Sino-Forest files supplement; eyes Jan. 15 restructuring completion

By Caroline Salls

Pittsburgh, Nov. 21 - Sino-Forest Corp. has filed a supplement to its amended plan of compromise and reorganization with the Ontario Superior Court of Justice, according to a company news release.

As previously reported, the amended plan calls for a restructuring transaction under which Sino-Forest would transfer substantially all of its assets to a newly formed entity to be owned by the company's affected creditors.

The affected creditors' class includes Sino-Forest's current noteholders and some other creditors. It excludes unaffected claims, equity claims, related indemnity claims, subsidiary intercompany claims and specified other claims.

The company said the assets transferred to the new company would include all of the shares of directly owned subsidiaries that own all of Sino-Forest's business operations, including Greenheart Group Ltd.

The transferred assets would not include specified litigation claims. Those claims would be transferred to a litigation trust.

According to the release, the plan supplement includes:

• A summary of the terms of the litigation trust;

• A draft copy of the litigation trust agreement;

• A summary of information related to the new company, including information about its governance and a summary of the terms of the shares and notes to be issued to affected creditors;

• A summary of the constitution and governance of SFC Escrow Co., which will hold some of the new company shares and notes in escrow pending resolution of unresolved claims, information about reserves and other amounts related to the amended plan; and

• A draft of the proposed plan sanction and approval order.

Creditor meeting

Sino-Forest said it intends to hold a meeting of creditors in connection with the amended plan on Nov. 29.

The company said the amended plan must be approved by a majority in number of affected creditors with proven claims and two-thirds in value of the proven claims held by the affected claims.

The plan is also subject to court approval and to receipt of any necessary regulatory approvals.

If required approvals are received within the expected time frames, Sino-Forest said it intends to complete the restructuring transactions by Jan. 15.

Equity claims appeal

On Oct. 10, the Ontario Court of Appeal granted leave to some parties involved in Sino-Forest's Companies' Creditors Arrangement Act proceedings to appeal a decision on an equity claims motion, the release said.

The affected creditors meeting cannot be held until after the appeals court releases its decision on appeal. A hearing on the appeal was held on Nov. 13.

Sino-Forest said the appeal decision is expected to be issued before the meeting, but there is no guarantee that it will be. The company also said the appeals court's decision can be further appealed.

Toronto-based Sino-Forest is a commercial forest plantation operator in China.

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