A Chinese bureau of commerce has changed website information that it says incorrectly identified Sino-Forest Corp. TRE-T as an affiliate of a company that sold $70-million of timber rights to the Canadian-based forestry company in 2007.
According to what Sino-Forest identified as an “unofficial translation” of a letter from Hunan Huaihua City Bureau of Commerce, the note said that due “to an administrative error” it had incorrectly identified the timber seller, Huaihua City Yuda Wood Co. Ltd., as a related Sino-Forest company on its website.
The letter, dated June 15, apologized for the error and said that Yuda Wood is, in fact, a subsidiary of Sonic Jita Engineering Ltd., a Hong Kong-based company.
Sino-Forest has appointed a special committee of directors and hired outside experts to investigate allegations from a short-selling firm, Muddy Waters, that it has inflated the value of extensive holdings of timber rights.
The probe is expected to take months because there is little public information about the value of timber rights and contracts in China. In addition, investigators are analyzing bank records at a large number of banks and branches that do business with Sino- Forest.
Muddy Waters alleged in a report earlier this month that Yuda Wood was an affiliate of Sino-Forest, one of the many convoluted corporate relationships that the short-selling firm alleged allowed Sin-Forest to inflate asset valuations.
Sino Forest has vigorously denied the allegations. Since the report was released, it has seen its stock slide from more than $25 a share on the Toronto Stock Exchange to as little as $2.85. It traded at $3.17 early on Friday.
