Sino-Forest shares fall on Moody's warning

Shares Mississauga-based Sino-Forest Corp. losta third of their value Tuesday, afterbond rating agency Moody's Investors Service putthe firm under reviewfor a possible credit downgrade.

Its stock closeddown 34 per cent, or $2.09, to $4.01on the Toronto Stock Exchange. Volume was30 million,12 times the usual.

Moody's said its warning was based on the controversy surrounding Sino-Forest.

The agency said the firm needs a continuing ability sell shares and bonds to keep up the pace of growth it has set for itself in recent years and the controversy may make that more difficult.

The company, whichowns and manages tree plantations in China,has continued to fight allegations it exaggerated sales and assets.

Moody's said $1.9 billion in Sino-Forest debt is affected by the review.

Sino-Forest has refuted the allegations, but Moody's is raising concerns the company's business may be affected even if the accusations are proven false.

The stock had traded for more than $18 before short-seller Muddy Waters Research published a scathing commentary on the company accusing it of fraud. The company said Tuesday it has asked management consultants PricewaterhouseCoopers to assist it in reviewingthe allegations.

Sino-Forest also stepped up its fight against the allegations on another front, Tuesday. Itreleased English translationsof sales agreements and other documents showing its ownership of timberlands in China.

The company had released on Monday the Chinese versions of the documents as well as bank statements for accounts in China and Hong Kong.

It said it would detail its sources and uses of cash when it releases its quarterly financial results June 14. Sino-Forest is also expected to take questions from financial analysts when it holds a conference call to discuss the results.