Sino-Forest Announces Filing of Plan Supplement to Amended Plan of Compromise and Reorganization

TORONTO, Nov. 21, 2012 /CNW/ - Sino-Forest Corporation ("Sino-Forest" or the "Company") today announced that, in connection with its previously announced creditor protection proceedings under the Companies' Creditors Arrangement Act (Canada) (the "CCAA"), it has filed with the Ontario Superior Court of Justice (the "Court") a supplement (the "Plan Supplement") to the Amended Plan of Compromise and Reorganization concerning Sino-Forest filed with the Court on October 23, 2012 (the "Amended Plan").

As previously announced, the Amended Plan provides for a restructuring transaction (the "Restructuring Transaction") under which Sino-Forest would transfer substantially all of its assets, other than certain excluded assets, to a newly formed entity ("Newco") to be owned by the "Affected Creditors" of Sino-Forest.  The class of Affected Creditors includes Sino-Forest's current noteholders and certain other creditors of Sino-Forest, and excludes unaffected claims, equity claims, related indemnity claims, subsidiary intercompany claims, and certain other claims.  The assets transferred to Newco pursuant to the Restructuring Transaction would include all of the shares of the Company's directly owned subsidiaries which own, directly or indirectly, all of the business operations of the Company including Greenheart Group Limited.  The assets transferred to Newco would not include, among other things, certain litigation claims of the Company against third parties which would be transferred to a litigation trust (the "Litigation Trust") to be established to pursue such claims on behalf of the Affected Creditors and certain other stakeholders, and cash to fund the Litigation Trust.

The Plan Supplement includes additional information regarding the Amended Plan, including: (A) a summary of the terms of the Litigation Trust, (B) a draft copy of the Litigation Trust agreement, (C) a summary of certain information concerning Newco, including information relating to Newco's governance and a summary of the terms of the Newco shares to be issued to Affected Creditors upon implementation of the Amended Plan, (D) a description of the terms of the Newco notes to be issued to Affected Creditors upon implementation of the Amended Plan, (E) a summary of the constitution and governance of SFC Escrow Co., which will hold certain Newco shares and Newco notes in escrow pending resolution of certain unresolved claims in accordance with the Amended Plan, (F) information concerning certain reserves and other amounts relating to the Amended Plan, and (G) a draft of the order that the Company intends to submit to the Court providing for the sanction and approval of the Amended Plan.

Sino-Forest intends to hold a meeting of creditors in respect of the Amended Plan on November 29, 2012 (the "Meeting").  Further information concerning the Meeting and the Amended Plan is available in the meeting information statement concerning the Amended Plan that was mailed to creditors on October 24, 2012 (the "Information Statement").

In order to be effective, 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 Creditors, in each case who vote (in person or by proxy) on the Amended Plan at the meeting of Affected Creditors.  The Amended Plan is also subject to the approval of the Court and to numerous conditions precedent, as well as receipt of any necessary regulatory approvals.  If requisite approvals are received within the time frames anticipated, Sino-Forest intends to complete the Restructuring Transaction not later than January 15, 2013.

This press release summarizes only certain terms of the Amended Plan and the Plan Supplement and does not, and is not intended to, contain a description of all of the material terms of the Amended Plan and the Plan Supplement.  A full copy of the Amended Plan, the Plan Supplement and the Information Statement for the Meeting is available on the Monitor's website at http://cfcanada.fticonsulting.com/sfc, the Company's website at www.sinoforest.com, and on SEDAR at www.sedar.com.  Affected Creditors should periodically check the Monitor's website at http://cfcanada.fticonsulting.com/sfc for additional reports of the Monitor and any updates or amendments to the Amended Plan, the Plan Supplement or the Information Statement that may arise between mailing of the Plan Supplement and the Meeting.

On October 10, 2012, the Ontario Court of Appeal granted leave to certain parties involved in the CCAA proceedings to appeal the Court's decision on an "equity claims" motion. The Ontario Court of Appeal directed that, while the Meeting could be scheduled and Meeting materials distributed, the Meeting not be held until after the Ontario Court of Appeal releases its decision on appeal. The appeal was heard on November 13, 2012. While it is expected that the Ontario Court of Appeal will issue its decision prior to the Meeting, there can be no assurance that this will in fact occur. In addition, the Ontario Court of Appeal's decision may be further appealed, and any such appeals could impact the timing of the Meeting. For these reasons, it is possible that the Meeting may be postponed. In addition, there may be amendments to the Amended Plan and the Plan Supplement resulting from the Ontario Court of Appeal's decision or the decision on any appeal from that decision.

Sino-Forest continues to be subject to a cease trade order of the Ontario Securities Commission which prohibits trading in Sino-Forest's securities. Sino-Forest obtained a variation of the cease trade order to allow implementation of the Amended Plan, subject to certain conditions. Sino-Forest has also applied to the Ontario Securities Commission and other provincial securities regulators for a decision that Sino-Forest is not a reporting issuer effective as of the implementation date of the Amended Plan. If granted, that decision would result in Sino-Forest and Newco not being reporting issuers in Ontario or any other province in Canada following the implementation date of the Amended Plan.

This news release contains forward-looking information within the meaning of applicable securities laws ("forward-looking statements"), including forward-looking statements relating to: Sino-Forest's expectations with respect to timing of the meeting of Affected Creditors to consider the Amended Plan; and the Company's expectations regarding the proposed Amended Plan involving the Company and the expected terms of, treatment of claims under and consideration payable pursuant to such Amended Plan. The forward looking statements expressed or implied by this news release are subject to important risks and uncertainties. When used in this news release, the words "intends", "may", "will, "would", "expected", and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. Forward-looking statements are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate in the circumstances. The results or events predicted in these statements may differ materially from actual results or events and are not guarantees of future performance of Sino-Forest. Factors which could cause results or events to differ from current expectations include, among other things: Sino-Forest's ability to complete the Amended Plan in the time period contemplated, if at all, which is dependent on its ability to comply with the closing conditions to the Amended Plan, many of which are significant and beyond the control of Sino-Forest, including the approval of the Court, the Company's creditors and securities and other regulatory authorities; the outcome of the appeal of the "equity claims" motion; orders of the Court in the CCAA proceedings; actions taken against the Company by governmental agencies and securities and other regulators; actions taken by the Company's noteholders, lenders, creditors, shareholders, and other stakeholders to enforce their rights; actions taken by the Monitor; the outcome of examinations and proceedings currently underway by law enforcement and securities regulatory authorities; the outcome of class action or other proceedings which have been or may in future be initiated against the Company; the Company's ability to continue to operate without former senior management, almost all of whom have ceased to employed by the Company; the Company's ability to acquire rights to additional standing timber; the Company's ability to meet its expected plantation yields; the cyclical nature of the forest products industry and price fluctuation in and the demand and supply of logs; the Company's reliance on the relationship with local plantation land owners and/or plantation land use rights holders, authorized intermediaries, key customers, suppliers and third party service providers; the Company's ability to operate its production facilities on a profitable basis; changes in currency exchange rates and interest rates; the evaluation of the Company's provision for income and related taxes; economic, political and social conditions and government policy in the People's Republic of China, the Republic  of Suriname and New Zealand; and other factors not currently viewed as material that could cause actual results to differ materially from those described in the forwarding-looking statements. Sino-Forest Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

SOURCE: Sino-Forest Corporation