Hogan Lovells Advises on Landmark Multi-Jurisdiction US$1.8 Billion Bond Restructuring of Sino-Forest Corporation
01 February 2013
HONG KONG, 1 February 2013 - Hogan Lovells advised the members of the ad-hoc committee of bondholders of Sino-Forest Corporation (Sino-Forest) and the newly formed entity Emerald Plantation Group Limited (NewCo) on the implementation of a Plan of Compromise and Reorganization (the Plan) which was overwhelmingly approved by the creditors and the Ontario Superior Court of Justice.
Sino-Forest is a forestry company with assets primarily in the People's Republic of China. Following allegations made in June 2011 by Muddy Waters that the group had fraudulently overstated assets, it defaulted on obligations under its bonds and sought insolvency protection under the Canadian CCAA process to enable it to pursue a restructuring. Prior to the restructuring and allegations, Sino-Forest had a market capitalization of over US$5 billion in addition to the US$1.8 billion of notes.
Under the Plan, Sino-Forest transferred substantially all of its assets to NewCo which is owned by the affected creditors of Sino-Forest in exchange for a release of the claims of the affected creditors against Sino-Forest and its subsidiaries with shareholders in Sino-Forest having no ongoing interest in the restructured group. The affected creditors also received certain new notes issued by NewCo and interests in a litigation trust which holds certain litigation claims of Sino-Forest against third-parties.
As a result of the Plan, NewCo acquired indirectly approximately 66.6% of the issued shares in Greenheart Group Limited ("Greenheart") (an indirect Hong Kong listed subsidiary of Sino-Forest). As a result, a mandatory general offer was triggered under the Takeover's Code as a result of the application of the chain principle. As a result NewCo was required to make an unconditional mandatory general cash offer to acquire all the remaining issued shares in Greenheart.
The Hogan Lovells team was led by Hong Kong-based partner Neil McDonald supported by a number of different offices and practice areas. Other lawyers involved include Hong Kong finance advice from Allan Wardrop, Stuart Tait, Shantay Cong and Derrick Lau; Hong Kong corporate and commercial advice from Tim Fletcher, Charles Butcher and Kitty Lam; US law advice from Chris Winckler, David Cohn and Greg Hafkin; tax advice from Jason Kaplan and Roberta Chang; and PRC corporate and commercial advice from Roy Zou and Hongjie Gao.