Jan. 23 (Bloomberg) -- Canada’s main securities regulator extended the trading ban on Sino-Forest Corp., the Chinese timber company fending off fraud allegations, after saying a lack of disclosure meant an orderly market can’t be maintained.
The Ontario Securities Commission lengthened the trading suspension to April 16 at a hearing today in Toronto. The cease- trade was due to expire Jan. 25. Sino-Forest investors lack sufficient information to make informed decisions about the company, Hugh Craig, counsel for the OSC staff, said at the hearing.
The ruling is a setback for investors seeking to sell their holdings. Shares of Hong Kong- and Mississauga, Ontario-based Sino-Forest were halted by the OSC in August after falling 74 percent since June, when short seller Carson Block said the company had overstated its timber holdings. Sino-Forest denies the allegations.
“I’m frustrated,” Bill Evans, 42, a Charleston, South Carolina-based mortgage originator who owns about 1,000 Sino- Forest shares, said by telephone before the ruling. “You don’t have to be a rocket scientist to know there’s some value there. It’s stupid.”
Chief Executive Officer Judson Martin, who took over after the resignation of company founder, Chairman and CEO Allen Chan in August, said in November that Sino-Forest may consider going private, selling a stake or seeking a merger to raise funds.
Sino-Forest, which is also under investigation by the Royal Canadian Mounted Police, is in talks with bondholders. The company said Jan. 12 that the debt holders agreed to waive a default triggered by delays in publishing third-quarter results. Sino-Forest agreed to “monetize” assets to repay debt as part of the accord. It has $1.8 billion in outstanding bonds.
A special committee of Sino-Forest directors has been investigating the Muddy Waters’ allegations.
Holders of Sino-Forest shares lost about C$3.3 billion ($3.28 billion) following the June 2 publication of a report by Block’s research firm Muddy Waters LLC. Hedge fund Paulson & Co., formerly Sino-Forest’s largest shareholder, sold its entire 12.5 percent stake in June, telling clients it had lost C$462 million since May 31 on the investment.
Sino-Forest last traded in Canada on Aug. 25 at C$4.81. The U.S. shares were halted after slumping to $1.38 on Aug. 26.
--Editors: Steven Frank, Jasmina Kelemen
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