TORONTO, March 23, 2011 /PRNewswire-FirstCall/ - Sino-Forest Corporation ("Sino-Forest") (TSX: TRE), a leading commercial forest plantation operator in China, today announced that its wholly-owned subsidiary, Sino-Panel (China) Investments Limited ("Sino-Panel"), has officially accepted a 15-Year Term Loan Facility (the "Facility") offered by the China Development Bank Corporation Guangdong Branch ("CDB"), pursuant to which CDB will provide a RMB350 million (approximately US$50 million) loan facility to Sino-Panel. The US$50 million, 15-Year Term Loan Facility will be used for land lease pre-payments to fund Sino-Forest's long-term planting program.
The loan will be based on the PRC market floating interest rate, which is currently 6.6% per annum for a period of five years or longer. Sino-Forest will draw down funds in tranches over a five-year period. As this loan is from a PRC policy bank to a company in China's forestry sector, Sino-Forest expects to receive an interest rate subsidy of approximately 2% per annum subject to approval.
In July 2010, Sino-Panel signed a Co-operative Framework Agreement with CDB that would allow project financing of up to RMB10 billion (US$1.5 billion) to support Sino-Forest and its subsidiaries' operations, including Greenheart Group, domestically and internationally. Furthermore, in the third quarter of 2010, Sino-Forest announced plans to plant 200,000 hectares by 2012 with its scientifically advanced seedlings. The Facility will partially fund the company's planting program.
The Governor of China Development Bank (Guangdong Branch), Mr. Wu De Li said, "We are very pleased to cooperate with Sino-Forest, and we anticipate this first Facility will accelerate and expand our cooperation further both domestically and internationally, and with its subsidiary."
China Development Bank is one of the three Chinese policy banks, administered by the PRC's State Council, with assets of RMB4.94 trillion (approximately US$740 billion) as of September 2010. The strategic focuses of CDB are to support China's basic and pillar industries, promote coordination of China's regional development and facilitate the development of China's new rural communities.
Sino-Forest Chairman and CEO Allen Chan said, "We are very pleased to commence our first cooperation with CDB, an important financing partner as its strategy aligns with Sino-Forest's replanting and regional development plan. The signing of the CDB framework agreement has opened many doors for potential onshore Renminbi financing for Sino-Forest and we appreciate the cost-competitive interest rates and extended terms offered by Chinese domestic financial institutions."
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 forest plantation, 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 (HKSE: 00094) with operations based in Suriname, South America and New Zealand, which is involved in responsible and sustainable log harvesting, lumber processing and sales and marketing of logs and lumber products to China and other countries 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.
Please note: This press release contains projections and forward-looking statements regarding future events. Such forward-looking statements are not guarantees of future performance of the Company and are subject to risks and uncertainties that could cause actual results and company plans and objectives to differ materially from those expressed in the forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in China's and international economies and in currency exchange rates; changes in market supply and demand for the Company's products, including global production capacity and wood product imports into China; changes in China's political and forestry policies; changes in climatic conditions affecting the growth of the Company's trees; competitive pricing pressures for the Company's products; and changes in wood acquisition and operating costs.
SOURCE Sino-Forest Corporation