CWT International Limited — M&A Activity 2007

Nov 28, 2007

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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SINOFERT HOLDINGS LIMITED 中化化肥控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 297)

DISCLOSEABLE AND CONNECTED TRANSACTIONS PROPOSED ACQUISITION OF INTEREST IN TIANJI JV AND PROPOSED ACQUISITION OF INTEREST IN SINOCHEM SHANDONG

CONTINUING CONNECTED TRANSACTION

As disclosed in the Company’s circular dated 13 June 2005, Sinochem Corporation granted the Option to the Company which allows the Company to acquire Sinochem Corporation’s interest in Qinghai Salt Lake, Tianji JV and Sinochem Shandong at a fair market value.

The Company announces that it has exercised the Option in respect of the acquisition of Sinochem Corporation’s interest in Tianji JV and Sinochem Shandong respectively, and that on 28 November 2007 (after trading hours), the Purchaser entered into the Tianji Acquisition Agreement and the Shandong Acquisition Agreement with Sinochem Corporation, for the acquisition of a 40% equity interest in Tianji JV and a 51% equity interest in Sinochem Shandong respectively. The consideration for the Tianji Acquisition is approximately RMB208.83 million (equivalent to approximately HK$218.85 million) and the consideration for the Shandong Acquisition is approximately RMB56.38 million (equivalent to approximately HK$59.09 million).

The consideration of approximately RMB208.83 million (equivalent to approximately HK$218.85 million) for the Tianji Acquisition and approximately RMB56.38 million (equivalent to approximately HK$59.09 million) for the Shandong Acquisition was arrived at after arm’s length negotiations between Sinochem Corporation and the Company based on the valuations of Tianji JV and Sinochem Shandong respectively. The directors (excluding the independent non-executive directors, whose views will be disclosed in the circular) of the Company are of the view that the terms of the Acquisition Agreements are fair and reasonable, on normal commercial terms and in the interests of the Company and its shareholders as a whole.

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The Tianji Acquisition Agreement constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. Furthermore, as Sinochem Corporation is a connected person of the Company by reason of it being a substantial shareholder of the Company, each of the Tianji Acquisition Agreement and the Shandong Acquisition Agreement constitutes a connected transaction of the Company. Given that the relevant applicable percentage ratios set out in the Listing Rules for each of the Tianji Acquisition and the Shandong Acquisition are more than 2.5% and the consideration is more than HK$10,000,000, each of the Tianji Acquisition and the Shandong Acquisition is subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. If aggregated, the Tianji Acquisition and the Shandong Acquisition would constitute a discloseable and connected transaction of the Company.

Citigroup is the financial adviser to the Company in respect of the Acquisitions.

In addition, the Purchaser entered into the Fertilizer Purchase Framework Agreement with Qinghai Salt Lake on 26 November 2007. The Fertilizer Purchase Framework Agreement will, upon completion of the Shandong Acquisition, constitute a continuing connected transaction of the Company under the Listing Rules. Given that the relevant applicable percentage ratios set out in the Listing Rules for determining the value for the Fertilizer Purchase Framework Agreement is expected to be 2.5% or above on an annual basis and the annual consideration is more than HK$10,000,000, the Fertilizer Purchase Framework Agreement falls within Rule 14A.35 of the Listing Rules, and is subject to the disclosure and approval requirements under Rules 14A.45, 14A.46 and 14A.48 and the annual review requirements under Rules 14A.37 and 14A.38 of the Listing Rules.

GENERAL

An Independent Board Committee of the Company has been formed to advise the Independent Shareholders in respect of the Tianji Acquisition, the Shandong Acquisition and the Fertilizer Purchase Framework Agreement. Somerley Limited has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Tianji Acquisition, the Shandong Acquisition and the Fertilizer Purchase Framework Agreement.

A circular containing, among other things, details of the Tianji Acquisition, the Shandong Acquisition and the Fertilizer Purchase Framework Agreement, a letter from the independent financial adviser, a letter from the Independent Board Committee, and a notice to convene the SGM will be despatched to the shareholders of the Company as soon as practicable.

Background

As disclosed in the Company’s circular dated 13 June 2005, Sinochem Corporation has given the Non-Competition Undertaking in favour of the Company, pursuant to which the Company was granted, among other things, the Option to acquire Sinochem Corporation’s interests in Qinghai Salt Lake, Tianji JV and Sinochem Shandong, each at a fair market value.

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The Company exercised the Option in respect of the acquisition of Sinochem Corporation’s interest in Tianji JV and Sinochem Shandong respectively. On 28 November 2007 (after trading hours), the Purchaser, an indirect wholly-owned subsidiary of the Company, entered into the Tianji Acquisition Agreement and Shandong Acquisition Agreement respectively with Sinochem Corporation, pursuant to which the Purchaser conditionally agreed to acquire, and Sinochem Corporation conditionally agreed to sell, equity interest in Tianji JV and Sinochem Shandong respectively. The Tianji Acquisition and the Shandong Acquisition are not inter-conditional.

TIANJI ACQUISITION

Date of the Tianji Acquisition Agreement

28 November 2007

Parties

Purchaser: the Purchaser Vendor: Sinochem Corporation

Interest to be acquired

The Purchaser has conditionally agreed to acquire from Sinochem Corporation a 40% equity interest in Tianji JV.

Board representation

Upon completion of the Tianji Acquisition, the Purchaser will have the rights to nominate and appoint directors and/or senior management of Tianji JV in accordance with the rights currently held by Sinochem Corporation in accordance with the articles of association of Tianji JV.

Consideration

The total consideration for the Tianji Acquisition is approximately RMB208.83 million (equivalent to approximately HK$218.85 million), which will be payable by the Purchaser in cash in 2 instalments.

The consideration was arrived at after arm’s length negotiations between Sinochem Corporation and the Company, taking into account by the Company the asset appraisal value of Sinochem Corporation’s 40% equity interest in Tianji JV as at 30 June 2007 (being approximately RMB186.40 million (equivalent to approximately HK$195.35 million)) from the asset appraisal report prepared by an independent third party institution specialized in asset appraisals and authorized by the Ministry of Finance of the PRC, the potential growth momentum of Tianji JV, its long term growth prospects, and the potential synergies arising from further vertical business integration through the Tianji Acquisition.

The consideration in respect of the Tianji Acquisition will be funded by internal cash resources of the Company.

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Effectiveness of the Tianji Acquisition Agreement

The Tianji Acquisition Agreement will become effective upon all necessary consents, permits and other approvals necessary for or in respect of the Tianji Acquisition having been obtained from the relevant governmental and regulatory authorities in the PRC, including, without limitation, approval from the SASAC.

Conditions of the Tianji Acquisition

The Tianji Acquisition is conditional upon the following conditions:

• (i) the Tianji Acquisition Agreement having become effective;

• (ii) the senior management committee of Sinochem Corporation having passed resolutions to approve the execution and performance of the Tianji Acquisition Agreement;

• (iii) the Independent Shareholders having passed all necessary resolutions to approve the Tianji Acquisition Agreement and the transactions contemplated thereunder at a general meeting of the Company in accordance with the Listing Rules; and

• (iv) other shareholders of Tianji JV having agreed to forego any right of first refusal in respect of Sinochem Corporation’s 40% equity interest in Tianji JV.

Sinochem Corporation has undertaken to use its best endeavours to procure Tianji JV and its related parties to render assistance to the Purchaser in respect of all necessary procedures involving the subject sale transfer, including without limitation, audit and equity interest registration.

Payment

The consideration payable to Sinochem Corporation shall be satisfied in 2 instalments in the following manner:

• (a) within 5 business days of signing of the Tianji Acquisition Agreement, the Purchaser shall pay 30% of the consideration ( First Tianji Payment ) to Sinochem Corporation in cash; and

• (b) within 3 months of the fulfilment or waiver of the conditions under the section headed “Conditions of the Tianji Acquisition”, and in any event no later than 1 year from the date of signing the Tianji Acquisition Agreement, the remaining 70% of the consideration shall be payable in cash.

Completion

Upon payment of the consideration in full and the transfer and registration of the 40% equity interest in Tianji JV in the name of the Purchaser, the Tianji Acquisition Agreement shall be deemed completed.

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Termination

If, due to reasons beyond the control of either party, the 40% equity interest in Tianji JV is not registered in the name of the Purchaser within 6 months of the satisfaction of the conditions under the section headed “Conditions of the Tianji Acquisition”, the Tianji Acquisition Agreement will automatically terminate. Sinochem Corporation shall refund the First Tianji Payment (together with interest calculated at prevailing deposit interest rates) to the Purchaser within 10 days of termination of the Tianji Acquisition Agreement.

If the conditions under the section headed “Conditions of the Tianji Acquisition” are not satisfied within 6 months from the date of signing of the Tianji Acquisition Agreement, either party has the right to terminate the Tianji Acquisition Agreement.

SHANDONG ACQUISITION

Date of the Shandong Acquisition Agreement

28 November 2007

Parties

Purchaser: the Purchaser Vendor: Sinochem Corporation

Interest to be acquired

The Purchaser has conditionally agreed to acquire from Sinochem Corporation a 51% equity interest in Sinochem Shandong.

Board representation

Upon completion of the Shandong Acquisition, the Purchaser will have the rights to nominate and appoint directors and/or senior management of Sinochem Shandong in accordance with the rights currently held by Sinochem Corporation in accordance with the articles of association of Sinochem Shandong.

Consideration

The total consideration for the Shandong Acquisition is approximately RMB56.38 million (equivalent to approximately HK$59.09 million), which will be payable by the Purchaser in cash in 2 instalments.

The consideration was arrived at after arm’s length negotiations between Sinochem Corporation and the Company, taking into account by the Company the asset appraisal value of Sinochem Corporation’s 51% equity interest in Sinochem Shandong as at 30 June 2007 (being approximately RMB48.71 million (equivalent to HK$51.05 million)) from the asset appraisal report prepared by an independent third party institution specializing in asset appraisals and authorized by the Ministry of Finance of the PRC, the potential growth momentum of Sinochem Shandong, its long term growth prospects, and the potential synergies arising from further vertical business integration through the Shandong Acquisition.

The consideration in respect of the Shandong Acquisition will be funded by internal cash resources of the Company.

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Effectiveness of the Shandong Acquisition Agreement

The Shandong Acquisition Agreement will become effective upon all necessary consents, permits and other approvals necessary for or in respect of the Shandong Acquisition having been obtained from the relevant governmental and regulatory authorities in the PRC, including, without limitation, approval from the SASAC.

Conditions of the Shandong Acquisition

The Shandong Acquisition is conditional upon the following conditions:

• (i) the Shandong Acquisition Agreement having become effective;

• (ii) the senior management committee of Sinochem Corporation having passed resolutions to approve the execution and performance of the Shandong Acquisition Agreement;

• (iii) the Independent Shareholders having passed all necessary resolutions to approve the Shandong Acquisition Agreement and the transactions contemplated thereunder at a general meeting of the Company in accordance with the Listing Rules; and

• (iv) other shareholders of Sinochem Shandong having agreed to forego any right of first refusal in respect of Sinochem Corporation’s 51% equity interest in Sinochem Shandong.

Sinochem Corporation has undertaken to use its best endeavours to procure Sinochem Shandong and its related parties to render assistance to the Purchaser in respect of all necessary procedures involving the subject sale transfer, including without limitation, audit and equity interest registration.

Payment

The consideration payable to Sinochem Corporation shall be satisfied in 2 instalments in the following manner:

• (a) within 5 days of signing of the Shandong Acquisition Agreement, the Purchaser shall pay 30% of the consideration ( First Shandong Payment ) to Sinochem Corporation in cash; and

• (b) within 3 months of the fulfilment or waiver of the conditions under the section headed “Conditions of the Shandong Acquisition”, and in any event no later than 1 year from the date of signing of the Shandong Acquisition Agreement, the remaining 70% of the consideration shall be payable in cash.

Completion

Upon payment of the consideration in full and the transfer and registration of the 51% equity interest in Sinochem Shandong in the name of the Purchaser, the Shandong Acquisition Agreement shall be deemed completed.

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Termination

If, due to reasons beyond the control of either party, the 51% equity interest in Sinochem Shandong is not registered in the name of the Purchaser within 6 months of the satisfaction of the conditions under the section headed “Conditions of the Shandong Acquisition”, the Shandong Acquisition Agreement will automatically terminate. Sinochem Corporation shall refund the First Shandong Payment (together with interest calculated at prevailing deposit interest rates) to the Purchaser within 10 days of termination of the Shandong Acquisition Agreement.

If the conditions under the section headed “Conditions of the Shandong Acquisition” are not satisfied within 6 months from the date of signing of the Shandong Acquisition Agreement, either party has the right to terminate the Shandong Acquisition Agreement.

INFORMATION ON THE COMPANY AND SINOCHEM CORPORATION

The Company is principally engaged in the production, procurement and sale of fertilizers and related products in the PRC. The main business comprises research and development, production, procurement and distribution of fertilizers and forms a vertically integrated business model combining upstream and downstream businesses. The Company aims to serve the agricultural industry in the PRC by introducing quality resources from overseas and to ensure food safety in the PRC.

The Company’s subsidiaries, including the Purchaser, are also engaged in the production, import, export, distribution, wholesale and retail of fertilizer raw materials and products, as well as research and development and services in the field of fertilizer-related business and products.

Established in 1950, Sinochem Corporation is a key state-controlled enterprise. It holds a 100% equity interest in Sinochem HK, which in turn owns approximately 50.06% of the Company.

Sinochem Corporation’s core business is as follows: petroleum, fertilizer, trade, distribution and logistics of chemicals, crude oil, fuel oil and natural rubber futures; overseas oil and gas exploitation and production, refinery, chemical mining and washing, fertilizer and chemicals production; hotel and real estate development and operation. Sinochem Corporation is one of the four major stateowned oil companies and the largest fertilizer importer and phosphorus and compound fertilizer manufacturer in the PRC. It is also a major sales and marketing service provider of chemical products in the PRC.

INFORMATION ON TIANJI JV

Tianji JV was established in the PRC in August 2003, and currently has a registered capital of RMB500 million (equivalent to approximately HK$524 million), Tianji JV is currently owned as to 40% by Sinochem Corporation and as to 60% by Tianji Coal. Tianji Coal is in turn interested in 40% of Beijing Sinochem Tianji Distribution Company Limited, a subsidiary of the Company. Tianji Coal is therefore a connected person of the Company. Sinochem Corporation acquired its 40% equity interest in Tianji JV in September 2004 for a consideration of RMB200 million (equivalent to approximately HK$209.60 million).

Tianji JV is engaged in, among other things, the production and sales of urea granulate in the PRC. The manufacturing facilities of Tianji JV, which were completed and put into operation in January 2007, have the capacity to produce 600,000 tons of large granulated urea per year.

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Based on the unaudited financial statements of Tianji JV, which were prepared under PRC GAAP, its unaudited consolidated profits for the years ended 31 December 2005 and 31 December 2006 and the six months ended 30 June 2007 are as follows:

	Financial year	Financial year	Six months
	ended 31	ended 31	ended 30
	December 2005	December 2006	June 2007
			RMB(95.59) million
Unaudited consolidated (loss)			(equivalent to
profit before taxation and			approximately
minority interests	N/A	N/A	HK$(100.18) million)
			RMB(95.59) million
Unaudited consolidated (loss)			(equivalent to
profit after taxation and			approximately
minority interests	N/A	N/A	HK$(100.18) million)

The consolidated net asset value of Tianji JV, based on its unaudited financial statements as at 30 June 2007, was RMB404.41 million (equivalent to approximately HK$423.82 million). No income and expenditure was recognised in the statements of operation in the two years ended 31 December 2006 as any income and expenditure incurred during the two years ended 31 December 2006 was deferred for recognition in statements of operation until the company commenced operation under PRC GAAP.

It is currently intended that following completion of the Tianji Acquisition, the Company’s interest in Tianji JV will be treated as an associated company and will be equity accounted for.

The Tianji Guarantee

Currently, Sinochem Corporation has provided to independent third party banks a guarantee of up to RMB440 million (equivalent to HK$461.12 million) in respect of loan facilities granted by such independent third party banks to Tianji JV ( Tianji Guarantee ). The Company and Sinochem Corporation are in discussions for the Company to assume the Tianji Guarantee as soon as practicable after completion of the Tianji Acquisition. The Company will comply with applicable Listing Rules requirements, as and when appropriate.

INFORMATION ON SINOCHEM SHANDONG

Sinochem Shandong was established in the PRC in March 2004, with a registered capital of RMB50 million (equivalent to approximately HK$52.40 million) (of which Sinochem Corporation contributed as to 60%, or RMB30 million (equivalent to approximately HK$31.44 million)). The registered capital of Sinochem Shandong was increased to RMB100 million (equivalent to approximately HK$104.80 million) in February 2005 (of which Sinochem Corporation contributed as to 80%, or RMB80 million (equivalent to approximately HK$83.84 million)). Sinochem Corporation has since sold 29% of its equity interests in Sinochem Shandong. Sinochem Shandong is currently owned as to 51% by Sinochem Corporation.

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Since the completion of its first stage of construction at the end of 2004, Sinochem Shandong has been producing and selling nitrogen compound fertilizers in the PRC. The manufacturing facilities of Sinochem Shandong have the capacity to produce 600,000 tons of compound fertilizers per year.

Based on the unaudited financial statements of Sinochem Shandong, which were prepared under PRC GAAP, its unaudited consolidated profits for the years ended 31 December 2005 and 31 December 2006 and the six months ended 30 June 2007 are as follows:

	Financial year	Financial year	Six months
	ended 31	ended 31	ended 30
	December 2005	December 2006	June 2007
	RMB(28.47) million	RMB6.42 million	RMB(5.11) million
Unaudited consolidated (loss)	(equivalent to	(equivalent to	(equivalent to
profit before taxation and	approximately	approximately	approximately
minority interests	HK$(29.84) million)	HK$6.73 million)	HK$(5.36) million)
	RMB(28.47) million	RMB5.05 million	RMB(6.45) million
Unaudited consolidated (loss)	(equivalent to	(equivalent to	(equivalent to
profit after taxation and	approximately	approximately	approximately
minority interests	HK$(29.84) million)	HK$5.29 million)	HK$(6.76) million)

The consolidated net asset value of Sinochem Shandong, based on its unaudited financial statements as at 30 June 2007, was RMB70.14 million (equivalent to approximately HK$73.51 million).

Sinochem Shandong will become a subsidiary of the Company and its results will be consolidated into the accounts of the Company upon completion of the Shandong Acquisition.

The Shandong Loan

Currently, Sinochem Corporation, through a wholly-owned subsidiary, has provided to and for the benefit of Sinochem Shandong a loan of RMB150 million (equivalent to approximately HK$157.20 million) ( Shandong Loan ). It is expected that Sinochem Corporation will continue to provide the Shandong Loan to Sinochem Shandong subsequent to completion of the Shandong Acquisition.

REASONS FOR AND BENEFITS OF THE TIANJI ACQUISITION

The Tianji Acquisition will be of strategic significance to the Company in the following aspects:

• (i) Capitalize on the size and growth of China’s fertilizer market. The combined effects of China’s rapid economic growth, rising demand for agricultural products and the government’s focus on boosting the agricultural industry will translate into a continued rapid growth of fertilizer consumption in China. It is expected that China’s urea consumption for agricultural and industrial purposes will continue to grow at compound annual growth rates of 6% and 15% respectively in the years to come according to the China Nitrogen Fertilizer Industry Association;

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• (ii) Implement the Company’s strategy to become an integrated fertilizer manufacturer. The Company aims to transform from a pure-play fertilizer trading company to a leading comprehensive agrochemical product / service provider in China. The Tianji Acquisition will enable the Company to obtain large-scale production capacity of nitrogenous fertilizers and further secure the supply to its downstream distribution network. The Company will combine its existing competitive advantages in downstream distribution with its newly acquired upstream nitrogenous fertilizer production through the Tianji Acquisition, and will benefit from the synergies arising from further vertical business integration in the future;

• (iii) Benefit from the future growth of Tianji JV. Tianji JV was established in August 2003 as a greenfield project with the main focus on the production of granular urea. Currently capital expenditure for the company’s 600,000 ton capacity manufacturing facilities has substantially been completed. Located in Jincheng, the so-called “Coal Capital of China”, Tianji JV enjoys the advantages of low-cost raw materials and advanced production technology. Tianji JV began operations in January 2007 and is in ramp-up to its full designed capacity. Revenues of Tianji JV for the six months ended 30 June 2007 reached RMB453.95 million (equivalent to approximately HK$475.74 million) and net assets amounted to RMB404.41 million (equivalent to approximately HK$423.82 million). Tianji JV only commenced operations in January 2007 and was therefore loss-making for the six months ended 30 June 2007. However, its financial performance is expected to improve due to production ramp-up, enhancement of operating efficiency and establishment of brand recognition. The Company also views the Tianji Acquisition as a move of strategic value which will enable the Company to benefit from the growth momentum of Tianji JV and create additional value for the shareholders of the Company.

The directors (excluding the independent non-executive directors, whose views will be disclosed in the circular) of the Company are of the view that the transaction contemplated under the Tianji Acquisition Agreement is fair and reasonable, on normal commercial terms and in the interests of the Company and its shareholders as a whole.

REASONS FOR AND BENEFITS OF THE SHANDONG ACQUISITION

The Shandong Acquisition will be of strategic significance to the Company in the following aspects:

• (i) Capitalize on the size and growth of China’s fertilizer market. The combined effects of China’s rapid growth in economy, rising demand for agricultural products and the government’s focus on boosting the agricultural industry will translate into a continued rapid growth of fertilizer consumption in China. The Company understands that, due to increasing adoption of compound fertilizers in agriculture production, China’s compound fertilizer consumption is expected to continue to grow in the years to come;

• (ii) Implement the Company’s strategy to become an integrated fertilizer manufacturer. The Company aims to transform from a pure-play fertilizer trading company to a leading comprehensive agrochemical product / service provider in China. The Shandong Acquisition will enable the Company to obtain large-scale production capacity of compound fertilizers and further secure the supply to its downstream distribution network. The Company will combine its existing competitive advantages in downstream distribution with its newly acquired upstream compounded fertilizer production through the Shandong Acquisition, and will benefit from the synergies arising from further vertical business integration in the future;

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• (iii) Benefit from future growth of Sinochem Shandong. Sinochem Shandong began operation in December 2004, with main products of compound fertilizers. Sinochem Shandong is located in Linyi, Shandong Province, one of China’s largest production base for compound fertilizers, and enjoys geographical proximity to one of the largest consumption markets for compound fertilizers in China surrounding Shandong province. Sinochem Shandong also benefits from technological advantages from its newly built production facilities. Revenues of Sinochem Shandong for the six months ended 30 June 2007 reached RMB321.05 million (equivalent to approximately HK$336.46 million) and net assets amounted to RMB70.14 million (equivalent to approximately HK$73.51 million). Sinochem Shandong was loss-making in the year ended 31 December 2005 and the six months ended 30 June 2007. However, its financial performance is expected to improve due to enhancement of operating efficiency and establishment of brand recognition. The Company also views the acquisition of Sinochem Shandong as a move of strategic value which will enable the Company to benefit from the growth momentum of Sinochem Shandong to create additional value for the shareholders of the Company.

The directors (excluding the independent non-executive directors, whose views will be disclosed in the circular) of the Company are of the view that the transaction contemplated under the Shandong Acquisition Agreement is fair and reasonable, on normal commercial terms and in the interests of the Company and its shareholders as a whole.

CONTINUING CONNECTED TRANSACTION

Background

The Purchaser in its ordinary and usual course of business has purchased fertilizer products from Qinghai Salt Lake. Upon completion of the Shandong Acquisition, Qinghai Salt Lake will become a connected person of the Company by reason of Qinghai Salt Lake being an associate of Qinghai Salt Lake Industry Group, which is a substantial shareholder of Sinochem Shandong, in turn a subsidiary of the Company.

Details of the Fertilizer Purchase Framework Agreement

In its ordinary and usual course of business, the Purchaser entered into the Fertilizer Purchase Framework Agreement with Qinghai Salt Lake on 26 November 2007. The Fertilizer Purchase Framework Agreement will apply from the beginning of the financial year 2008 and expire on 31 December 2010.

Pursuant to the Fertilizer Purchase Framework Agreement, Qinghai Salt Lake will supply, and the Purchaser will purchase, chemical and fertilizer products and materials. The price of the fertilizers shall be their fair market price in the PRC at the time the purchase order is placed, and shall be exclusive of the relevant transport fees. The Purchaser shall provide monthly to Qinghai Salt Lake a purchase plan setting out the quantity of potash fertilizer the Purchaser intends to purchase for the following month, and shall pay in advance to Qinghai Salt Lake a deposit equivalent to 50% of the purchase price for such quantity. The remaining purchase price shall be calculated based on the actual quantity of potash fertilizer purchased by the Purchaser in the relevant month, and the Purchaser shall pay to Qinghai Salt Lake such remaining purchase price before the 10th day of the following month.

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The historical amounts of transactions between the Purchaser and Qinghai Salt Lake for the sale and purchase of potash fertilizer products for the two years ended 31 December 2006 and the six months ended 30 June 2007 were approximately RMB779,148,488 (equivalent to approximately HK$816,546,309), RMB870,339,564 (equivalent to approximately HK$912,114,404) and RMB479,152,316 (equivalent to approximately HK$502,150,824), respectively. The Company estimates that the maximum annual amount of purchases of potash fertilizers by the Purchaser under the Fertilizer Purchase Framework Agreement will be approximately RMB2,400,000,000 (equivalent to approximately HK$2,515,195,975), RMB2,880,000,000 (equivalent to approximately HK$3,018,235,170) and RMB4,200,000,000 (equivalent to approximately HK$4,401,592,957) for each of the three years ending 31 December 2010. Such estimates are calculated based on projected quantities of sales and the projected average price of the chemical and fertilizer products and materials to be purchased by the Purchaser for each of the relevant years, having regard to the anticipated growth of fertilizer consumption in the PRC in the future and the continuing expansion of the Group’s sales network.

Information on Qinghai Salt Lake

Qinghai Salt Lake is a state-controlled joint stock limited liability company established in the PRC in 1997 whose shares are traded on the Shenzhen Stock Exchange. Its principal activities are the development, production and distribution of chlorine potassium. Other activities include the development, production and distribution of carnallite and low adopt carnallite and the development, processing and smelting of other mining products.

Qinghai Salt Lake is currently owned as to 30.06% by Qinghai Salt Lake Industry Group. As disclosed in the Company’s announcement dated 17 October 2007, the Purchaser has entered into an acquisition agreement with Sinochem Corporation pursuant to which the Purchaser agreed to purchase, and Sinochem Corporation agreed to sell, shares of Qinghai Salt Lake representing an approximate 18.49% interest in Qinghai Salt Lake.

Directors’ view of the Fertilizer Purchase Framework Agreement

The directors (excluding the independent non-executive directors whose views will be set out in the circular) are of the view that the Fertilizer Purchase Framework Agreement has been conducted on normal commercial terms, were entered into in the ordinary and usual course of business of the Group, are fair and reasonable and in the interests of the Company and its shareholders as a whole, and that the maximum annual value of the Fertilizer Purchase Framework Agreement is fair and reasonable.

Reasons and benefits for the Fertilizer Purchase Framework Agreement

The Fertilizer Purchase Framework Agreement was entered into to establish a strategic partnership between the Purchaser, a substantial distributor of potash fertilizer in the PRC, and Qinghai Salt Lake, a substantial manufacturer of potash fertilizer in the PRC. The Fertilizer Purchase Framework Agreement will allow the Purchaser to obtain a steady supply of potash fertilizer, providing a platform for the Purchaser to maintain its status as a substantial distributor of potash fertilizer in the PRC and to further expand its business.

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LISTING RULES IMPLICATIONS

The Tianji Acquisition Agreement constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. The Shandong Acquisition Agreement does not constitute a notifiable transaction of the Company under Chapter 14 of the Listing Rules. Furthermore, as Sinochem Corporation is a connected person of the Company by reason of it being a substantial shareholder of the Company, each of the Tianji Acquisition Agreement and the Shandong Acquisition Agreement constitutes a connected transaction of the Company. Given that the relevant applicable percentage ratios set out in the Listing Rules for each of the Tianji Acquisition and the Shandong Acquisition are more than 2.5% and the consideration is more than HK$10,000,000, each of the Tianji Acquisition and the Shandong Acquisition is subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. If aggregated, the Tianji Acquisition and the Shandong Acquisition would constitute a discloseable and connected transaction of the Company.

Given that the relevant applicable percentage ratios set out in the Listing Rules for determining the value for the Fertilizer Purchase Framework Agreement is expected to be 2.5% or above on an annual basis and the annual consideration is more than HK$10,000,000, the Fertilizer Purchase Framework Agreement falls within Rule 14A.35 of the Listing Rules, and is subject to the disclosure and approval requirements under Rules 14A.45, 14A.46 and 14A.48 and the annual review requirements under Rules 14A.37 and 14A.38 of the Listing Rules.

To the best of the knowledge, information and belief of the directors of the Company, having made all reasonable enquiries, apart from Sinochem HK and its associates, no other shareholder of the Company will be required to abstain from voting on the resolutions to approve the Tianji Acquisition, the Shandong Acquisition and the Fertilizer Purchase Framework Agreement at the SGM.

Upon completion of the Shandong Acquisition, whereupon Sinochem Shandong will become a subsidiary of the Company, the Shandong Loan will be treated as a connected transaction of the Company under the Listing Rules. However, as the Shandong Loan was made for the benefit of Sinochem Shandong on normal commercial terms and does not involve security over the assets of the Company or its subsidiaries (including Sinochem Shandong), the Shandong Loan is exempt from the reporting, announcement and independent shareholders’ approval requirements under Listing Rule 14A.65(4).

Citigroup is the financial adviser to the Company in respect of the Tianji Acquisition and the Shandong Acquisition.

GENERAL

An Independent Board Committee of the Company has been formed to advise the Independent Shareholders in respect of the Tianji Acquisition, Shandong Acquisition and the Fertilizer Purchase Framework Agreement. Somerley Limited has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Tianji Acquisition, the Shandong Acquisition and the Fertilizer Purchase Framework Agreement.

A circular containing, among other things, details of the Tianji Acquisition, the Shandong Acquisition and the Fertilizer Purchase Framework Agreement, a letter from the independent financial adviser, a letter from the Independent Board Committee, and a notice to convene the SGM will be despatched to the shareholders of the Company as soon as practicable.

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DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions have the following meanings:

“Acquisitions”	the Tianji Acquisition and the Shandong Acquisition
“associate”	has the meaning given to it under the Listing Rules
“Citigroup”	Citigroup Global Markets Asia Limited
“Company”	Sinofert Holdings Limited, a company incorporated on 26 May
	1994 in Bermuda with limited liability, the ordinary shares of
	which are listed on the Stock Exchange
“connected person”	has the meaning given to it under the Listing Rules
“Fertilizer Purchase	the framework agreement in respect of sale and purchase of
Framework Agreement”	fertilizer products entered into between the Purchaser and Qinghai
	Salt Lake dated 26 November 2007
“Hong Kong”	Hong Kong Special Administrative Region of the PRC
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Independent Board	the committee of independent non-executive directors of the
Committee”	Company formed to advise the Independent Shareholders in respect
	of the terms of the Acquisition and Fertilizer Purchase Framework
	Agreement
“Independent Shareholders”	shareholders of the Company other than Sinochem HK and its
	associates
“Listing Rules”	the Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited
“Non-Competition	the non-competition undertaking dated 6 June 2005 entered into
Undertaking”	by Sinochem Corporation in favour of the Company
“Option”	an option granted by Sinochem Corporation to the Company
	pursuant to the Non-Competition Undertaking for the acquisition
	of Sinochem Corporation’s interests in Qinghai Salt Lake, Tianji
	JV and Sinochem Shandong
“PRC”	the People’s Republic of China, which for the purposes of this
	announcement excludes Hong Kong, Macau and Taiwan
“PRC GAAP”	generally accepted accounting principles in the PRC
“Purchaser”	Sinochem Fertilizer Company Limited, a company incorporated in
	the PRC, and an indirect wholly-owned subsidiary of the Company

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“Qinghai Salt Lake”	青海鹽湖鉀肥股份有限公司(Qinghai Salt Lake Potash Co. Ltd),
	a joint stock limited liability company whose shares are listed on
	the Shenzhen Stock Exchange under stock code 000792
“Qinghai Salt Lake	青海鹽湖工業（集團）有限公司(Qinghai Salt Lake Industry Group
Industry Group”	Co. Ltd) a limited liability company which holds approximately
	30.6% of the total issued share capital of Qinghai Salt Lake
“RMB”	Renminbi, the lawful currency of the PRC
“SASAC”	State-owned Assets Supervision and Administration Commission
	of the State Council of the PRC
“SGM”	the special general meeting of the Company to be convened to
	consider and, if thought fit, approve, among other things, the
	Acquisitions and Fertilizer Purchase Framework Agreement and
	the transactions contemplated thereunder
“Shandong Acquisition”	the proposed acquisition of a 51% equity interest in Sinochem
	Shandong
“Shandong Acquisition	conditional sale and purchase agreement dated 28 November 2007
Agreement”	between Sinochem Fertilizer Company Limited (as purchaser) and
	Sinochem Corporation (as seller) in relation to the Shandong
	Acquisition
“Sinochem Corporation”	中國中化集團公司(Sinochem Corporation), a state-owned
	enterprise established in the PRC formerly known as China National
	Chemicals Import & Export Corporation
“Sinochem HK”	Sinochem Hong Kong (Group) Company Limited (formerly known
	as Sinochem Hong Kong (Holdings) Company Limited), a company
	incorporated in Hong Kong with limited liability which is wholly-
	owned by Sinochem Corporation
“Sinochem Shandong”	中化山東肥業有限公司(Sinochem Shandong Chemical Fertilizer
	Company Limited), a limited liability company established in the
	PRC
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Tianji Acquisition”	the proposed acquisition of a 40% equity interest in Tianji JV
“Tianji Acquisition	conditional sale and purchase agreement dated 28 November 2007
Agreement”	between Sinochem Fertilizer Company Limited (as purchaser) and
	Sinochem Corporation (as seller) in relation to the Tianji
	Acquisition
“Tianji Coal”	天脊煤化工（集團）有限公司(Tianji Coal and Chemical
	Engineering Group Company Limited), a limited liability company
	established in the PRC

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“Tianji JV”

天脊中化高平化工有限公司 (Tianji Sinochem Gaoping Chemical Engineering Company Ltd.), a limited liability company established in the PRC

This announcement contains translation of HK$ into RMB at the rate of HK$1.00 to RMB0.9542. The translation shall not be taken as representation that any amounts in RMB or HK$ could be converted at such rate or at any other rate.

As at the date of this announcement, the executive directors of the Company are Mr. Du Ke Ping (Chief Executive Officer) and Mr. Harry Yang; the non-executive directors are Mr. Liu De Shu (Chairman), Mr. Song Yu Qing (Deputy Chairman), Mr. Chen Guo Gang, Mr. Stephen Francis Dowdle and Mr. Wade Fetzer III; and the independent non-executive directors are Mr. Tse Hau Yin, Aloysius, Mr. Ko Ming Tung, Edward, and Mr. Tang Tin Sek.

By order of the Board of Sinofert Holdings Limited Du Ke Ping Chief Executive Officer

Hong Kong, 28 November 2007

• For identification purposes only

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