TORONTO, Dec. 18, 2011 /PRNewswire via COMTEX/ —
Sino-Forest Corporation (“Sino-Forest” or
the “Company”) today announced that it has received written
notices of default dated December 16, 2011 in respect of its Senior
Notes due 2014 and its Senior Notes due 2017. The notices, which were
sent by the Trustee under the Senior Note Indentures, reference the
Company’s previously disclosed failure to release its 2011 third
quarter financial results (the “Q3 Results”) on a timely basis. An
“Event of Default” under the Senior Note Indentures will have occurred
if the Company fails to cure or otherwise fails to address the breach
of indenture giving rise to the notices of default within 30 days
following receipt of the notices. The Company does not expect to be
able to file the Q3 Results and cure the default within the 30 day cure
period.

The Company and its advisors met on December 14, 2011 with an ad hoc
committee of note holders and their legal counsel. The Company was
informed by the ad hoc committee’s legal counsel that the note holders
attending and others represented at the meeting by legal counsel hold a
substantial portion of the Company’s four series of senior and
convertible notes. As there is no registry of beneficial holders for
the notes, the Company cannot independently verify the holdings of
those who attended or were represented by counsel. The note holders
and their legal counsel expressed a willingness to work cooperatively
with the Company in an effort to preserve value for the benefit of the
Company’s stakeholders. The Company has since been informed that the
note holders present at the meeting or represented by counsel did not
initiate or support the issuance of the notices of default that the
Company has received from the Trustee.

The Company’s breach of the Senior Note Indentures relating to the Q3
Results can be waived for a series of Senior Notes by the holders of at
least a majority in principal amount of that series. The Company has
begun discussions with its note holders with a view to obtaining
waivers under the two relevant series of Senior Notes or with a view to
having the Trustee withdraw the notices of default. There can be no
assurance that the notices of default will be withdrawn or that any
such waivers will be obtained.

If the notices are not withdrawn and the required waivers are not
obtained within the 30 day cure period, and the Q3 Results are not
filed within the 30 day cure period, an Event of Default will have
occurred under each series of Senior Notes. Under the Senior Note
Indentures, if such an Event of Default occurs and is continuing, the
Trustee or the holders of at least 25% in aggregate principal amount of
a series of Senior Notes may by written notice declare the principal
of, premium, if any, and accrued and unpaid interest on that series of
Senior Notes to be immediately due and payable. Upon a declaration of
acceleration, such amount would become immediately due and payable.
Also, the trustee under the Senior Note Indentures may pursue any
available remedy to collect the payment of principal of and interest on
the Senior Notes or to enforce the performance of any provision of the
Senior Notes or the Senior Note Indentures. In addition, the trustee
under the Senior Note Indentures may instruct the “Security Trustee” to
foreclose on the collateral pledged by the Company and its affiliates
in respect of the Senior Notes.

As the Company has previously disclosed, the Board has determined that
it must consider all strategic options available to the Company. Those
options may include the recapitalization of the company, the sale of
some or all of its business or assets, as well as creditor-protection
or other insolvency-related proceedings in jurisdictions in which the
Company and its subsidiaries carry on business.

On December 16, 2011 the Board of Directors established a Special
Restructuring Committee of the Board, comprised exclusively of
directors independent of management of the Company, for the purpose of
supervising, analyzing and managing the strategic options available to
the Company. The members of the Committee are Mr. William Ardell,
Chair of the Board of Directors, who will be Chair of the Committee,
and Mr. Garry West.

The Company has commenced discussions with its stakeholders, and the
success of these discussions will be a key element in determining the
future of the Company and the courses of action available to it.

The aggregate amount of principal owing under the four series of
outstanding senior and convertible notes is approximately US $1.8
billion. In addition to its outstanding senior and convertible notes,
as of September 30, 2011, the Company has loan facilities in China
totaling US $70.5 million (unaudited).

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 with assets in Suriname (South America) and New Zealand and
involved in sustainable harvesting, processing and sales of its logs
and lumber to China and other markets 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 .

Cautionary notes: No stock exchange or regulatory authority has approved
or disapproved of information contained herein. Certain information
included in this news release is forward-looking and is subject to
important risks and uncertainties. When used in this news release, the
words “believe”, “intend”, “estimate”, “expect”, “plan”, “consider”,
“may”, and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain such
words. These forward-looking statements are based on current
expectations. The results or events predicted in these statements may
differ materially from actual results or events and are no guarantees
of future performance of Sino-Forest. Factors which could cause results
or events to differ from current expectations include, among other
things: our ability to cure our default under our notes, actions taken
by note holders, other lenders, other creditors, shareholders,
regulators, governmental agencies and other stakeholders to enforce
their rights, the outcome of examinations currently underway by the
Independent Committee and securities regulatory authorities, the
outcome of class action proceedings initiated against the Company as a
result of allegations made in the ‘report’ issued by Muddy Waters LLC,
our reliance on key employees, our ability to acquire rights to
additional standing timber, our ability to meet our expected plantation
yields, the cyclical nature of the forest products industry and price
fluctuation in and the demand and supply of logs, our 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, our ability to operate our
production facilities on a profitable basis, changes in currency
exchange rates and interest rates, the evaluation of our provision for
income and related taxes, economic, political and social conditions and
government policy in China, the Republic of Suriname and New Zealand,
and stock market volatility, and other factors not currently viewed as
material that could cause actual results to differ materially from
those described in the forwarding-looking statements. For additional
information with respect to certain of these and other factors, see the
reports filed by Sino-Forest Corporation with applicable Canadian
securities administrators. 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

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