TORONTO - Sino-Forest Corporation ("Sino-Forest" or the "Company") announced today certain personnel changes. The Company also announced today its intention to apply to the court, in the application commenced by the Company under the Companies' Creditors Arrangement Act on March 30, 2012 (the "CCAA Proceeding"), to enhance the powers of the court-appointed Monitor, FTI Consulting Canada Inc.
Sino-Forest announced today that it has terminated the employment of Alfred Hung, Vice President Corporate Planning and Banking of the Company, George Ho, Vice President Finance of the Company and Simon Yeung, Vice President Operations of Sino-Panel (Asia) Inc., a subsidiary of the Company. The Company also announced that Albert Ip, who served as Senior Vice President Development and Operations North East and South West China, prior to his recent resignation, will not serve as a consultant to the Company.
Sino-Forest also announced today that Allen Chan, the Founding Chairman Emeritus of the Company, has voluntarily resigned from the Company and that David Horsley has resigned as the Company's Chief Financial Officer but will continue as an employee of the Company, to assist with the Company's restructuring efforts.
In late August 2011, Messrs. Hung, Ho and Yeung were placed on administrative leave by the Company, and Mr. Ip was requested to act solely on the instructions of W. Judson Martin, the Vice Chairman and Chief Executive Officer of the Company. These actions were taken after certain information was uncovered during the course of the review being undertaken by the Independent Committee of the Board of Directors of the Company, established in response to the allegations made in a "report" prepared by Muddy Waters LLC that was publicly disclosed on June 2, 2011, and immediately before the Ontario Securities Commission issued a temporary cease trade order on August 26, 2011.
On August 28, 2011, the Company announced that Mr. Chan had voluntarily resigned as Chairman, Chief Executive Officer and Director but would continue with the Company as Founding Chairman Emeritus, a non-executive position.
On March 30, 2012, Mr. Ip resigned from the Company for health reasons but had agreed to serve as a consultant to Sino-Forest on a part-time basis.
The information identified in August 2011, did not raise conduct issues in relation to Mr. Horsley. For this reason, no consideration was given to taking employment action against him at that time.
On April 9, 2012, the Company announced that it had received an "Enforcement Notice" on April 5, 2012 from Staff of the Ontario Securities Commission (the "Commission"). The Company also announced that it had learned that Enforcement Notices also were received that day by Messrs. Chan, Ip, Hung, Ho, Yeung and Horsley. As previously disclosed, the Enforcement Notice received by Sino-Forest alleges conduct contrary to ss. 122 and 126.1 of the Ontario Securities Act and raises conduct issues in relation to the Company and in relation to the individuals who also received Enforcement Notices. The Company intends to respond to the Enforcement Notice that it received.
Following review of the Enforcement Notice directed at the Company, further discussions with Staff of the Commission, together with examination of issues identified in the Enforcement Notice received by the Company, the Board of Directors of the Company determined that it was in the best interests of Sino-Forest to terminate the employment of Messrs. Hung, Ho and Yeung and not to enter into a consulting arrangement with Mr. Ip.
Following receipt of the Enforcement Notice, Mr. Chan informed the Board of Directors that he wished to resign as Founding Chairman Emeritus and as an employee of the Company. Mr. Chan has indicated that he remains available to assist with efforts to allow the Company's stakeholders to realize value in relation to assets located in the People's Republic of China.
The Board of Directors believes that the nature of the allegations made against Mr. Horsley in the Enforcement Notice differ substantially from those directed at the other individuals who received Enforcement Notices on April 5, 2012. In these circumstances the Board, having consulted with the Monitor, has determined that it is in the best interests of the Company to retain Mr. Horsley's services while allowing Mr. Horsley to step down from his role as Chief Financial Officer.
Following discussions with the Monitor, the Company intends to forthwith bring an application in the CCAA Proceeding to enhance the powers of the Monitor. Among other things, the enhanced powers will facilitate the Monitor providing additional assistance to the Company in light of the personnel changes identified above.
All inquiries regarding the CCAA Proceeding should be directed to the Monitor, FTI Consulting Canada Inc., via email at: firstname.lastname@example.org, or telephone: (416) 649-8094. Information about the CCAA Proceedings, including copies of all court orders and the Monitor's reports, are available at the Monitor's website http://cfcanada.fticonsulting.com/sfc.
Source: Sino-Forest Corporation
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