Sino-Forest to Raise US$200 million in Strategic Placement; Sino-Forest to Acquire 200,000 hectares of Standing Timber in Yunnan Province

    TORONTO, March 23 /CNW/ - Sino-Forest Corporation ("Sino-Forest")
(TSX:TRE and TRE.S), a leading commercial forestry plantation operator in
China, today announced that it has entered into an agreement to sell
approximately 26 million common shares, which will represent approximately 16%
of the diluted total shares outstanding, to several institutional investors
including Temasek Holdings and United Capital Investments Group (UCI). Temasek
Holdings, an Asia investment firm headquartered in Singapore will be
subscribing for approximately 85% of the offering. The offering is for gross
proceeds of US$200 million at a price of Cdn$9.15 per share, which represents
a discount of approximately 9% to the volume-weighted market price over the
past 30 days. The proceeds will be used for the acquisition of standing timber
(including pursuant to the Yunnan agreement described below), for the
acquisition or construction of related processing facilities in the regions,
and for working capital.
    Upon completion of the offering, the subscribers will be entitled to
nominate a member to the Board of Directors of Sino-Forest. Certain senior
members of Sino-Forest's management will agree with the subscribers to
restrict their ability to dispose of securities of Sino-Forest for a one-year
period, while the restriction on the CEO and Chairman of Sino-Forest will
extend for a two-year period; each of these members of management will forfeit
50% of their securities if, in certain circumstances, such person ceases to be
employees prior to the end of the restricted period. The subscribers have each
agreed to a six-month lock up period on the shares acquired under the
    In addition, Sino-Panel (Asia) Inc. ("Sino-Panel"), a wholly-owned
subsidiary of Sino-Forest, has today entered into an agreement with Gengma Dai
and Wa Tribes Autonomous Region Forestry Company Ltd., ("Gengma Forestry")
established in Lincang City, Yunnan Province in the People's Republic of China
("PRC") (the "Agreement"), under which Sino-Panel will acquire approximately
200,000 hectares of non-state owned commercial standing timber in Lincang City
and surrounding cities in Yunnan Province for approximately RMB5.5 to 11
billion or approximately US$0.7 to 1.4 billion over a 10-year period. The
purchase price is not to exceed RMB260 or approximately US$33.6 per cubic
metre (m3). The number of hectares to be acquired each year will be determined
by Sino-Panel's PRC subsidiaries by entering into specific purchase agreements
with Gengma Forestry. The Agreement also provides Sino-Forest with the rights
of first refusal to lease the land for 50 years after harvesting. The final
terms of the lease are to be further negotiated with Gengma Forestry.
    The area of acquisition in Lincang City and surrounding cities in Yunnan
Province contains mature species of pine, oak, birch and other broadleaved
shaw with an estimated fibre yield of 105 to 210 m3 per hectare or
approximately 21 to 42 million m3 of wood fibre in total. The funding of the
acquisition will be provided by the proceeds raised and future cash flow
generated from operating in Yunnan Province. The economics of the Yunnan
agreement are similar to those of the Hunan agreement announced in 2006.
    "This placement brings in a new, strategic investor with significant
investments in the PRC. The US$200 million raised together with the Yunnan
agreement will allow us to commit and execute our long-term sustainable
forestry programme," said Allen Chan, Chairman and CEO of Sino-Forest.
    Mr. Chan continued, "The operating model in Yunnan would be similar to
the one in Hunan where we will harvest, re-plant, or, re-generate secondary
forest to conserve bio-diversity, and to develop value-added processing
facilities by maximising the value of the wood fibre. It will also bring
sustained economic benefits to local communities."
    Yunnan Province is located in the southwest region of China and shares a
border of 4,060 km with Myanmar to the west, Laos to the south, and Vietnam to
the southeast and hence, has a tropical climate. Yunnan abounds in natural
resources and diverse plants and species. The province has a forest area of 24
million hectares, with standing timber covering 15.6 million hectares of
forested land.

    About Sino-Forest Corporation

    Sino-Forest Corporation, a Canadian company, is a leading commercial
forestry plantations operator in China. The company started its operations in
1994 and is the first foreign and privately managed operator involved in
forest products in China. Its principal businesses include the ownership and
management of forestry plantation trees and sales of standing timber, wood
chips and logs, and complementary manufacturing of downstream engineered-wood
products. The Corporation's common shares trade on the Toronto Stock Exchange
under the symbol TRE since 1995.

    Please note: The Renminbi currency is translated at an exchange rate of
RMB7.73 to US$1.00. 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.

For further information:

For further information: Toronto: Dave Horsley, Senior Vice President &
Chief Financial Officer, Tel: (905) 281-8889, Email:; Hong Kong: Louisa Wong, Manager, Investor
Communications & Relations, Tel: +852 2514 2109, Email:

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