Sino-Forest Increases Investment in Omnicorp Limited; Expanding foothold in South American tropical forest

TORONTO, Feb. 6 /PRNewswire-FirstCall/ – Sino-Forest Corporation (“Sino-Forest” or the “Company”) (TSX: TRE), a leading commercial forestry plantation operator in China, is pleased to announced that it has acquired 55 million ordinary shares in the capital of Omnicorp Limited (“Omnicorp”) (HKSE:0094), a Hong Kong listed company, and Omnicorp 4% secured convertible bonds due 2009 (the “Convertible Bonds”) with an aggregate principal amount of approximately US$21.6 million (i.e. HK$168 million) (the “Sale Bonds”).

The aggregate purchase price paid by Sino-Forest was approximately US$4.3 million in cash for the Omnicorp shares at a price of HK$0.60 per share, and the issuance of approximately 2.7 million common shares in the capital of Sino-Forest at a price of Cdn$10.00 per share for the Sale Bonds. The issuance of the Sino-Forest shares represents a dilution of approximately 1.4% of its existing outstanding shares. The acquisition was completed in the secondary market from various third parties including Simon Murray (or an entity he controls), a director of Sino-Forest. The value of the Omnicorp shares and Sale Bonds being sold by Mr. Murray to Sino-Forest represents approximately 5.5% of the aggregate value of the overall transaction.

Upon the completion of such transaction, Sino-Forest’s stake in Omnicorp has increased to approximately 20.0% of Omnicorp’s outstanding shares as well as 89.6% of the outstanding Convertible Bonds. The Convertible Bonds held by Sino-Forest are convertible into an additional 106,164,150 Omnicorp ordinary shares at a price of HK$2.00 per share at any time prior to November 9, 2009, subject to certain terms and restrictions. Assuming the full conversion by Sino-Forest of the acquired Convertible Bonds, subject to certain terms and conditions of the Convertible Bonds, Sino-Forest would own approximately 40.2% of Omnicorp’s outstanding shares.

Omnicorp owns a 60.4% interest in its subsidiary Greenheart Resources Holdings Limited (“Greenheart”) – one of the largest natural forest concession owners and operators in Suriname, South America and owns 180,000 hectares of tropical hardwood concession and cutting rights in Suriname, with a harvestable standing stock volume of approximately 4.4 million cubic metres. Greenheart’s concession and cutting rights represents 13% of the largest concession type available in Suriname. Over 60% of the world’s growing stock is hardwood, with approximately 45% coming from Latin America, while Asia-Pacific is the largest market for tropical hardwood logs, representing approximately 59% of the total global market.

Mr. Allen Chan, Sino-Forest’s Chairman & CEO, said “We are very pleased to increase our equity stake in Omnicorp and indirectly in Greenheart. Omnicorp’s strategy will be to source quality fibre from outside China, especially tropical hardwood to be sold in the Chinese markets.”

Mr. Chan added, “As Greenheart adheres to the sustainable forestry management and silviculture systems developed by CELOS (The Centre for Agricultural Research in Suriname) and practised by the Suriname Government, we are confident that Greenheart will operate in a responsible and environment-friendly manner.”

About Sino-Forest Corporation

Sino-Forest Corporation is a leading commercial forestry plantation operator in the Peoples Republic of China. The Canadian company started its operations in 1994 and was one of the first few foreign and privately managed operators involved in forest products in China. Its principal businesses include the ownership and management of forestry plantation trees and sales of standing timber, wood logs and complementary manufacturing of downstream engineered-wood products. The Corporation’s common shares have traded on the Toronto Stock Exchange under the symbol TRE since 1995.

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 not limited to, changes in China and international economies; changes in currency exchange rates; changes in worldwide demand for the Company’s products; changes in worldwide production and production capacity in the forest products industry; competitive pricing pressures for the Company’s products and changes in wood and timber costs.



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