Toronto, Canada, 10 January 2012 -- Sino-Forest Corporation (TSX:TRE) today provided an update concerning the status of the company’s efforts to obtain waivers of its default from its note holders in respect of its senior notes due 2014 and its senior notes due 2017, and commented on the status of its historic financial statements.
As disclosed 18 December 2011, Sino-Forest received written notices of default dated 16 December 2011, in respect of its senior notes due 2014 and its senior notes due 2017. The notices reference the company’s previously disclosed failure to release its 2011 third quarter financial results on a timely basis. An “event of default” under the senior note Indentures will have occurred if Sino-Forest fails to cure or otherwise fails to address the breach of indenture giving rise to the notices of default within 30 days following receipt of the notices. The company will not be able to file the third quarter results and cure the default within the 30-day cure period.
The company's breach of the senior note Indentures relating to the third quarter results can be waived for a series of senior notes by the holders of at least a majority in principal amount of that series.
The company has been in discussions with an ad hoc committee of note holders that hold a substantial portion of the company’s four series of senior and convertible notes. The company and the ad hoc committee have negotiated the terms under which the defaults under the senior notes will be waived. While there is no assurance that waivers will be obtained, the company is optimistic that holders of a majority in principal amount of its senior notes due 2014 and its senior notes due 2017 will agree to waive the breach within the 30 day cure period.
On 15 November 2011, Sino-Forest announced, among other things, that it was deferring the release of the third quarter results until certain issues could be resolved to the satisfaction of the board of directors. The issues included (a) determining the nature and scope of the relationships between Sino-Forest and certain of its authorized intermediaries and suppliers and among certain authorized intermediaries and suppliers, as discussed in the second interim report of the independent committee of the board of directors publicly released on 15 November 2011, and (b) the satisfactory explanation and resolution of issues raised by certain documents identified by the advisors to the independent committee, by counsel to the company, by the company's auditor Ernst & Young, and by staff members of the Ontario Securities Commission.
The company has worked diligently since 15 November 2011, and believes it has made progress in resolving outstanding issues. As disclosed 12 December 2011, there is no assurance that the company will be able to release the third quarter results or, if able, as to when such release will occur. For the same reasons, there is also no assurance that the company will be able to release audited financial statements for its 2011 fiscal year.
As was indicated 12 December 2011, the circumstances that could cause the company to be unable to release the third quarter results could affect the company's historic financial statements. For this reason, the company cautions that the company’s historic financial statements and related audit reports should not be relied upon. The company continues its efforts to resolve the outstanding issues described above. The company believes that if it is successful in releasing its third quarter results and in obtaining an audit opinion for its 2011 fiscal year, those efforts will resolve any issues associated with the reliability of the company’s historic financial statements.
Sino-Forest Corporation is a leading commercial forest plantation operator in China. Its principal businesses include the ownership and management of tree plantations, the sale of standing timber and wood logs, and the complementary manufacturing of downstream engineered wood products. Sino-Forest also holds a majority interest in Greenheart Group Limited (HKSE:00094), a Hong Kong listed investment holding company with assets in Suriname and New Zealand, which is involved in sustainable harvesting, processing, and sales of its logs and lumber to China and other markets around the world. Sino-Forest’s common shares have been listed on the Toronto Stock Exchange under the symbol TRE since 1995. Learn more at www.sinoforest.com.