Cathay Forest signs definitive deal to acquire 40% of Eco-Energy China Group

   Moscow. May 21, 2009. /Lesprom Network/. Cathay Forest Products Corp. has signed a definitive agreement in which it will acquire 40% of privately held Eco-Energy China Group, a vertically integrated biodiesel producer in China. Terms of the deal include that Cathay Forest will acquire a 40% ownership of Eco-Energy for an aggregate purchase price of CDN$2.9 million ($2.5 million). This investment will be funded using Cathay Forest's current available cash position, as Marketwire informed Lesprom Network.

Eco-Energy, based in the southwestern province of Guizhou, is a valuable addition to Cathay Forest's portfolio of forestry assets. Eco-Energy's assets include a 40 thousand hectare plantation of Jatropha Curcus and a recently completed biodiesel refinery.

Cathay Forest's forestry expertise and regional network will assist Eco-Energy in furthering its plantation expansion strategy to become a leading biodiesel producer in China. The investment in Eco-Energy will broadly diversify the customer base of Cathay Forest beyond the wood market.

"This investment in Eco-Energy allows Cathay Forest to advance into the world of biofuel production utilizing forestry assets and byproducts. In China, diesel is a product that is high in demand and short on supply." said Anthony Ng, Cathay Forest's President and CEO. "While Cathay Forest's focus is still on developing our Russian and China operations, we will not stop exploring new and promising opportunities to remain on the frontier of the forestry industry and create value for our shareholders. Following this investment in Eco-Energy, Cathay Forest will still have adequate resources to advance its business activities to positive cash flow."

Cathay Forest is a forest products company that manages approximately 1 million hectares of standing timber properties and fast-growth, high-yield poplar plantations in China and Russia. Cathay Forest is building a world-class forest products company through a customer base that includes the domestic Chinese pulp and paper industry and other wood products customers in the Japanese market.