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Sino-Forest receives notices of default
Source: Agencies |
December 20, 2011, Tuesday
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Print Edition
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SINO-FOREST, a China-focused forestry company accused of fraud, said it received notices of default from its noteholders and set up a committee to look at options for the company that could include its sale.
Until recently the largest forestry stock listed on the Toronto Stock Exchange, Sino-Forest warned last week it would not be able to file its quarterly results on time as an internal probe into fraud allegations is taking longer than anticipated.
Sino-Forest has been reeling since June, when short seller Carson Block and his Muddy Waters firm accused it of exaggerating the extent of its Chinese assets. Sino-Forest has said a preliminary investigation by its independent directors showed no evidence of fraud.
Sino-Forest said its board decided not to make a US$10 million interest payment that was due to noteholders last Thursday.
Singapore-based Richard Chandler Corp, Sino-Forest's largest shareholder, last week demanded a board shake-up at the firm, slamming the "excessive time and money" spent on the probe and questioning the board's decision to delay its results. Chandler's fund stands to lose at least C$140 million (US$135 million) and possibly more, if Sino becomes insolvent.
Regulators have put a cease-trade order on Sino-Forest's shares, pending the completion of a probe into the firm. The shares had fallen over 75 percent this year, before being halted by regulators in late August.
The company and its advisers met last Wednesday with an ad hoc committee of noteholders and their legal counsel. Sino-Forest said all parties expressed "a willingness to work cooperatively with the company in an effort to preserve value for the benefit of stakeholders."
However, it cautioned that it cannot independently verify the holdings of those who attended or were represented at the meeting. It said the notices of default it received were not initiated or supported by noteholders attending the meeting.
It said it was talking to noteholders about securing a waiver, linked to its failure to file its financial results, but it warned there was no guarantee the notices would be withdrawn.
Until recently the largest forestry stock listed on the Toronto Stock Exchange, Sino-Forest warned last week it would not be able to file its quarterly results on time as an internal probe into fraud allegations is taking longer than anticipated.
Sino-Forest has been reeling since June, when short seller Carson Block and his Muddy Waters firm accused it of exaggerating the extent of its Chinese assets. Sino-Forest has said a preliminary investigation by its independent directors showed no evidence of fraud.
Sino-Forest said its board decided not to make a US$10 million interest payment that was due to noteholders last Thursday.
Singapore-based Richard Chandler Corp, Sino-Forest's largest shareholder, last week demanded a board shake-up at the firm, slamming the "excessive time and money" spent on the probe and questioning the board's decision to delay its results. Chandler's fund stands to lose at least C$140 million (US$135 million) and possibly more, if Sino becomes insolvent.
Regulators have put a cease-trade order on Sino-Forest's shares, pending the completion of a probe into the firm. The shares had fallen over 75 percent this year, before being halted by regulators in late August.
The company and its advisers met last Wednesday with an ad hoc committee of noteholders and their legal counsel. Sino-Forest said all parties expressed "a willingness to work cooperatively with the company in an effort to preserve value for the benefit of stakeholders."
However, it cautioned that it cannot independently verify the holdings of those who attended or were represented at the meeting. It said the notices of default it received were not initiated or supported by noteholders attending the meeting.
It said it was talking to noteholders about securing a waiver, linked to its failure to file its financial results, but it warned there was no guarantee the notices would be withdrawn.
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