TORONTO, June 11 /CNW/ - Sino-Forest Corporation (TSX: TRE), a leading
commercial forest plantation operator in China, announced today that its
wholly-owned subsidiary, Sino-Panel (China) Investments Limited
("Sino-Panel"), has entered into a Master Agreement for the Purchase of Pine
and Chinese Fir Plantation Forests (the "Jiangxi Master Agreement") with
Jiangxi Zhonggan Industrial Development Company Limited ("Jiangxi Zhonggan"),
which will act as the authorized agent for the original plantation rights
Under the Jiangxi Master Agreement, Sino-Panel will, through PRC
subsidiaries of Sino-Forest, acquire between 15 million and 18 million cubic
metres (m(3)) of wood fibre located in plantations in Jiangxi Province over a
three-year period with a price not to exceed RMB300 per m(3), to the extent
permitted under the relevant PRC laws and regulations. The plantations in
which such amount of wood fibre to acquire is between 150,000 and 300,000
hectares to achieve an estimated average wood fibre yield of approximately 100
m(3) per hectare, and include tree species such as pine, Chinese fir and
others. Jiangxi Zhonggan will ensure plantation forests sold to Sino-Panel and
its PRC subsidiaries are non-state-owned, non-natural, commercial plantation
In addition to securing the maximum tree acquisition price, Sino-Panel
has pre-emptive rights to lease the underlying plantation land at a price,
permitted under the relevant PRC laws and regulations, not to exceed RMB450
per hectare per annum for 30 years from the time of harvest. The land lease
can also be extended to 50 years as permitted under PRC laws and regulations.
The specific terms and conditions of purchasing or leasing are to be
determined upon the execution of definitive agreements between the PRC
subsidiaries of Sino-Panel and Jiangxi Zhonggan upon the authorisation of
original plantation rights holders, and subject to the requisite governmental
approval and in compliance with the relevant PRC laws and regulations.
Sino-Forest Chairman and CEO Allen Chan said, "We are fortunate to have
been able to capture and support investment opportunities in China's
developing forestry sector by locking up a large amount of fibre at
competitive prices. The Jiangxi Master Agreement is Sino-Forest's fifth,
long-term, fibre purchase agreement during the past two years. These five
agreements cover a total plantation area of over one million hectares in five
of China's most densely forested provinces."
Mr. Chan added, "Plantation forests in Jiangxi have been generally
underproductive despite favourable tree growing conditions. We are confident
that our 14-year proven track record and our silviculture expertise will allow
us to significantly improve current low wood fibre yield, and improve the
livelihoods of local farmers."
Net proceeds from the recently closed Cdn$380 million bought deal
offering will be used primarily for the acquisition of standing timber in
Jiangxi Province and for general corporate purposes.
Jiangxi Province is located in south-eastern China between Hunan and
Fujian, where Sino-Forest already has significant plantation operations.
Favourable climate and fertile soil in Jiangxi are quite suitable for growing
five to eight years short cycle fast-growing species such as eucalyptus,
poplar, acacia and other species. One of Sino-Forest's core competencies is
growing eucalyptus and other short cycle fast-growing species, and its
scientific silviculture expertise should help Jiangxi's government strive to
achieve its goals of achieving forest coverage of 63% from current 60% with
forest stock volume of 750 million m(3).
About Sino-Forest Corporation
Sino-Forest Corporation (the "Company") 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 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.
For further information:
For further information: SINO-FOREST CORPORATION: Toronto, Dave Horsley
- Senior Vice President & Chief Financial Officer, Tel: (905) 281-8889, Email:
firstname.lastname@example.org; Hong Kong, Louisa Wong - Senior Manager, Investor
Communications & Relations, Tel: +852 2514 2109, Email: