Mangakahia Forest owner Sino-Forest seeks buyer

Tuesday 3rd April 2012

About 11,000 hectares of Northland forestry may be end up on the block as Sino-Forest, which owns the block through a Hong Kong investment vehicle, seeks a buyer for its assets after filing for bankruptcy protection last week.

The Toronto Stock Exchange-listed company is seeking to sell its assets, which include the Mangakahia Forest through its majority stake in Hong Kong Exchange-listed Greenheart Group, after reaching a deal with about 40 percent of its noteholders.

Sino Forest’s creditors stand to acquire the assets if a buyer can’t be found. That may cut out shareholders in Sino-Forest, including Richard Chandler Corp which holds about 19 percent of the forestry company.

RCC yesterday appointed a team led by Asian forestry expert David Walker to lead its proposal in restructuring the company. The investment vehicle of New Zealand-born billionaire Richard Chandler said Sino-Forest’s business and financial resources have deteriorated in recent months due to the lack of a “credible business plan”.

“A successful restructuring which builds a long-term sustainable plantation business will take a considerable amount of time and a strong team to drive the process,” Walker said in a statement. “We look forward to working with the company and its bondholders to implement a plan which builds long-term value for all Sino-Forest stakeholders.”

Sino-Forest hit the rocks in June after research house Muddy Waters issued a report accusing the company of overstating its earnings, leading to a sell-off in its stock that destroyed some C$3.3 billion of value.

Its trading was suspended amid investigations by regulators and police and chief executive Allen Chan resigned in August. The company last week filed a C$4 billion claim against Muddy Waters, Carson Block and others relating to the report and trading in Sino-Forest shares.

Last year, Sino-Forest sold the Mangakahia Forest, which was once owned by Carter Holt Harvey, to subsidiary Greenheart Group for US$77 million. Greenheart also owns forestry assets in Suriname.

In response to the Sino-Forest announcement, Greenheart said it was too early to speculate on the outcome of the Sino-Forest sale or restructure. Shares in Greenheart sank 9.2 percent to 59 Hong Kong cents in trading on the Hong Kong exchange, valuing it at HK$506.8 million.

The New Zealand assets drove up Greenheart’s annual revenue of HK$327 million in the 2011 calendar year, compared to HK$17 million a year earlier, though its loss widened to HK$105.9 million from HK$86.6 million, according to financial statements lodged last week. The New Zealand segment revenue accounted for about HK$300.7 million, with most of the timber sold into China.

BusinessDesk.co.nz

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