Sino-Forest shareholder calls for board shake-up

Thu Dec 15, 2011 5:32pm EST
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By Euan Rocha

Toronto (Reuters) - Richard Chandler Corp, the largest shareholder in Sino-Forest, called on Thursday for a board shake-up, saying directors are taking too long to clear the China-focused forestry company of fraud allegations.

RCC, a Singapore-based investment firm that owns nearly 20 percent of Sino through its Mandolin Fund, slammed the board on Wednesday for its decision to trigger a debt default and called on Sino to reconsider.

Separately, Davis Advisors, another major shareholder, released an open letter asking the Sino board to reconsider its actions.

"We are unable to reconcile your actions with your fiduciary duty to represent the interests of shareholders," said the letter.

Davis said it owns more than 17 percent of the company's outstanding shares on behalf of its clients, making it Sino's second largest shareholder.

Sino-Forest, until a few months ago the largest listed forestry company on the Toronto Stock Exchange, has been reeling since June, when short-seller Carson Block and his firm Muddy Waters accused it of exaggerating the extent of its Chinese assets.

Earlier this week, the company said it would again delay reporting its financial results, putting it in breach of debt covenants. Given the circumstances, Sino said its board has decided not to make interest payments due on December 15, raising the prospect of insolvency proceedings.

That decision came a few weeks after Sino said a preliminary investigation by its independent directors had shown no evidence of fraud.   Continued...