Bloomberg News

Sino-Forest Says Bondholders Agree to Waiver on Default

January 12, 2012

(Updates with interest payment in third paragraph.)

Jan. 12 (Bloomberg) -- Sino-Forest Corp., the Chinese timber company fending off allegations of fraud, said it reached a waiver agreement with bondholders, reducing the risk of bankruptcy.

Holders of a majority in principal of its senior notes due 2014 and 2017 agreed to waive the default arising from the company’s failure to release its third-quarter financial results on time, Hong Kong- and Mississauga, Ontario-based Sino-Forest said today in a statement.

Following the accord, Sino-Forest said it will make the $9.78 million interest payment on its 2016 convertible notes that was due last month. The company will also pay a waiver fee totaling $9.99 million, or 1 percent of the principal amount, to all holders of the 2014 and 2017 senior notes.

“It keeps Sino-Forest out of bankruptcy for the time being,’ Geof Marshall, a Toronto-based money manager at CI Investments Inc. who helps oversee C$5 billion ($4.9 billion) of fixed-income funds, said today in a telephone interview.

Sino-Forest said in December it received notices of default on the notes after the company failed to publish its third- quarter financial results in a ‘‘timely manner.’’

A special committee of directors has been investigating allegations the company overstated its timber assets in China. The deal may give Sino-Forest more time to hold informal talks with bondholders to avoid having to seek court-ordered protection from creditors.

Sino-Forest shares plunged 74 percent in Toronto last year after Carson Block, a short seller, published allegations of fraud in June. The company, with $1.8 billion in outstanding bonds, has been suspended from trading since August and denies the allegations.

Sino-Forest had said Jan. 11 it was ‘‘optimistic’’ of reaching waiver agreements with holders of its notes due in 2014 and 2017 after negotiating terms with a committee of investors that held ‘‘a substantial portion’’ of its debt.

--Editor: Simon Casey

-0- Jan/11/2012 17:52 GMT

-0- Jan/11/2012 22:46 GMT

-0- Jan/12/2012 16:31 GMT

-0- Jan/12/2012 16:46 GMT

To contact the reporter on this story: Christopher Donville in Vancouver at

To contact the editor responsible for this story: Simon Casey at -0- Jan/11/2012 16:31 GMT

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