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Emerald Plantation Holdings Limited (“EPHL”)

Frequently Asked Questions

Following on from the implementation of the restructuring of Sino-Forest Corporation (“Sino-Forest”) under which substantially all of the assets of the Sino-Forest group were transferred to EPHL, the company and its advisers have received a number of queries from former noteholders of Sino-Forest. Set out as follows are responses to those questions for the benefit of those former noteholders who on implementation of the restructuring became shareholders and noteholders in EPHL.
To the extent that any noteholder and/or shareholder in EPHL has any further queries they should submit them to [email protected] and if appropriate this page will be updated to include a response.

A. Sino-Forest


1. What assets of Sino-Forest were transferred to EPHL and what was not included?
The assets transferred to EPHL’s group pursuant to the restructuring plan (the “Plan”) included, among other things, all of Sino-Forest’s cash and shares of all of Sino-Forest’s directly owned subsidiaries which owned, directly or indirectly, all of the business operations of Sino-Forest.
The assets transferred to EPHL’s group did not include, among other things, certain of Sino-Forest’s litigation claims against third parties which were transferred to a litigation trust established pursuant to the Plan (the “Litigation Trust”) to pursue such claims on behalf of the affected creditors of Sino-Forest and certain other stakeholders, and certain cash amounts used to fund the Ligigation Trust and certain other cash reserves established under the Plan.


2. Is Sino-Forest still a reporting issuer?
Sino-Forest ceased to be a reporting issuer in each of the applicable jurisdictions in Canada by order of the applicable Canadian securities regulators immediately prior to the implementation of the Plan.


3. What will happen to shares in Sino-Forest?
All but one of the outstanding common shares of Sino-Forest will be cancelled for no consideration on March 4, 2013. The single remaining share of Sino-Forest is held by the litigation trustee for the Litigation Trust.


B. Plan distributions


4. What distributions were made under the Plan?
In exchange for a release of all claims against Sino-Forest and its subsidiaries, among others, creditors received distributions of EPHL’s shares and new notes and interests in the Litigation Trust as follows:


(a) EPHL Shares:
92.5% of the new shares in EPHL were distributed pro rata among the holders of notes in Sino-Forest (the “Noteholders”), with a de minimus amount of the new shares being reserved for certain other creditors whose claims are still contested and have not yet been accepted (or rejected) for distribution purposes (the “Unresolved Creditors”)
The remaining 7.5% of the new shares in EPHL were distributed as “Early Consent Consideration” to those Noteholders who signed Sino-Forest’s restructuring support agreement on or before 15 May 2012 (the “Consenting Noteholders”) pro rata to their holdings of notes on that date (as to which see further below).
(b) EPHL Notes
EPHL’s new notes were distributed pro rata among the Noteholders, with a de minimis among of new notes being reserved for the Unresolved Creditors.
If the Unresolved Creditors are able to prove their claims against Sino-Forest, the amount of EPHL shares and notes that has been reserved for them will be distributed to them. If they are not able to prove their claims, then the de minimis amount of EPHL shares and notes that has been reserved for them will be distributed out pro rata to the Noteholders (as of the Record Date January 16, 2013 (the “Record Date”)).
(c) Litigation Trust Interests
A 75% interest in any future distributions from the Litigation Trust (if any) was ascribed pro rata among the Noteholders based on their respective aggregate holdings of notes (as of the Record Date).
The remaining 25% interest was ascribed on a representative basis to the representative of the Noteholder Class Action Claimants (as defined in the Plan) against Sino-Forest, Mr. David Gray.
Further details regarding the Litigation Trust and the Litigation Trust interests can be obtained by contacting the Litigation Trustee, Cosimo Borrelli, at [email protected].


5. How were the distributions of Plan consideration (the new EPHL shares and notes and the Litigation Trust Interests) calculated?

Plan consideration was distributed to Noteholders holding Sino-Forest notes (as of the Record Date) on a pro rata basis among them based on the aggregate of their principal and interest accrued but unpaid as at 31 March 2012. As the payment dates and interest coupon for each of the four series varied, there was some variation between the allocations to the different series. Ratios in respect of the distribution of shares and notes have been disclosed through the depositary system and should be available from brokers.
The total amount of principal and interest under each series was:

Series Principal Interest Total
5.00% Convertible Notes due 2013 US$345,000,000 US$2,827,083 US$347,827,083
10.25% Senior Notes due 2014 US$399,517,000 US$7,280,088 US$406,797,087
4.25% Convertible Notes due 2016 US$460,000,00 US$5,702,083 US$465,702,083
6.25% Senior Notes due 2017 US$600,000,000 US$16,562,50 US$616,562,500


The allocation of EPHL’s shares and notes for each series were made as follows:


Series of Sino-Forest notes                     Ratio of EPHL notes per US$1,000 Principal Amount of Sino-Forest notes Ratio of EPHL shares per US$1,000 Principal Amount of Sino-Forest notes
5.00% Convertible Notes due 2013 164.5568 EPHL Shares US$ 152.2151
10.25% Senior Notes due 2014 166.1936 EPHL Shares US$ 153.7291
4.25% Convertible Notes due 2016 165.2426 EPHL Shares US$ 152.8494
6.25% Senior Notes due 2017 167.7249 EPHL Shares US$ 155.1455


* the actual amount of EPHL notes and number of EPHL shares were rounded downwards to the nearest integer at allocation.
For example, a person who as of Record Date held US$345,000 worth of principal in the 5% Notes due 2013 was allocated US$56,772 worth of notes and 52,514 shares in EPHL.


C. EPHL Shares


6. What classes of shares does EPHL have and how are they held?
EPHL is a private Cayman company whose share capital consists of a single class of fully paid and non-assessable voting shares.
The bulk of the shares in EPHL are currently registered in the name of one shareholder, being Cede & Co. (the nominee of The Depository Trust Company), which holds EPHL’s shares on behalf of EPHL’s beneficial shareholders. Beneficial shareholders hold their shares indirectly through their financial institutions and do not hold physical share certificates.


7. Are shares in EPHL listed and/or tradable?
EPHL is not a reporting issuer (or equivalent) in any jurisdiction and its shares are not currently listed on any stock exchange. However, EPHL’s shares are held through The Depository Trust Company (“DTC”) as depositary and are capable of being traded. Trading in EPHL’s shares is subject to the securities laws applicable to the relevant shareholder. EPHL’s shares appear on Bloomberg with the following references:
CUSIP Number: G30337 102
ISIN Number: KYG303371028


8. Is there a shareholders’ agreement in respect of EPHL?
There is no shareholders’ agreement among the shareholders of EPHL. The rights (and protections) of EPHL shareholders are as set forth in EPHL’s articles. Key provisions of EPHL’s articles are as follows:
(a) Information Rights
The articles of EPHL provide that it will provide to its shareholders:


(i) as soon as available, but not later than 180 days after the end of each financial year, a copy of the consolidated balance sheet of EPHL as of the end of such financial year and the related consolidated statements of income, changes in equity and cash flows for such financial year, setting forth in each case in comparative form the figures for the previous year, all in reasonable detail and accompanied by a management summary and analysis of the operations for EPHL for such financial year; and
(ii) as soon as available, but not later than 90 days after the end of each financial half-year, a copy of the consolidated balance sheet of EPHL as of the end of such financial half-year and the related consolidated statements of income, changes in equity and cash flows for such financial half-year, and accompanied by a management summary and analysis of the operations for EPHL for such financial half-year.


(b) Shareholder Meetings
EPHL will hold its first annual general meeting of shareholders not earlier than January 30, 2014, with subsequent annual general meetings to be held annually thereafter. At any time after January 30, 2014, an extraordinary general meeting may be requisitioned by registered EPHL shareholders holding 10% or more of its issued and outstanding shares.
Quorum for any annual or extraordinary general meeting of shareholders shall be two or more persons present in person and representing in person or by proxy in excess of 33 1/3% of the issued and outstanding shares entitled to vote at a general meeting.


(c) Board of Directors
The board of directors of EPHL currently consists of five directors: Paul Brough, Gene Davis, Colin Keogh, Eddie Wang and Barry Field. Although Cayman law and EPHL’s articles of association permit corporations to serve as directors, all of the directors currently on the EPHL board are individuals. A director is entitled to appoint an alternate or a proxy to attend board meetings (in person or by telephone) in the director’s absence.
Commencing with the first annual general meeting of EPHL shareholders, any registered shareholder that (i) was an Initial Consenting Noteholder and (ii) owns (individually or together with its affiliates) shares representing 10.0% or more of the shares then issued and outstanding that carry the right to vote at general meetings (excluding for the purposes of such calculation any shares held at such time by SFC Escrow Co.) (a “10% Position”) and has either (A) owned (beneficially or as a registered shareholder) such 10% Position continuously since January 30, 2013 (the “Plan Implementation Date”), or (B) acquired such 10% Position from a prior 10%+ Shareholder (each a “10%+ Shareholder”) shall be entitled to appoint one director to the board. The remaining directors shall be elected by the EPHL shareholders as a group. An EPHL shareholder must be the registered owner of its 10% Position in order to exercise any rights it may have as a 10%+ Shareholder.
A 10%+ Shareholder’s board appointment right shall be transferable only in connection with its sale of a 10% Position to another person. No person that acquires a 10% Position after the Plan Implementation Date, other than in connection with an acquisition of a 10% Position from a 10%+ Shareholder, shall be entitled to appoint a director to the EPHL board. In the event a 10%+ Shareholder ceases to own a 10%+ Position, the director appointed by it shall resign and such 10%+ Shareholder will lose its right to appoint a director to the EPHL board.
Directors (other than any director appointed by a 10%+ Shareholder) will be elected by shareholders on an annual basis at the EPHL annual general meeting. Any director appointed by a 10%+ Shareholder may only be removed by that 10%+ Shareholder and a 10%+ Shareholder shall be entitled to appoint another director in his place.
Prior to the first annual general meeting, a director may only be removed with the support of shareholders holding at least 66-2/3% of the votes cast at the meeting. On or following the first annual general meeting, a director (other than a director appointed by a 10%+ Shareholder) may be removed with the support of shareholders holding more than 50% of the votes cast at the meeting.


(d) Shareholder Approval Rights
In addition to certain other matters requiring approval by special resolution under applicable Cayman law (including amendment of EPHL’s memorandum or articles of association and a voluntary winding-up of EPHL), EPHL may not undertake any of the following actions without the prior approval of shareholders holding at least 66-2/3% of the votes cast at a meeting, or by way of resolution of shareholders owning at least 66-2/3% of the shares::


• any reorganization, recapitalization, amalgamation, merger or consolidation of or involving EPHL;
• issuance of (i) any equity securities having a preference over the current class of shares, or (ii) equity incentive awards to directors, officers or employees, which awards represent in the aggregate in excess of 10% of EPHL’s outstanding shares;
• sale of all or substantially all of EPHL’s assets (on a consolidated basis);
• any material change in the nature of EPHL’s business;
• affiliated or related party transactions (other than transactions between EPHL and its wholly-owned subsidiaries); and
• a voluntary liquidation, dissolution or winding up of EPHL or any of its material subsidiaries (other than in connection with an internal restructuring).


(e) Dividends
Subject to preferences for the receipt of dividends that may be accorded to holders of any other classes of shares of EPHL ranking senior to the current class of shares that may be authorized from time to time, holders of EPHL’s shares are entitled to receive, if, as and when declared by the board of directors of EPHL, such dividends as may be declared thereon by the board from time to time in equal amounts per share on EPHL’s shares at the time outstanding, without preference or priority.


(f) Pre-emptive Rights
If EPHL wishes to issue equity securities (or any securities convertible into or exchangeable for equity securities of EPHL, including convertible debt) other than (a) pursuant to an initial public offering, (b) equity incentive awards to directors, officers or employees of EPHL, which awards represent in the aggregate less than 10% of its outstanding shares (or such higher limit as may be approved by shareholders), or (c) in respect of share splits, share dividends or similar capital reorganizations, it shall offer such securities to each registered shareholder pro rata in proportion to the number of shares held by such shareholder at the time of the offer prior to selling such securities to non-shareholders.


(g) Drag-Along Rights
In the event holders of at least 66-2/3% of the outstanding shares wish to sell all of their shares to a third party, they will have the right to force the other shareholders to sell all of their shares on the same terms, thereby enabling a sale of the entire company.


(h) Redemption
EPHL may redeem its shares in accordance with applicable Cayman law, provided that such shares are redeemed on a pro rata basis.


D. Early Consent Consideration


9. Will the Early Consent Consideration be distributed to the Consenting Noteholders in the same manner as other Plan distributions?
Distribution of the 7.5% of new EPHL shares as the “Early Consent Consideration” available under the Plan did not occur on the Plan Implementation Date, but rather occurred subsequently through a direct distribution by Computershare to the Consenting Noteholders pursuant to a Letter of Instruction process, as set out in the Plan. Thus, unlike the shares in EPHL distributed on the Plan Implementation Date, the additional Early Consent shares were not distributed through DTC and will be held through the Direct Registration System (DRS) administered by Computershare on behalf of EPHL.
Consenting Noteholders who wish to move their holdings of Early Consent shares from the Direct Registration System (“DRS”) to DTC may contact Computershare (as set forth below)to have their Early Consent shares added to their existing positions of shares in EPHL (as received on the Plan Implementation Date) with DTC. Please contact your broker to complete this process as described below.


10. How can holders of Early Consent shares holding through DRS transfer their shares into their overall positions with DTC via the Deposit/Withdrawal At Custodian (“DWAC”) method?
Consenting Noteholders should first inform their brokers that they would like to hold their shares through DTC via a DWAC. Holders should then submit the following to Computershare, the designated transfer agent for all shares in EPHL:


(a) A letter of instruction requesting that the shares are transferred to DTC positions via DWAC; the letter should include the broker’s name, contact information and participant number; and
(b) A stock power with medallion signature guarantee (an example form of which may be obtained from Computershare)


The above documents should be sent to Computershare at either of the following addresses:
Regular mail:
P.O. Box 43078
Providence, RI 02940-3078
Overnight/certified/registered delivery:
250 Royall Street
Canton, MA 02021
Holders are advised to contact Computershare shareholder services at the numbers below for further information:
Within the US: (800) 962-4284
Outside of the US: +1-781-575-3120


E. EPHL Notes


11. Are EPHL’s notes listed and/or tradable?
The new notes issued by EPHL are not listed on any exchange. However, these notes are held through DTC as depositary and are capable of being traded. Trading in EPHL’s notes is subject to the securities laws applicable to the relevant noteholder. The new notes appear on Bloomberg with the following references:
CUSIP Number: 29101W AA4
ISIN Number: US29101WAA45


12. What information rights do noteholders have?
Under the note indenture for the new EPHL notes, EPHL is required to provide to the note trustee and noteholders with copies of all financial statements or financial reports that are distributed by EPHL to its shareholders from time to time. EPHL’s information obligations to its shareholders are summarized above.


F. General


13. Where can more information regarding the restructuring be found?
Information regarding EPHL’s shares and notes and the Litigation Trust was provided to stakeholders in Sino-Forest’s CCAA proceedings by way of, among other documents, the Meeting Information Statement dated October 20, 2012, the Plan Supplement dated November 21, 2012 and the various Reports filed by the court-appointed monitor of Sino-Forest, FTI Consulting Canada Inc., throughout the CCAA proceedings. All of these materials are available on the Monitor’s Website at http://cfcanada.fticonsulting.com/sfc/. In particular, the following may be of interest:
(a) the Plan;
(b) the Indenture for EPHL notes; and
(c) the Litigation Trust Agreement.