Richard Chandler Corporation Sees New Future for Sino-Forest if Governance Improved
SINGAPORE, December 15, 2011 /PRNewswire/ --
- Richard Chandler Corporation Expresses Concern About the Sino-Forest Board's Ability to Address Governance and Operational Challenges and Calls for New Directors
Richard Chandler Corporation is the largest shareholder in Chinese forestry company Sino-Forest. Over the past six months customers, employees, shareholders and bondholders have demonstrated great patience as Sino-Forest has sought to comprehensively address the allegations by Muddy Waters. The Board has spent almost US$40 million to confirm the company's assets and operations. During this time, the Board has communicated infrequently with stakeholders.
The Richard Chandler Corporation is concerned about the excessive time and money spent by the Board on the investigation, the weak internal controls acknowledged by management, the unexplained delay to the 3Q 2011 results, the delay of the final Independent Committee (IC) report and non-payment of the bond interest (despite having the funds). We call on the Board to reverse its decision on the bond interest payment. All these issues raise serious concerns about the Board's ability to fulfil its responsibilities to stakeholders.
Sino-Forest has generated profitable growth since 1994. The Richard Chandler Corporation continues to have confidence in the underlying business of Sino-Forest. Based on the IC's findings to date, Sino-Forest is a going concern, with real assets and a strong balance sheet. However, the interim IC Report reveals that Sino-Forest's internal processes, record keeping and breadth of management team have not kept pace with the growth of its operations.
The Richard Chandler Corporation believes that credibility in Sino-Forest can be restored by aligning management capabilities and governance policies with the scale and growth potential of this exciting business. Sino-Forest urgently requires strong leadership to address structural challenges and implement strong processes and internal controls. The Richard Chandler Corporation calls upon Sino-Forest to appoint new board members with appropriate experience to drive the changes that are necessary.
Alan Kelly, Senior Advisor to the Richard Chandler Corporation said: "With the introduction of a new leadership and discipline, Sino-Forest can become one of the world's leading sustainable forestry companies and a Chinese national champion. New leadership with a robust plan based upon the principles of integrity, transparency and accountability will set new governance standards. Such actions are urgently required to meet the company's responsibilities to shareholders, bondholders and employees. Sino-Forest has great potential and there are many people who believe in the company. They aspire to be supporters of, and partners in, a sustainable, transparent, ethical long term business".
The Richard Chandler Corporation is committed to develop a plan to help Sino-Forest build value for all stakeholders.
Key elements of the Sino-Forest Recovery Plan will include:
- Strong leadership through new directors on the board implementing a robust governance program
- Meeting all bondholder interest obligations promptly
- Finalising outstanding issues of the Independent Committee investigation
- Releasing timely financial statements
- Appointing a new CEO with a clear mandate to strengthen internal controls and business processes
- Addressing the challenges relating to the BVI structures and AI business model
- Communicating regularly with shareholders, bondholders and regulators
- Resolving Ontario Securities Commission concerns with a view to lifting the cease trade order
- Presenting a new business plan to stakeholders which incorporates a conservative and balanced growth and financing plan
As Sino-Forest's largest shareholder, the Richard Chandler Corporation requests that any current director of Sino-Forest who is preoccupied with issues of personal legal liability arising from the Muddy Waters allegations step down so that the Recovery Plan may be executed quickly. Any actions by directors, such as the non-payment of bonds, which compromises the going concern capability of Sino-Forest will potentially lead to shareholder actions for negligence.
"Sino-Forest has the potential to be a great company. With shareholders, bondholders, employees and regulators working together, we can turn this potential into reality. Our goal is to make Sino-Forest a benchmark for corporate excellence and integrity so that it can continue its development as one of China's leading resource-based corporations", said Alan Kelly.
About the Richard Chandler Corporation
The Richard Chandler Corporation is a private investment group based in Singapore and founded by New Zealand-born entrepreneur Richard F. Chandler. The Richard Chandler Corporation's mission, Building Prosperity for Tomorrow's World, adopts a holistic approach to building sustainable prosperity through investments in financial and social enterprises. Since 1986, the Richard Chandler Corporation has provided capital to companies and governments from Asia and Africa to Latin America and Eastern Europe, and invested in a wide range of industries, such as telecoms, power, steel, banking and energy.
For more information, please visit: http://www.richardchandler.com
For media enquiries please contact:
Richard Barton
Kreab Gavin Anderson
Tel: +852-2523-7189
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E-mail: rbarton@kreabgavinanderson.com
SOURCE The Richard Chandler Corporation
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