June 20, 2011

TORONTO, June 20, 2011 /PRNewswire/ - Sino-Forest Corporation (TSX: TRE) (“Sino-Forest” or the “Company”), a
leading commercial forest plantation operator in China, today made the
following statement in response to the incorrect portrayal of its
business provided by The Globe and Mail in an article published on
Saturday, June 18th.

At the heart of The Globe and Mail’s article is the assertion that there
is a discrepancy between the Company’s public disclosure regarding its
2007 Master Agreement with Gengma Dai and Wa Tribes Autonomous County
Forestry Limited (“Gengma Dai and Wa”) for the purchase of plantations
in the province of Yunnan (the “Master Agreement” – filed in the
dataroom on the Company’s website), acquisitions made under it, and the
description of the Master Agreement and related acquisitions that was
apparently provided by Gengma Dai and Wa to The Globe and Mail. There
is no discrepancy.

The Chairman of Gengma Dai and Wa, Mr. Xie Hongting, was introduced by
Sino-Forest to The Globe and Mail in an open attempt to address some of
its many questions. After the interview with Mr. Xie, the Company had
its own background interview with The Globe and Mail, during which it
became clear there were some factual misunderstandings regarding the
Company’s ownership of trees in Yunnan. The Company informed The Globe
and Mail that Mr. Xie would clarify the relationship between both
parties. However, The Globe and Mail chose not to wait for Gengma Dai
and Wa’s complete description of its relationship with Sino-Forest.

The Company has provided the following status update with respect to its
Yunnan tree ownership resulting from the Master Agreement entered into
with Gengma Dai and Wa in 2007:

        --  Sino-Forest entered into the first Yunnan Master Agreement in
            2007 (filed in the dataroom on the Company's website). The
            Master Agreement had a target to acquire 'approximately'
            200,000 hectares (3 million mu - mu being the common Chinese
            unit of land measurement that is equivalent to 1/15th of a
            hectare) of standing timber. The Master Agreement does not
            specify a maximum amount of standing timber to be acquired
            under the Agreement (the phrase "up to" in The Globe and Mail
            article is inaccurate and not a reflection of the Company's
            public disclosures on this matter). As per Sino-Forest's 2010
            Annual Information Form, the Company had acquired 190,300
            hectares (2.855 million mu) under the Master Agreement and
            retained holdings of 186,700 hectares (2.8 million mu) as at
            December 31, 2010. As per the Management's Discussion and
            Analysis (MD&A) that accompanied the financial statements for
            the first quarter 2011, the Company had acquired approximately
            a total of 230,200 hectares (3.453 million mu) under the Master
            Agreement as of March 31, 2011.
        --  In 2007, through its subsidiaries, the Company entered into
            specific agreements to acquire standing timber and land use
            rights on 12,667 hectares (190,000 mu) of Gengma Dai and Wa's
            land in Lincang City, Yunnan Province. A sample of these
            agreements have previously been published on the Company's
        --  Subsequent to that initial sale, Gengma Dai and Wa has sold
            approximately 34,667 hectares (520,000 mu) of standing timber
            located in Lincang City, Yunnan Province to subsidiaries of the
            Company. Of this amount approximately 12,000 hectares (180,000
            mu) was standing timber owned by Gengma Dai and Wa, and
            approximately 22,667 hectares (340,000 mu) was standing timber
            sold to the Company by others. Gengma Dai and Wa acted as a
            purchasing agent in those transactions, by arranging the sales
            of bundles of standing timber parcels to the Company and its
            subsidiaries by the owners of such standing timber.
        --  In addition, Gengma Dai and Wa has acted as the Company's
            purchasing agent, under the Master Agreement, for the purchase
            of other standing timber elsewhere in Yunnan Province, beyond
            Lincang City, totalling approximately 182,867 hectares (2.743
            million mu).
        --  As a result, in total under the Master Agreement, the Company
            through its subsidiaries has acquired standing timber of
            182,867 hectares (2.743 million mu), plus 34,667 hectares
            (520,000 mu) and 12,667 hectares (190,000 mu), for a total of
            approximately 230,200 hectares, or approximately 3.453 million
        --  Gengma Dai and Wa is currently continuing to work with the
            Company on further purchases in Lincang City, Yunnan Province.

This breakdown is completely consistent with the Company’s public
disclosure of its total acquisitions of standing timber hectares in
Yunnan Province in its first quarter 2011 MD&A of 230,200 hectares
(3.453 million mu) acquired pursuant to the Yunnan Master Agreement and
is also consistent with the comments of Mr. Xie of Gengma Dai and Wa to
The Globe and Mail. When asked in the interview how much he has sold to
Sino-Forest, he accurately says he has sold the Company “almost 200,000
mu” (13,333 hectares) which represents land use rights on land provided
by Gengma Dai and Wa and is an approximate total of the Company’s land
lease certificates in Yunnan. In addition, Gengma Dai and Wa has sold
standing timber for a total of another 34,667 hectares (520,000 mu) in
Lincang City both as owner and as agent, and acted as an agent on
another 182,867 hectares (2.743 million mu) elsewhere in Yunnan
Province. For further clarity, the Company attaches Gengma Dai and Wa’s
own statement on this matter which was issued over the weekend, again
consistent with what the Company has set out above. This is the
clarification that the Company asked The Globe and Mail to wait for
prior to publication; however the newspaper chose to publish the
article without all of the facts on June 18th.

The Globe and Mail’s article is further inaccurate in a critical part of
its research. It refers to “Gengma Forestry”, with its “litter-strewn”
office “up a dusty cement staircase” and its office manager Zhang Ling.
Very poetic, but completely irrelevant, because based on the
information that The Globe and Mail provided to the Company, the
Company believes that this is the address of a business known as Gengma
Dai and Wa Autonomous County Forestry Industrial Co., Ltd.
( ). It is a different organization from Gengma Dai and
Wa Tribes Autonomous County Forestry Limited ( ), with
whom Sino-Forest has its Master Agreement, which is based at an
entirely different address. Upon becoming aware of this incorrect
description, the Company provided the correct address for Gengma Dai
and Wa Tribes Autonomous County Forestry Limited to The Globe and Mail.

In addition, in support of its case The Globe and Mail quotes an unnamed
broker who stated that “most of the land with good trees around Gengma
is all sold out.” The scope of the Master Agreement encompasses the
whole of Yunnan Province. For reference, Gengma County represents
approximately 16% of the landmass of Lincang City area and less than 1%
of Yunnan Province as a whole.

Furthermore, regarding The Globe and Mail’s reference to an unnamed
Yunnan Provincial forestry bureau official saying that Sino-Forest
manages far less than 200,000 hectares, as indicated in the Company’s
written response to The Globe and Mail, the provincial level bureau
records land ownership and land lease transactions, but does not separately record sales of standing timber. As publicly disclosed, the
substantial majority of Sino-Forest’s purchases are standing timber. The provincial level forestry bureau will therefore not have full
details of the total area of timber purchases under Sino-Forest’s and
its subsidiaries’ names.

The Company would like to remind investors that most domestic and
multinational companies with significant China exposure, a country with
a rapidly evolving business environment, have structures and operations
that are complex and significantly different from the North American
environment and that can be complex to explain. As, for example, the
distinction between ownership of standing timber and leasing the
underlying land by plantation operators whereas only the State and
farmers-collective “own” the land that exists in China. The Independent
Committee has told the Board that the review and examination being
undertaken by the Independent Committee with the assistance of
PricewaterhouseCoopers (PwC) and its independent legal advisors will
likely take at least two to three months, which is normal for such
processes. The Company fully understands that the pressure for answers
is significant, but stands by its public disclosure and, as far as
possible, asks that investors trust that process, and allow it to be
conducted fully and definitively, not over-judging single articles or
publications that are not produced by persons necessarily familiar with
the forestry business or business practices in China, that might not be
fully sourced or accurate. During the course of the Independent
Committee’s examination, the Board expects it will provide updates from
such process as appropriate. That is precisely why the Company and
Independent Committee need the time to complete the process.

Terms used in this announcement

        --  Mu is a standard unit of land measurement in China and is
            one-fifteenth of a hectare (1 hectare = 15 mu).
        --  Gengma County in Yunnan Province falls within the jurisdiction
            of Lincang City metropolitan area.

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 tree plantations, the sale of standing timber and wood
logs, and the complementary manufacturing of downstream engineered-wood
products. Sino-Forest also holds a majority interest in Greenheart
Group Limited, a Hong Kong-listed investment holding company (HKSE:
00094) with operations based in Suriname, South America and New
Zealand, which is involved in responsible and sustainable log
harvesting, lumber processing and sales and marketing of logs and
lumber products to China and other countries around the world.
Sino-Forest’s common shares have been listed on the Toronto Stock
Exchange under the symbol TRE since 1995. Learn more at www.sinoforest.com.

Forward looking statement disclaimer

This press release contains 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;
risk that the Independent Committee review and examination cannot
fully independently determine the veracity of certain public
allegations made against the Company, competitive pricing pressures for
the Company’s products; and changes in wood acquisition and operating

SOURCE Sino-Forest Corporation

Source: newswire

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