* Extension gives company time to advance asset sales
* OSC extends cease trade order on company's shares to July
* OSC seen filing charges against Sino-Forest very shortly
By Euan Rocha
TORONTO, April 13 A Canadian court on Friday
extended a creditor protection order for Sino-Forest Corp
by five weeks to June 1, giving the embattled Chinese
forestry company more time to move forward with asset sales.
Justice Geoffrey Morawetz of the Ontario Superior Court
declined the Toronto-listed company's request for an extension
until July 9, but agreed to leave the order in place for about a
month beyond its initial April 29 expiration.
Sino-Forest, accused of fraudulently exaggerating the size
of its forestry assets, says the allegations have paralyzed its
"I am satisfied that the applicant is working in good
faith," said Morawetz, adding that the court would consider a
further extension after it weighs other motions, including those
in a related shareholder lawsuit.
Sino-Forest's shares tumbled last June after short-seller
Carson Block and his firm Muddy Waters accused the company of
swindling investors. Sino-Forest is now battling several
lawsuits, on top of investigations by regulators and law
The company's stock, halted for months, is being delisted by
the Toronto Stock Exchange in the wake of the bankruptcy
Sino-Forest's lawyers said in court the company had started
putting its assets up for sale and that the extension of the
stay period would provide stability to Sino-Forest's business
while it works through the sale process.
Sino-Forest said the initial phase of the sale process
involves soliciting nonbinding letters of intent from potential
bidders. This phase is expected to be completed by June 28.
CEASE TRADE EXTENDED
In a separate proceeding on Friday, the Ontario Securities
Commission (OSC), Canada's main securities regulator, extended
its cease trade order on shares of Sino-Forest until July 16.
Hugh Craig, a senior litigator with the OSC, said the
extension beyond the May 9 delisting date was necessary as the
stock could still potentially be traded over-the-counter after
it is delisted by the Toronto Stock Exchange.
He declined to say when the regulator will file its official
statement of allegations against the company.
"I would submit that the issuance of an enforcement notice
... is a clear signal that staff's investigation has proceeded
to the cusp of issuing a statement of allegations," Craig told
Mary Condon, who is Vice-Chair of the OSC.
Earlier this week, the Ontario Securities Commission said it
has served Sino-Forest and some current and former officials of
the company with enforcement notices. Such notices are issued by
the OSC at or near the end of an investigation and set the stage
for the regulator to commence formal proceedings.