There are good times to bury bad news and then there is 4:44am, New York time, on a Sunday, in the middle of the worst hurricane to hit the eastern seaboard in decades.
But as we’ve learned, Sino-Forest is not your average company.
Quick recap: on Friday, the Ontario Securities Commission (OSC), ordered the suspension of trading in Sino-Forest shares on the TSX and the resignation of the firm’s senior management.
And then it figured out it didn’t actually have the power to do the latter without a public hearing.
No scene. Sino-Forest announced on Sunday morning that it’ll do it anyway. Full release below (emphasis ours):
Sino-Forest Announces the Resignation of Allen Chan as Chairman and Chief Executive Officer and his Appointment as Founding Chairman Emeritus
William Ardell, Lead Director and Chairman of the Independent Committee, and Judson Martin, Vice Chairman and Executive Director of the Company, have assumed the roles of the Chairman and CEO, respectively
TORONTO, CANADA – August 28, 2011 – Sino-Forest Corporation (“Sino-Forest” or the “Company”) (TSX:TRE) announced that Allen Chan has voluntarily resigned as Chairman, Chief Executive Officer and Director, pending completion of the review by the Independent Committee of the allegations made by Muddy Waters. The Board has appointed William Ardell, Lead Director and Chairman of the Independent Committee, to the role of Chairman and Judson Martin, Executive Director and Vice-Chairman of the Company, to the role of CEO. Mr. Martin will continue as CEO of Greenheart Group Limited, the Company’s controlled subsidiary listed on the Hong Kong Stock Exchange. Mr. Chan will become Founding Chairman Emeritus of the Company and will be fully available to assist Mr. Martin with operational matters and with the Independent Committee review as requested. Mr. Chan had expressed his willingness to step aside prior to the issuance on the morning of August 26, 2011, of a cease trade order by the Ontario Securities Commission (the “OSC”). David Horsley and Tom Maradin are continuing in their current roles as Chief Financial Officer and Vice President Corporate Finance respectively. The three overriding priorities of the Company are to complete the work of the Independent Committee, to cooperate with the OSC and to preserve shareholder value.
In addition, Sino-Forest has placed three employees on administrative leave, during which they have been relieved of their responsibilities but remain available to assist the Company if required. A fourth senior employee has been requested to act solely on the instructions of Mr. Martin to assist the Company in certain matters relating to the work of the Independent Committee and the continuing operations of the Company’s business. These actions were undertaken by the Company after certain information was uncovered during the course of the Independent Committee’s review, subsequent to the release of the Company’s second quarter financial results, and before the OSC’s cease trade order was issued.
The allegations made in the OSC’s temporary order, while unproven, are of a serious nature. The Independent Committee, assisted by its independent legal counsel in three jurisdictions and its independent accounting advisors, has been engaged in its review process for approximately 10 weeks, and its work continues, including in relation to recent developments. The Company’s business is complex, the scope of the review is significant and there are enormous amounts of data that have been marshalled and are under review. In these circumstances, the Independent Committee has not yet reached any conclusions. The Company has been cooperating with the OSC throughout, including by responding to numerous and extensive information requests and by providing regular periodic briefings. As previously announced, the Independent Committee has indicated that it expects to provide a further interim report within four to six weeks and currently believes that its review process will be completed prior to the Company’s year end.
Trading of the Company’s stock on the Toronto Stock Exchange has been suspended as a result of the OSC’s temporary order. The Company does not believe any default under its Guaranteed Senior Notes or its Convertible Senior Notes has been triggered by these events. It will continue to review the terms of all of its debt and other contractual arrangements.
Related links:
Sino-Forest coverage – FT Alphaville
Sino-Forest says independent review will take longer – FT Tilt