Forestry firm confident in root support

TORONTO

— Troubled Chinese forestry company Sino-Forest Corp. said Friday that holders of about 72 per cent of its outstanding notes have agreed to support a restructuring at the company.

Sino-Forest said the support follows a deal with an ad hoc committee of noteholders in March to support “either a sale of the company to a third party or a restructuring under which the noteholders would acquire substantially all of the assets of the company.”

Once the most valuable forestry company on the Toronto Stock Exchange, Sino-Forest was accused of fraud last year by short seller Muddy Waters Research.

Sino-Forest and several former executives have been accused of lying to investors and attempting to mislead investigators by the Ontario Securities Commission. The case has also been referred to the RCMP for investigation.

The company filed for court protection from creditors earlier this year and put itself up for sale, saying that if it doesn’t receive a suitable takeover offer it will implement a restructuring plan under the Companies’ Creditors Arrangement Act.

On Friday, the company said noteholders holding at least two-thirds of the principal amount of each of Sino-Forest’s four series of notes have agreed to support a restructuring.

Sino-Forest owns and manages tree plantations as well as manufacturing operations in China.

The company has been accused of overstating assets and revenue as well as misleading investors as to the relationship between Sino-Forest, founder and former CEO Allen Chan and Greenheart, a publicly traded company listed in Hong Kong.

The regulator also alleged Chan secretly controlled companies that received more than $22 million when Sino-Forest bought a controlling interest in Greenheart, which has forest concessions in Suriname.

Sino-Forest’s shares have been delisted from the Toronto Stock Exchange.