Sino-Forest delays tour of its assets; shares dive
By Euan Rocha and Allison Martell
TORONTO (Reuters) - Embattled Chinese forestry company Sino-Forest said on Wednesday it has postponed a tour of its forestry assets because many analysts have halted coverage of the company.
The value of Sino-Forest shares and bonds collapsed last month after short-seller Muddy Waters accused the company of fraudulently exaggerating the size of its forestry assets.
The company has denied the allegations and appointed an internal committee of its independent directors to investigate the matter. However a full review is expected to take up to three months to complete.
Dundee Capital Markets analyst Richard Kelertas and RBC Capital Markets analyst Paul Quinn, who initially panned the Muddy Waters allegations, later opted to suspend coverage of the company. Other analysts have put their ratings and price targets on Sino-Forest under review.
"Following management's recent conversations with the analyst community who cover Sino-Forest, it has become apparent that many of you have been precluded from resuming coverage of the company and otherwise discussing its affairs publicly until after the independent committee reports," the company said in in a letter announcing the postponement.
The move to postpone the tour doesn't help Sino-Forest's stock, said Barry Schwartz, who is vice president and portfolio manager at Baskin Financial Services in Toronto.
"The company has not done a great job defending itself," he said. "There's too much uncertainty until the auditors come and pick through the company."
Investors reacted negatively to the company's move, driving Sino-Forest's shares down more than 20 percent to C$4.16 in early trading on the Toronto Stock Exchange. The shares pared some of the early losses ended the day down 10.2 percent at C$4.75. Continued...