Deal with bondholders reduces risk of Sino-Forest's bankruptcy
Source: Bloomberg News |
January 14, 2012, Saturday
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Print Edition
Print Edition
SINO-FOREST Corp, the Chinese timber company fending off allegations of fraud, said it has reached a waiver agreement with a group of bondholders, reducing the risk of bankruptcy.
Holders of a majority of its senior notes due 2014 and 2017 agreed to waive the default, Hong Kong- and Ontario-based Sino-Forest has said in a statement.
In December, the company said it received notices of default after announcing it wouldn't publish its third-quarter financial results on "a timely basis."
"It keeps Sino-Forest out of bankruptcy for the time being," said Geof Marshall, who helps oversee C$5 billion (US$4.9 billion) of fixed-income funds at CI Investments Inc in Toronto.
A special committee of directors has been investigating allegations in a June report by short seller Carson Block's Muddy Waters LLC that Sino-Forest overstated its timber assets in China.
After the report, the shares fell 74 percent before trading was suspended by the Ontario Securities Commission in August, reducing the company's market value by C$3.3 billion.
Sino-Forest, which is also under investigation by the OSC and the Royal Canadian Mounted Police, denies the allegations.
The company is also negotiating terms of an extension of a share-trading suspension by the OSC, Canada's main securities regulator, which was due to end on January 25, according to the statement.
Sino-Forest said on Thursday that it will complete and make public a final report on the special committee's investigation of the Muddy Waters allegations by January 31. The firm said last month that the report wouldn't be completed until some time in 2012.
The waiver deal with the bondholders gives them a say on appointments of Sino-Forest directors and senior executives, access to the company's offices, accounts, books and records, as well as updates on significant transactions, the statement said.
Sino-Forest said it has agreed to make the US$9.78 million interest payment due last month on its 2016 convertible notes.
The company will also pay a waiver fee totaling US$9.99 million, or 1 percent of the principal amount, to all holders of the 2014 and 2017 senior notes.
Holders of a majority of its senior notes due 2014 and 2017 agreed to waive the default, Hong Kong- and Ontario-based Sino-Forest has said in a statement.
In December, the company said it received notices of default after announcing it wouldn't publish its third-quarter financial results on "a timely basis."
"It keeps Sino-Forest out of bankruptcy for the time being," said Geof Marshall, who helps oversee C$5 billion (US$4.9 billion) of fixed-income funds at CI Investments Inc in Toronto.
A special committee of directors has been investigating allegations in a June report by short seller Carson Block's Muddy Waters LLC that Sino-Forest overstated its timber assets in China.
After the report, the shares fell 74 percent before trading was suspended by the Ontario Securities Commission in August, reducing the company's market value by C$3.3 billion.
Sino-Forest, which is also under investigation by the OSC and the Royal Canadian Mounted Police, denies the allegations.
The company is also negotiating terms of an extension of a share-trading suspension by the OSC, Canada's main securities regulator, which was due to end on January 25, according to the statement.
Sino-Forest said on Thursday that it will complete and make public a final report on the special committee's investigation of the Muddy Waters allegations by January 31. The firm said last month that the report wouldn't be completed until some time in 2012.
The waiver deal with the bondholders gives them a say on appointments of Sino-Forest directors and senior executives, access to the company's offices, accounts, books and records, as well as updates on significant transactions, the statement said.
Sino-Forest said it has agreed to make the US$9.78 million interest payment due last month on its 2016 convertible notes.
The company will also pay a waiver fee totaling US$9.99 million, or 1 percent of the principal amount, to all holders of the 2014 and 2017 senior notes.
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