TORONTO, July 5, 2010 /CNW/ - Sino-Forest Corporation ("Sino-Forest") (TSX: TRE), a leading commercial forest plantation operator in China, is pleased to announce that its indirect wholly-owned subsidiary, Sino-Panel (China) Investments Limited ("Sino-Panel"), has entered into a Co-operative Framework Agreement with the China Development Bank Corporation Guangdong Branch ("CDB"), a financial institution set up by the People's Republic of China State Council in 1994 for the purposes of fostering economic development in various industries throughout China.
Pursuant to the terms of the agreement, CDB could provide project financing of up to 10 billion RMB (US$1.5 billion) to support Sino-Panel's projects in China. CDB will also be given the opportunity to act as financial consultant with respect to Sino-Panel's PRC domestic development projects. While Sino-Panel will give priority consideration to utilize various term loan facilities to be provided by CDB, it will continue to have the right to accept financial services from other financial institutions and lenders. Any debt financing provided by CDB would be subject to loan agreements entered into by the parties on mutually agreeable terms.
Sino-Forest Chairman and CEO Allen Chan said, "We are very pleased to enter into this Co-operative Framework Agreement with CDB; it represents an important milestone for Sino-Forest in terms of accessing long-term capital in China and establishing strategic business arrangements with a Chinese policy bank that represents Central Government policy directives. CDB is a very significant domestic source of capital and can become an important strategic financing partner in our future growth plans both domestically and internationally."
Dave Horsley, Sino-Forest's Senior Vice President & Chief Financial Officer, added, "The exchange and extension of our US$212 million guaranteed senior notes last year was supported by our fixed-income investors as Sino-Forest can take advantage of cost-competitive interest rates offered by Chinese domestic financial institutions. Although we have no immediate need for financing at this time and Sino-Forest has a conservatively low debt-to-equity ratio of 0.41 to 1, we are establishing a new banking arrangement that could allow us to better control our long-term cost of capital and maximize value for our shareholders."
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. Sino-Forest's common shares have traded on the Toronto Stock Exchange under the symbol TRE since 1995. Learn more at www.sinoforest.com.
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 are not limited to: changes in China's and international economies and in currency exchange rates; changes in market supply and demand for the Company's products, including global production capacity and wood product imports into China; changes in China's political and forestry policies; changes in climatic conditions affecting the growth of the Company's trees; competitive pricing pressures for the Company's products; and changes in wood acquisition and operating costs.
SOURCE Sino-Forest Corporation
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