In My opinion this is good news of CEO stepping aside and let someone else lead the charge. All accusations are priced in stock. We do not know volume of error misrepresentation at this time but it could not be that huge. But any thing of that sort will not justify stock price to go down from 20 Plus $ to 1.38$ in 3 month’s time. With some big investor joining in and buying stake around 20% in last few weeks must have done some homework and could have plan to overtake or earn huge profit on decline with avg cost in around 3-5$ rate(assumption). Some short seller did home work to earn some profit with breaking out allegation(STILL TO BE PROVEN). It's been done well played so far. Now they all know to cover their position to book profit if this is how it works. OSC's temporary order to halt is good thing for shareholder’s to maintain and restore value of their holding and wealth. Panicking will not take you any good or bad at this cheap price when we know some big companies bought higher than current price. In fact some OLD(earlier holders who got out) holder might also end up buying stock at this level to cover their losses in change in the leadership and conclusion of allegation in sight. And on top of this imagine short seller trying to cover position. Also look at assets/liabilities and outstanding share to come up with your own price. In short those who hold stock and in much better position than those who try to cover and Buy in new shares. Seller has not much to gain at this level by SELLING. But definately by not selling supply/demand principle will trigger the price of stock to rise and substantial level. Not suggesting buy/sell at this time. All investors are smart. Just sharing my thoughts/opinion. Do you own research. Risk analysis is equally important. Profit goes with ability to take risk. Will help you do better job. THINK BEFORE YOU DO ANYTHING. Second note to come with news unfolding.
Sino-Forest also said the OSC's stock trading halt will not trigger any defaults on outstanding debt. The company "does not believe any default under its guaranteed senior notes or its convertible senior notes has been triggered by these events."
Sino-Forest would continue to review the terms of all of its debt and other contractual arrangements, it added.
According to its annual information form for the year to Dec. 31, 2010, Sino-Forest had outstanding short- and long-term debt of $2.07 billion. Beyond $87.7 million being repaid this month, Sino-Forest has no other long-term debt due this year.
It does have roughly $345 million in long-term debt due in 2013, along with $424.5 million that matures over 2014 and 2015, according to the 2010 annual report. As of June 30, the company held cash and cash equivalents of about $900 million.
See my earlier post on their business model. A lot of that "debt" is money borrowed from one subsidiary and loaned to another.
As far as their convertible notes: From their Quarter 1 report: "As the share price decreases, the equity convert option becomes less valuable (less costly to the Company) and therefore results in a gain being recorded in the income statement." They can pay the notes off in a combination of some cash, and the rest, shares.
Their short term deposits amount to 33,189,000. The rest of the cash equivalents is notes involving subsidiaries, basically a Madoff style Ponzi scheme.