  Incentive  Bonus Plan.  The  Compensation
Committee  did not meet  during  1998,  but  acted  by  written  consent  on one
occasion.

         The Company does not have a Nominating Committee.

Security Ownership of Management

         The following table sets forth information  regarding  ownership of the
Company's Shares on the April 30, 1999, by (i) each Trustee, nominee for Trustee
and Named  Executive  Officer  (as defined  below);  and (ii) all  Trustees  and
executive officers of the Company as a group. Unless otherwise  indicated,  each
Named Executive  Officer and Trustee has sole voting and disposition  power with
respect  to the  Shares  set forth  opposite  his name.  Each  such  person  has
indicated that he will vote all Shares owned by him in favor of the nominees for
Trustee and in favor of each of the other proposals.

<TABLE>
<CAPTION>
                                                     Shares
                                                  Beneficially                  Percent
                  Name of Owner                      Owned                    of Ownership
          <S>                                        <C>                          <C>
          Jimmy S.H. Lee(1)                          172,333                      1.1%

          C.S. Moon(2)                                12,000                       *

          Michel Arnulphy(2)                           6,000                       *

          Maarten Reidel(3)                          191,667                      1.2%

          Ron Aurell(4)                               46,700                       *

          Trustees and Officers as a
          Group
          (5 persons)(5)                             428,700                      2.6%


*        Less than 1%.

(1)      Includes presently exercisable stock options to acquire 158,333 shares.
(2)      Represents presently exercisable stock options.
(3)      Includes presently exercisable stock options to acquire 71,667 shares.
(4)      Includes presently exercisable stock options to acquire 10,000 shares.
(5)      Includes presently exercisable stock options to acquire 258,000 shares.
</TABLE>


Executive Compensation

         The following table sets forth  information on the annual  compensation
for each of the Company's last three fiscal years of the chief executive officer
( the "CEO") and each of the Company's  four most highly  compensated  executive
officers other than the CEO who received aggregate annual  remuneration from the
Company in excess of  $100,000  during the fiscal year ended  December  31, 1998
(collectively, with the CEO, the "Named Executive Officers").

<TABLE>
<CAPTION>
                                                                                        Long-Term
                                                      Annual Compensation               Compensation

                                                                                           Securities                           
                                                                                           Underlying      
    Name and Principal                                                Other Annual          Options/            All Other
         Position           Year     Salary($)    Bonus($)          Compensation($)          SARs(#)         Compensation($)
    ------------------      ----     ---------    --------          ---------------          -------         ---------------
<S>                         <C>     <C>           <C>                     <C>               <C>                   <C>
Jimmy S.H. Lee              1998    221,326       151,200                  0                  90,000                0
Chief Executive Officer     1997    263,781       101,540                  0                 160,000                0
                            1996    293,220       128,855                  0                  75,000                0
Maarten Reidel                                                                                                                  
Chief Financial Officer                                                                       50,000                             
                            1998    287,799       105,000                  0                                        0
                            1997    224,790       105,000                  0                 120,000                0
                            1996    179,104        71,586                  0                    0                   0

Dr. Ron Aurell              1998       68,224     (1)                      0                    0                   0
Managing Director           1997      69,280      109,159                  0                    0                   0
of Pulp Operations          1996      79,601      258,092                  0                    0                   0

(1)  At the date hereof, Dr. Aurell's bonus for 1998 has not been determined.

</TABLE>

Employment Agreement

         Mr. Lee has entered into an employment agreement with the Company dated
July 1, 1994. The agreement generally  provides,  subject to certain termination
provisions,  for continued  employment of Mr. Lee for a period of 36 months with
automatic one month renewals,  so that the contract at all times has a remaining
term  of  36  months.  The  agreement  provides  for a  base  salary  and  other
compensation  as determined by the board of  directors.  The agreement  contains
change in control  provisions  pursuant  to which,  if a change in  control  (as
defined in the agreement)  occurs,  Mr. Lee may only be discharged for cause. In
the event Mr. Lee is  terminated  without  cause or resigns  for good reason (as
defined in the agreement)  within eighteen  months of the change in control,  he
shall be entitled to a severance  payment of three times his annual salary under
the agreement and all unvested rights in any stock option or other benefit plans
shall vest in full. If Mr. Lee is  terminated  without cause or resigns for good
reason after eighteen months of the change in control, he shall be entitled to a
severance  payment  of a  proportionate  amount  based  on the  length  of  time
remaining in the term of the  agreement  of three times his annual  salary under
the agreement and all unvested rights in any stock option or other benefit plans
shall vest in full.  In addition,  Mr. Lee will  continue to receive  equivalent
benefits as were provided at the date of  termination  for the remaining term of
the agreement.

Stock Options

         The  following  table sets forth  information  concerning  the award of
stock options to the Named Executive Officers during fiscal 1998

<TABLE>
<CAPTION>
                                   Option/SAR Grants in Last Fiscal Year

                                  Number of        % of Total                                        Potential Realizable
                                 Securities       Options/SARs                                         Value at Assumed
                                 Underlying        Granted to                                        Annual Rates of Stock
                                Options/SARs    Employees Fiscal   Exercise or Base    Expiration   Price Appreciation for
          Name                   Granted (#)          Year           Price ($/Sh)         Date           Option Term
                                                                                                         5% ($) 10%($)
          <S>                      <C>                <C>                <C>             <C>            <C>
          Jimmy S.H. Lee           90,000             27.3%              $6.00           10/08          339,603 860,620

          Maarten Reidel           50,000             15.2%              $6.00           10/08          188,668 478,122
</TABLE>

         The table below  provides  information  on exercises of options  during
1998 by the Named Executive Officers and information with respect to unexercised
options held by the Named Executive Officers at December 31, 1998

             Aggregated Option/SAR Exercises in Last Fiscal Year and
                        Fiscal Year-End Option/SAR Values

<TABLE>
<CAPTION>
                                                                       Number of Securities   
                                                                            Underlying        Value of Unexercised
                                                                            Unexercised           in-the-money
                                                                          Options/SARs at        Options/SARs at
                                                                        Fiscal Year-End (#)    Fiscal Year-End ($)
                             Shares Acquired on                            Exercisable/           Exercisable/
           Name                 Exercise (#)      Value Realized ($)       Unexercisable          Unexercisable
           ----                 ------------      ------------------       -------------          -------------
<S>                               <C>                   <C>               <C>                     <C>
Jimmy S.H. Lee                       0                     0              158,333/166,667         24,300/48,600

Maarten Reidel                    120,000               176,250            71,667/33,333          13,500/27,000

Dr. R. Aurell                        0                     0                 10,000/0                  0/0

</TABLE>

Compensation of Trustees

         The Trustees do not receive cash compensation for service as a Trustee.
The Company  reimburses the Trustees and officers for their expenses incurred in
connection   with  their  duties  as  Trustees  and  officers  of  the  Company.
Non-employee  Trustees  who are in  office at the end of a fiscal  year  receive
options to acquire  6,000 shares of common  stock at an exercise  price equal to
the closing price of the Company's shares on The Nasdaq Stock Market's  National
Market on the last trading day of the fiscal year.

Report of the Trustees on Executive Compensation

         Compensation  of the Company's  executive  officers is determined on an
annual basis by either the Trustees as a whole or the Compensation  Committee in
consultation with management.  For 1998,  compensation of executive officers was
determined by the Trustees as a whole.  The Company's  goal is to compensate the
Company's  executive officers in a manner which is consistent with the Company's
strategic  plan and  which  rewards  executive  officers  in a fair  manner  for
performance  which forwards the strategic plan. To this end, the Company's basic
compensation  philosophy  is to maintain  annual  base  salaries  for  executive
officers at relatively low amounts and to award bonuses and long-term incentives
in the form of stock options based on annual  performance  of the Company and of
the executive.

         The financial  results from operating the Company's  businesses are the
major factor in determining levels of executive compensation.

         The Company  adopted an Employee  Incentive Plan ("EIP") during 1994 in
which the Company's  executive  officers and other  employees  may  participate.
Under the EIP, 5% of the  Company's Net Income for each fiscal year is set aside
as a bonus pool.  During the course of the fiscal  year,  the Trustees may grant
interests in the bonus pool to  employees,  officers and trustees of the Company
and its  subsidiaries.  Bonuses are to be paid within 120 days of the end of the
fiscal year.

         In evaluating the  performance of the Company's  executive  officers in
awarding  grants  under the EIP,  the  Trustees  considered  factors such as the
growth in earnings of the  Company,  the  effectiveness  of cost  reduction  and
productivity-enhancement  measures in the operating subsidiaries,  the growth in
assets,  and the  performance of the Company's  Common Stock.  The Trustees also
considered  the  contribution  of the Company's  executive  officers  toward the
accomplishment of those goals.

         In  determining  the  compensation  of the  Company's  Chief  Executive
Officer, Mr. Lee, for 1998, the Trustees evaluated Mr. Lee based on the criteria
set forth above.  In determining  Mr. Lee's salary and his bonus award under the
EIP, the  Trustees  considered  the  operating  performance  of the Company in a
difficult economic  environment for pulp and paper companies,  the progress made
by the Company in transitioning  its pulp production from sulphite pulp to kraft
pulp and the  completion  of the sales of two of the  Company's  paper  mills in
furtherance  of the  Company's  strategic  plan to  rationalize  its  production
facilities.  Mr.  Lee was  granted  options  to  purchase  90,000  shares of the
Company's common stock in order to provide a long term incentive.

 /s/ Michel Arnulphy   /s/ Jimmy S. H. Lee  /s/ C. S. Moon   /s/ Maarten Reidel



<PAGE>



Performance Graph

         The following graph compares the cumulative  total  stockholder  return
(stock price appreciation plus dividends) on the Company's Common Stock with the
cumulative  total return of NASDAQ Market Index and an additional  group of peer
companies  which comprise  Standard  Industrial  Classification  Code 262--Paper
Mills for comparison over the five years ending December 31, 1998. The companies
which  comprise SIC Code 262 are  Abitibi-Consolidated  Inc.;  American  Israeli
Paper; Avenour Inc.; Badger Paper Mills Inc.; Boise Cascade Corporation; Bowater
Inc.; Champion International;  Chesapeake Corporation; Consolidated Papers Inc.;
Crown  Vantage  Inc.;  Domtar  Inc.;  Fletcher   Challenger  Forests;   Fletcher
Challenger Building; Fletcher Challenger Paper; Fort James Corp.; Johns Manville
Corporation;   Kimberly-Clark   Corporation;   MacMillan  Bloedel  Ltd.;  Mercer
International  Inc.  SBI;  P.H.  Glatelter  Co.;  Pope & Talbot  Inc.;  Potlatch
Corporation;  Schweitzer Mauduit  International;  Striker Industries Inc.; Union
Camp  Corporation;   Wausau-Mosinee  Paper  Corporation;  Westvaco  Corporation;
Weyerhauser Company; and Willamette Industries.

                      Comparison of Cumulative Total Return
                   of Company Industry Index and Broad Market
<TABLE>
<CAPTION>
                                                                 FISCAL YEAR ENDED

 COMPANY                                       1994           1995         1996       1997        1998
 -------                                       ----           ----         ----       ----        ----
<S>                                           <C>            <C>          <C>        <C>         <C>
 Mercer International Inc. SBI                 96.46         145.13        72.57      62.56       48.56

 Industry Index                               102.01         134.41       150.44     155.60      162.33

 Broad Market                                 104.99         136.18       169.23     207.00      291.96

</TABLE>

<PAGE>



Certain Transactions

     At December 31, 1998,  Mr. Reidel had  outstanding  amounts  payable to the
Company of $161,000. This amount is due on demand and does not bear interest.

         The Company  reimburses a Hong Kong company controlled by the family of
Mr. Lee for the use of office space and general and administrative  expenses for
activities  of the  Company's  Hong Kong  subsidiary.  During 1998,  the Company
became obligated to reimburse this company a total of $207,000.

Section 16(a) Beneficial Ownership Compliance

         Section  16(a) of the  Securities  and Exchange Act of 1934, as amended
(the  "Exchange  Act") requires that the Company's  officers and directors,  and
persons  who own more than 10% of a  registered  class of the  Company's  equity
securities,  file  reports  of  ownership  and  changes  of  ownership  with the
Securities and Exchange Commission (the "SEC"). Officers,  directors and greater
than 10% shareholders are required by SEC regulation to furnish the Company with
copies of all such reports they file.

         Based  solely on the review of the copies of such  reports  received by
the  Company,  and on written  representations  by the  Company's  officers  and
Trustees regarding their compliance with the applicable  reporting  requirements
under Section 16(a) of the Exchange Act, the Company believes that, with respect
to its fiscal year ended  December  31,  1998,  all of its officers and Trustees
filed all required reports under Section 16(a) in a timely manner.


PROPOSAL 2:  INCREASE IN SHARES AVAILABLE FOR ISSUANCE UNDER STOCK OPTION PLAN

         In 1992,  the Board of  Directors  of the  Company  adopted  the Mercer
International,  Inc. 1992 Non-Qualified  Stock Option Plan (the "Stock Plan"). A
copy of the Stock Plan may be obtained  upon  written  request to the  Company's
secretary.  The Stock Plan was approved by shareholders at the annual meeting in
1993.  Under the Stock Plan, the Company is authorized to issue 2,000,000 shares
of Mercer  common  stock upon the  exercise of options  granted  under the Stock
Plan. The  shareholders are being requested to approve an amendment to the Stock
Plan that increases the number of shares that may be issued under the Stock Plan
from 2,000,000 to 3,600,000.

         The  purpose of the Stock Plan is to enable the  Company to attract and
retain  employees  of ability  and  experience,  and to furnish  such  personnel
significant  incentives  to  improve  operations  and  increase  profits  of the
Company. Since its inception, options with respect to 1,164,500 shares have been
exercised  and  765,000  options  are  currently  outstanding  and  exercisable.
Currently,  there are no shares  available for future option grants to employees
and fewer than 70,000 shares available for future option grants to Trustees. The
Board believes that the number of shares  remaining  available for issuance will
be  insufficient  to achieve  the purpose of the Stock Plan over the term of the
Plan (which  expires,  unless  earlier  terminated,  in 2002) unless  additional
shares are authorized.  The amount of the proposed  increase,  1,600,000 shares,
represents approximately 10.0% of the Company's outstanding shares.

         In  general,  the  Stock  Plan  currently  authorizes  Mercer  to grant
non-qualified stock options.  The Stock Plan is administered by the Compensation
Committee  and  all  terms  of the  grant  are  determined  by the  Compensation
Committee. The purchase price of each share of Mercer common stock covered by an
option  may not be less than  100% of the fair  market  value of  Mercer  common
stock,  on the date of grant of the option.  Options may be exercised only while
the holder is in the employ of the Company or a subsidiary  within 90 days after
the date of  termination or within one year after the death or disability of the
holder.

         Approval of an amendment to the Stock Plan as described  above requires
the  affirmative  vote of a majority of the  outstanding  shares of common stock
eligible to vote as the meeting.  THE TRUSTEES  RECOMMEND A VOTE FOR ADOPTION OF
THIS PROPOSAL.


                      INDEPENDENT ACCOUNTANTS AND AUDITORS

     Peterson Sullivan P.L.L.C., Certified Public Accountants, has been selected
by the Trustees to examine the consolidated  financial statements of the Company
and its  subsidiaries  for the fiscal year ending  December 31,  1999.  Peterson
Sullivan  P.L.L.C.  have examined the consolidated  financial  statements of the
Company and its subsidiaries each year since 1989.  Representatives  of Peterson
Sullivan P.L.L.C. are not expected to be present at the Annual Meeting.

                          FUTURE SHAREHOLDER PROPOSALS

         Any proposal which a Shareholder  intends to present at the next Annual
Meeting of Shareholders must be received by the Company on or before February 2,
2000. A shareholder  must notify the Company on or before April 17, 2000 that he
or she  intends to  introduce  a  proposal  at the 2000  shareholder  meeting or
management will have discretionary authority to vote its proxies with respect to
any such proposal.

                                  OTHER MATTERS

         The Trustees know of no matter other than those  mentioned in the Proxy
Statement  to be brought  before the meeting.  If other  matters  properly  come
before the meeting, it is the intention of the Proxy holders to vote the Proxies
in accordance with their judgment.  If there are  insufficient  votes to approve
any of the proposals contained herein, the Trustees may adjourn the meeting to a
later date and solicit additional Proxies. If a vote is required to approve such
adjournment, the Proxies will be voted in favor of such adjournment.

         A copy of the Company's  Annual Report to the  Securities  and Exchange
Commission will be provided to Shareholders  without charge upon written request
directed  to Mercer  Shareholders  Information,  Burglistrasse  6, 8002  Zurich,
Switzerland.

         By Order of the Trustees,

         DATE:  June 1, 1999.



<PAGE>


                                      PROXY

                            MERCER INTERNATIONAL INC.
                                 Burglistrasse 6
                                   8002 Zurich
                                   Switzerland

         This  Proxy  is   solicited   on  behalf  of  the  Trustees  of  Mercer
International Inc.

         The undersigned hereby appoints Jimmy S.H. Lee as proxy, with the power
of substitution to represent and to vote as designated  below, all the shares of
beneficial  interest  of  Mercer  International  Inc.  held  of  record  by  the
undersigned on May 21, 1999, at the Annual Meeting of Shareholders to be held on
July 13, 1999, or any adjournment thereof.

         1.       ELECTION OF TRUSTEES

 FOR the nominees listed            WITHHOLD AUTHORITY to vote
 below (except as marked            for the nominees listed
 to the contrary below)       |_|   below                        |_|

     (Instruction:  To withhold  authority to vote for a nominee,  strike a line
through the nominee's name in the list below.)

                           Jimmy S. H. Lee R. Ian Rigg

         2.  Amendment  of the  Company's  Non-qualified  Stock  Option  Plan to
increase the number of shares  available for issuance from  2,000,000  shares to
3,600,000 shares.

         3. In his discretion,  the Proxy holder is authorized to vote upon such
other business as may properly come before the meeting.

         This Proxy when properly  executed will be voted in the manner directed
herein by the undersigned stockholder.  If no direction is made, this Proxy will
be voted FOR Proposals 1 and 2.

         Please sign  exactly as name appears on your share  certificates.  When
shares are held by joint  tenants,  both should sign.  When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a  corporation,  please  sign  in full  corporate  name by  President  or  other
authorized  officer.  If a  partnership,  please  sign  in  partnership  name by
authorized person.

DATED:                             , 1999
                                                     Signature


                                                     Print Name


                                                     Signature, if jointly held


                                                     Print Name


Please  mark,  sign,  date and return  this Proxy  promptly  using the  enclosed
envelope.

--------
1 Filed jointly with Edward C. Johnson 3d and Abigail P. Johnson.

2 Filed on behalf of Merrill  Lynch Asset  Management  Group,  together  Merrill
Lynch Special Value Fund, Inc. ("MLF"). MLF claims shared voting and dispositive
power with respect to 1,609,000 shares.

3 Sole voting  power as to  1,360,146  Shares and sole  dispositive  power as to
1,477,401 Shares.