Moody's lowers Sino-Forest

Moody's Investors Service said it downgraded to Caa1 from B1 the corporate family and senior unsecured debt ratings of Sino-Forest Corp.

Moody's also said it continues its review for further downgrade.

The action follows the order by the Ontario Securities Commission to suspend trading of Sino-Forest's shares and the subsequent resignation of its chairman and chief executive officer Allen Chan, the agency said.

According to the commission, the company may have misrepresented some of its revenue and exaggerated some of its timber holdings, Moody's said.

The regulator also said the company, through its subsidiaries, appears to have engaged in transactions that may have been contrary to Ontario's securities laws and the public interest, the agency said.

Moody's said it is concerned that the allegations are serious.

The trading suspension, the resignation of Allen Chan and the ongoing investigations add significant negative pressure on the company's operations and its ability to access additional liquidity, the agency added.

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