Sino-Forest announces convertible note and common share offerings primarily
for funding of growth opportunities; Sino-Forest also announces acquisition
of Mandra Forestry by issuing new guaranteed senior notes in exchange for
outstanding Mandra guaranteed notes and warrants

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

This news release is not an offer for sale of securities in the United States. The securities referred to herein have not been registered under the U.S. Securities Act of 1933, as amended, and may not be sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. The Company does not intend to register any part of the offering in the United States or to conduct a public offering of securities in the United States.

Nothing in this announcement constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so.

TORONTO, Dec. 1 /CNW/ - Sino-Forest Corporation (TSX: TRE) (the "Company" or "Sino-Forest") today announced it has commenced an offering of up to US$400,000,000 convertible senior notes due 2016, plus a 15% over-allotment option, and a contemporaneous offering of common shares. The final size and other terms of the offering of notes and the common shares, including (in the case of the notes offering) the interest rate payable, the maturity date and the terms at which the notes will be convertible into common shares and (in the case of the common share offering) the number of common shares to be sold and price per share, will be determined after completion of marketing activities and is subject to prevailing market conditions. The notes offering is being made on a private placement basis in Canada, the United States and internationally pursuant to available exemptions, through a syndicate of initial purchasers formed by Credit Suisse Securities (USA) LLC, BofA Merrill Lynch and TD Securities Inc. The common share offering is being made by way of a short form prospectus offering in all provinces of Canada and on a private placement basis in the United States and internationally pursuant to available exemptions, through a syndicate of underwriters with Credit Suisse Securities (Canada), Inc. and TD Securities Inc. as joint bookrunners and including Dundee Securities Corporation, RBC Dominion Securities Inc., Scotia Capital Inc., CIBC World Markets Inc., BofA Merrill Lynch, Canaccord Capital Corporation and Maison Placements Canada Inc.

The Company intends to use the aggregate net proceeds from the notes offering and the common share offering as follows:

    
    -   approximately US$150.0 million to prepay the full amount of
        borrowings outstanding under the Company's syndicated term loan,
        including accrued but unpaid interest and related fees and expenses
        thereunder;

    -   approximately US$250.0 million as initial capital for the acquisition
        of commercial plantation forests in the Guizhou Province, PRC. The
        Company is currently negotiating, and expects to enter into shortly
        after the completion of the offerings, through one of its PRC
        subsidiaries, a master agreement to acquire between approximately
        10.5 million and 16.5 million cubic meters of plantation wood fibre,
        within an area of approximately 150,000 hectares of plantations trees
        that has an average yield of 70 to 110 cubic meters per hectare in
        Guizhou Province. The term of the agreement is three years, and the
        purchase price for the timber shall not exceed RMB 300 per cubic
        meter, to the extent permitted under the relevant PRC laws and
        regulations. Pursuant to the terms of the contemplated master
        agreement, the Company will not be obligated to acquire any of these
        plantation trees which do not meet its specific requirements. Subject
        to reaching a definitive purchase agreement with the vendor on the
        final terms of the master agreement, the Company expects to have pre-
        emptive rights to lease the underlying plantation land at a price, if
        permitted under the relevant PRC laws and regulations, not to exceed
        RMB450 per hectare per annum for 30 years. The expected term of the
        land lease can be for up to 50 years from the harvest date as
        permitted under PRC laws and regulations. The specific terms and
        conditions of such purchase or lease are to be determined upon the
        execution of the definitive purchase or lease agreement between one
        of the Company's PRC subsidiaries and the vendor upon the
        authorization of the original plantation rights holders, and subject
        to the requisite governmental approval and plantation rights
        registration with the local forestry bureau in compliance with the
        relevant PRC laws and regulations. There can be no assurance that the
        Company will be able to enter into the master agreement;

    -   approximately US$200.0 million to fund forestry investments in
        cooperation with state-owned plantation entities ("SOPs") in the PRC.
        It is intended that the Company and the SOPs will make investments
        into newly formed entities ("Co-op Entities") owned by the Company
        and the SOPs in accordance with relevant PRC laws and regulations and
        subject to receipt of the requisite government approvals, with the
        goal of developing the economic value of state-owned plantation farms
        by investing in advanced breeding, planting and silviculture
        technology and introducing modern plantation management know-how and
        practices to the Co-op Entities. The Co-op Entities are expected to
        have approximately 120,000 hectares of plantation trees under
        management; and

    -   any remainder, for any payments required to be made in connection
        with consummating the exchange for certain notes issued by Mandra
        Forestry Finance Limited ("Mandra Forestry") and warrants issued by
        Mandra Forestry Holdings Limited ("Mandra") and the acquisition of
        common shares of Mandra as described below, for investments in Mandra
        Forestry as the Company may determine to make after it has
        consummated such exchange and acquisition, subject to definitive
        documentation and satisfaction of certain conditions, and for general
        corporate purposes.
    

No assurance can be given that the Company will not terminate its marketing activities or alter the amount or terms of the notes offering or common share offering due to market conditions or otherwise.

In addition to the above described offerings, on December 1, 2009, the Company entered into a memorandum of understanding with Mandra Forestry and certain holders of the US$195,000,000 12% guaranteed senior notes due 2013 issued by Mandra Forestry (the "Mandra Notes") and certain warrants issued by Mandra (the "Mandra Warrants") to exchange the Mandra Notes in the aggregate principal amount of US$192.7 million and the Mandra Warrants held by such holders, for new guaranteed senior notes to be issued by Sino-Forest in the aggregate principal amount of US$185.4 million bearing interest at a rate of 10.25% per annum with a maturity date of July 28, 2014 (the "New 2014 Senior Notes"), subject to certain conditions, including the waiver of any defaults or events of default under the Mandra Notes and Mandra Warrants. The New 2014 Senior Notes will have substantially the same terms and conditions as the Company's outstanding US$212,330,000 10.25% guaranteed senior notes due 2014. The Company intends to consummate the exchange concurrently with an acquisition of the outstanding common shares of Mandra not already owned by it, with respect to which the Company has an agreement in principle with Mandra Resources Limited and Morgan Stanley Dean Witter Equity Funding, Inc., which are the other holders of Mandra common shares.

Sino-Forest Chairman and Chief Executive Officer Allen Chan said, "With this series of transactions, we continue to (1) strategically expand and complete our south-west base of commercial plantations with the addition of Guizhou Province, where we intend to implement our integrated plantation model, (2) invest in state-owned plantation farms in an effort to bolster their productivity and economic value, and (3) obtain full ownership of Mandra Forestry, which has locked in access to fibre for supplying the Bohai/Greater Shanghai region, where there is robust economic growth."

According to a valuation report prepared by Poyry Forest Industry Pte. Ltd., Mandra Forestry has an estimated 150,000 hectares of plantation under management, and upon the completion of the Mandra transactions, Sino-Forest would have an aggregate plantation size under management of approximately 620,000 hectares, and an additional 901,000 hectares available for acquisition under its signed long-term master agreements.

About Sino-Forest Corporation

Sino-Forest Corporation is a leading commercial forest plantation operator in China. Its principal businesses include the ownership and management of forest plantation trees, the sale of standing timber and wood logs, and the complementary manufacturing of downstream engineered-wood products. The Company's common shares have traded on the Toronto Stock Exchange under the symbol TRE since 1995.

Please note: This press release contains projections and forward-looking statements regarding future events. Such forward-looking statements are not guarantees of future performance of the Company and are subject to risks and uncertainties that could cause actual results and company plans and objectives to differ materially from those expressed in the forward-looking statements. Such risks and uncertainties include, but not limited to, changes in China and international economies; changes in currency exchange rates; changes in worldwide demand for the Company's products; changes in worldwide production and production capacity in the forest products industry; competitive pricing pressures for the Company's products and changes in wood and timber costs.

This announcement is subject to offer and distribution restrictions in, among other countries, the United States, the People's Republic of China, the Republic of Italy, Belgium, Canada, the European Economic Area, France, Germany, Hong Kong, Switzerland, the United Kingdom and Singapore.

This announcement does not constitute an offer of securities for sale in any jurisdiction in or from which, or to any person to whom, it is unlawful to make such offer or invitation under applicable laws. The distribution of this announcement in certain jurisdictions may be restricted by law. Persons into whose possession this announcement comes are required by each of the Company and the dealer manager and solicitation agent to inform themselves about, and to observe, any such restrictions.

SOURCE Sino-Forest Corporation

For further information: For further information: SINO-FOREST CORPORATION, Toronto, Dave Horsley - Senior Vice President & Chief Financial Officer, Tel: (905) 281-8889, Email: davehorsley@sinoforest.com; Hong Kong, Louisa Wong - Senior Manager, Investor Communications & Relations, Tel: +852 2514 2109, Email: louisa-wong@sinoforest.com

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Sino-Forest Corporation

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