Richard Chandler Corp., the largest shareholder of Sino-Forest Corp. , has spoken up, a rare move for the typically quiet Singapore-based investment firm.
In a news release, the firm said "it is disappointed" that Sino-Forest will not make its next bond interest payment, which will effectively trigger a default. That comment alone isn't really shocking. If you were locked into Sino-Forest's shares, which have ceased trading, the last thing you would want is a bankruptcy that favours bondholders who are higher up in the capital structure.
What's more newsworthy is that Richard Chandler, a prolific value investor in Asia, continues to stand resolutely behind Sino-Forest, even though the independent committee's latest report raised new questions about Sino-Forest's business practices.
"Sino-Forest has generated profitable growth since 1994 and the Richard Chandler Corporation continues to have confidence in the underlying business of Sino-Forest," the firm said in a statement.
It then goes on to mention the committee's findings, but ignored any of the red flags raised.
"Based on the independent committee's findings to date, Sino-Forest is a going concern, with real assets and a strong balance sheet."
Back in July, Richard Chandler publicly announced that it owned 10.9 per cent of Sino-Forest, which made it the second-largest owner, behind Wellington Management. Today, Richard Chandler is the largest shareholder.