Cathay Forest Announces Delay in Filing 2010 Financial Statements
April 29 2011 - 4:52PM
Marketwired
Cathay Forest Products Corp. ("Cathay Forest" or the "Company")
(TSX VENTURE: CFZ) announces that it will not be in a position to
file its consolidated audited financial statements as at and for
the year ended December 31, 2010, accompanying management's
discussion and analysis, related CEO and CFO certification and
Annual Information Form for the year ended December 31, 2010 within
the prescribed 120 day period as prescribed under National
Instrument 51-102 and National Instrument 51-109, respectively (the
"2010 Financial Filings"). Cathay Forest cannot presently estimate
when it will be in a position to file the 2010 Annual Filings. The
delay stems from the following:
-- Forestry certificates for the Shandong plantation
-- Deposits related to properties in Guizhou and Jiangxi provinces
-- Investment in Eco-Energy China Group Inc.
Management has spent significant effort during the last several
months reviewing all aspects of the Company's affairs. The above
items, in addition to those identified by the Venture Exchange
disclosed in our last press release, have come to light and are the
subject of ongoing investigation.
As previously publicly disclosed on March 31, 2011, the Company
is also continuing to prepare submissions to the TSX Venture
Exchange Compliance & Disclosure Group so that it can complete
its review of several transactions entered into by the Company
during prior periods and of the Company's internal disclosure
procedures and corporate governance practices.
Forestry Certificates for the Shandong Plantation
Cathay Forest, through its subsidiary, Shanghai Shengtai Forest
Co. Ltd., was provided with the rights to plant and harvest a total
of 11,531 hectares of poplar plantations under a Master Agreement
in Shandong Province. The majority of the forestry right
certificates totaling 11,333 hectares which had been issued to the
Company have now expired. Cathay Forest understands that the local
government is willing to allow the Company to reacquire these
certificates. However, considering the current prices of poplar in
the region, the economic feasibility of reacquiring the plantations
does not appear to be viable at this time considering the amount of
the deferred and accrued land lease payments for such plantations
over the years.
If the Company decides not to proceed with the reacquisition of
such plantations a write down of plantation assets and related
deferred and accrued land lease payments liabilities will be
required for an amount of approximately $79 million.
Deposits related to properties in Guizhou and Jiangxi
provinces
The Company previously reported as at September 30, 2010,
deposits amounting to $4.8 million relating to potential property
transactions in the Chinese provinces of Guizhou and Jiangxi. The
Company has recently uncovered information suggesting that certain
irregularities could have occurred with respect to the payment of
these deposits by Cathay Forest. The Company has engaged local
legal counsel to investigate this matter. At this time, the
investigation is on-going and no formal conclusion can be reached
with regards to the status of the deposit amounts in question.
Investment in Eco-Energy China Group Inc. ("EEC")
Cathay Forest has been advised by management of EEC that EEC is
not able to complete the preparation of audited financial
statements for the year ended December 31, 2010 due to financial
constraints. Such financial statements are required by Cathay
Forest to complete its 2010 Financial Filings in relation to the
investment by Cathay Forest in EEC.
The Company is continuing to work with its auditors to resolve
these matters and complete the 2010 Financial Filings as
expeditiously as possible.
About Cathay Forest Products
Cathay Forest is a forest products company that manages
approximately 1,000,000 hectares of forest properties in Russia and
China. Cathay Forest's customer base includes the domestic Chinese
pulp and paper industry and other wood products customers in the
Chinese and Japanese markets.
Forward-Looking Statements
All statements, other than statements of historical fact, in
this news release are forward-looking statements that involve
various risks and uncertainties, including, without limitation,
statements regarding the future plans and objectives of Cathay
Forest. Actual results and future events could differ materially
from those anticipated in such statements. Except as required under
applicable securities laws, Cathay Forest assumes no obligation to
update forward-looking statements should circumstances or
management's estimates or opinions change.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Contacts: Cathay Forest Products Corp. Luc Perron, CA Chief
Financial Officer (416) 226-7269 luc.perron@cathayforest.com
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