August 19, 2011 - Hong Kong - TSX News reports that there is a possibility of a takeover offer being developed for beleaguered Chinese forestry company Sino-Forest Corporation
(TSX: TRE; OTCQX: SNOFF) from a consortium of private Chinese and Singaporean investors for close to 39.5 billion HKD or $5 billion (CDN). Net of debt, the rumoured deal would be valued at $10.50 per common share on the Toronto Stock Exchange. The
Mandolin Fund has purchased 18% of the outstanding shares in the company as of August 5th, raising the possibility that they are involved in or are privy to the deal.
The company has
delayed the findings of its fraud reviewfrom August to the end of December, citing data-collection challenges. However, the delay tactics could bide time for the interested parties to put a deal forward that would be acceptable to shareholders but at a price significantly undervaluing the company's operations and assets. A buyout of $10.50 would represent a 120% premium over the 50-day moving average price on the TSX but would be merely a fraction of the stock's 200-day moving average of $17.71 or 52-week high of $25.85.
This would not be the first time that an attempt to buy out Sino-Forest was on the table. Back in 2007, CVC Asia Pacific Ltd. and Macquarie Bank Ltd.
approached the company about a takeover offer but those plans never materialized. Now that the stock is at a deep discount thanks to Canadian investors' unfamiliarity with the Chinese company's business practices, entities that are more familiar with those practices have the opportunity to buy the company on very favourable terms.
Sino-Forest did not wish to comment upon the validity of any current possible deal.
https://tsxnews.blogspot.com/2011/08/buyout-rumoured-to-be-offered-for.html