CWT International Limited — Proxy Solicitation & Information Statement 2015

Feb 25, 2015

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your Shares in Sinofert Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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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)

CONTINUING CONNECTED TRANSACTIONS UNDER THE NEW MOU

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

SOMERLEY CAPITAL LIMITED

A letter from the Board is set out on pages 4 to 9 of this circular. A letter from the Independent Board Committee containing its advice to the Independent Shareholders is set out on pages 10 to 11 of this circular. A letter from Somerley, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 12 to 20 of this circular.

A notice convening the SGM of Sinofert Holdings Limited to be held at Salon I, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong on 17 March 2015 at 10:00 a.m. is set out on pages 24 to 25 of this circular. Whether or not you are able to attend and vote at the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office of the Company in Hong Kong, Tricor Secretaries Limited, Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof. Completion and return of the form of proxy as instructed will not preclude you from subsequently attending and voting at the meeting or any adjourned meeting if you so wish.

• For identification purposes only

26 February 2015

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . .	10
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER. . . . . . . . . . . . . . .	12
APPENDIX 1 −GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
NOTICE OF SPECIAL GENERAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24

– i –

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meaning:

• “associate(s)” has the same meaning ascribed to it under the Listing Rules

• “Board” the board of Directors of the Company

• “Canpotex” Canpotex Limited, a company incorporated in Canada, which is held as to 33.33% by Potash Corporation

• “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 same meaning ascribed to it under the Listing Rules

• “Director(s)” the director(s) of the Company

• “Group” the Company and its subsidiaries

• “HK$”

• Hong Kong dollars, the lawful currency of Hong Kong

• “Hong Kong”

• Hong Kong Special Administrative Region of the PRC

• “Independent Board Committee”

• the independent board committee of the Company formed to consider the New MOU, the transactions contemplated thereunder and the proposed annual caps

• “Independent Financial Adviser” or “Somerley”

• Somerley Capital Limited, a licensed corporation to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities as defined under the SFO, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the New MOU, the transactions contemplated thereunder and the proposed annual caps

• “Independent Shareholders”

• shareholders other than Potash Corporation and its associates

• “Latest Practicable Date”

23 February 2015, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

– 1 –

DEFINITIONS

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “Macao” Macao Special Administrative Region of the PRC “MOU” the memorandum of understanding dated 13 December 2013 entered into between Sinochem Macao and Canpotex International Pte. Limited (on behalf of Canpotex) “New MOU” the memorandum of understanding dated 12 January 2015 entered into between Sinochem Macao and Canpotex International Pte. Limited (on behalf of Canpotex) “Potash Corporation” Potash Corporation of Saskatchewan Inc., a corporation incorporated in Canada with its shares listed on the Toronto Stock Exchange and the New York Stock Exchange, and a substantial shareholder of the Company “PRC” the People’s Republic of China, which for the purposes of this circular only, excludes Hong Kong, Macao and Taiwan “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SGM” the special general meeting of the Company to be held at Salon I, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong on 17 March 2015 at 10:00 a.m., or any adjournment thereof, the notice of which is set out on pages 24 to 25 of this circular

• “Share(s)” ordinary share(s) of HK$0.10 each in the capital of the Company

• “shareholder(s)” registered holder(s) of Shares “Sinochem Group” 中國中化集團公司 (Sinochem Group), a state-owned enterprise incorporated in the PRC and the ultimate controlling shareholder of the Company

• “Sinochem Macao” 中化化肥澳門離岸商業服務有限公司 (Sinochem Fertilizer Macao Commercial Offshore Limited), a company incorporated in Macao on 16 November 2004 and an indirect wholly-owned subsidiary of the Company

– 2 –

DEFINITIONS

“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“subsidiary(ies)”	has the same meaning ascribed to it under the Listing
	Rules
“substantial shareholder(s)”	has the same meaning ascribed to it under the Listing
	Rules
“US$”	US dollars, the lawful currency of the United States of
	America
“%”	percent

For the purposes of illustration only, US$ is translated into HK$ at the rate of US$1.00 = HK$7.7544. No representation is made that any amount in US$ has been or could be converted at the above rate or at any other rates or at all.

– 3 –

LETTER FROM THE BOARD

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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)

Executive Directors: WANG Hong Jun (Chief Executive Officer) Harry YANG

Non-executive Directors: LIU De Shu (Chairman) YANG Lin Stephen Francis DOWDLE XIANG Dandan

Independent Non-executive Directors: KO Ming Tung, Edward TSE Hau Yin, Aloysius

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Principal place of business: Units 4601-4610, 46th Floor Office Tower Convention Plaza 1 Harbour Road Wanchai Hong Kong

26 February 2015

To: the shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS UNDER THE NEW MOU

INTRODUCTION

Reference is made to the announcement of the Company dated 12 January 2015 in relation to the New MOU. The transactions contemplated under the New MOU constitute continuing connected transactions of the Company, and are subject to the reporting, announcement, annual review and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The purpose of this circular is to provide you with (i) further information on the details of the New MOU, the transactions contemplated thereunder and the proposed annual caps; (ii) the letter of advice from the Independent Board Committee to the Independent

• For identification purposes only

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LETTER FROM THE BOARD

Shareholders; (iii) the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; (iv) the notice of the SGM; and (v) other information as required under the Listing Rules.

CONTINUING CONNECTED TRANSACTIONS UNDER THE NEW MOU

Reference is made to the announcement of the Company dated 13 December 2013 in relation to the MOU entered into between Sinochem Macao, an indirect wholly-owned subsidiary of the Company, and Canpotex International Pte. Limited (on behalf of Canpotex), for the supply of Canadian potash by Canpotex to Sinochem Macao. The MOU expired on 31 December 2014.

On 12 January 2015, Sinochem Macao and Canpotex International Pte. Limited (on behalf of Canpotex) entered into the New MOU, pursuant to which Sinochem Macao will continue to purchase Canadian potash from Canpotex during the period from 1 January 2015 to 31 December 2017.

Principal Terms of the New MOU

Date

12 January 2015

Parties

Sinochem Macao

Canpotex International Pte. Limited (on behalf of Canpotex)

Nature of transactions

Under the New MOU, Canpotex shall supply, and Sinochem Macao shall purchase, a minimum of 500,000 tonnes, 650,000 tonnes and 750,000 tonnes of red standard grade potash for the three years ending 31 December 2017, respectively. In addition to red standard grade potash, Sinochem Macao shall have the option to purchase from Canpotex a maximum of 800,000 tonnes of other grades of Canadian potash for each of the three years ending 31 December 2017.

Under the circumstances specified in the New MOU, Sinochem Macao shall have the exclusive right to sell red standard grade potash sourced from Canpotex in the PRC market.

The parties will enter into specific agreements pursuant to the New MOU, setting out detailed terms of the transactions.

– 5 –

LETTER FROM THE BOARD

Pricing

Prices will be determined on a six-month basis through mutual negotiations between the parties with reference to prevailing international market potash prices and competitive sea import prices to the PRC. If Sinochem Macao and Canpotex cannot reach final agreements on prices pursuant to the New MOU by certain specified dates, both parties will be free to pursue business through alternative channels.

In determining such prices, the parties generally make reference to weekly reports published by certain independent commodity information providers such as Argus Media and Baichuan（百川資訊）. Such reports, usually updated on a weekly basis and available to the Company by subscription, provide up to date information on market trend and prevailing market prices.

In addition, the Group maintains regular contacts with domestic and overseas potash producers, distributors and traders, keeping abreast of the latest international and domestic market prices. Before placing a purchase order with Canpotex, the Group usually makes reference to the prices under its long-term agreements with other potash suppliers and takes into account the demand of its downstream customers when determining the prices and quantities of the transactions with Canpotex. Such prices will be reported to the manager of the potash department, and then submitted to the vice president in charge of the potash business for approval and in certain circumstances, the price will be subject to the approval from a more senior management level.

As the procurement and approval process involves reference to industry reports as well as up to date market prices as mentioned above, the Company considers that methods and procedures adopted above can ensure that the transactions will be conducted on normal commercial terms and not prejudicial to the interests of the Company and its minority shareholders.

Payment

Payments may be settled by way of letter of credit or such other means as may be decided upon by the parties.

Term and termination

Three years from 1 January 2015 to 31 December 2017. The New MOU may be terminated by either party giving a written notice to the other party by 30 June for termination on 31 December of the same year.

Annual Caps

The proposed annual caps for the three years ending 31 December 2017 in respect of the continuing connected transactions contemplated under the New MOU are US$435,500,000 (equivalent to approximately HK$3,377,041,000), US$500,250,000 (equivalent to approximately HK$3,879,139,000) and US$550,250,000 (equivalent to approximately HK$4,266,859,000), respectively. Such annual caps are determined based on

– 6 –

LETTER FROM THE BOARD

the estimated volume and prices of purchases pursuant to the New MOU, with reference to the transaction volume of potash purchased for the previous years and taking into account the demand for potash imports into the PRC in recent years. When estimating the purchase quantities for the three years ending 31 December 2017, the Group has taken into account the minimum purchase quantities of red standard grade potash and the maximum purchase quantities of other grades of Canadian potash as stipulated in the New MOU, and estimated the total purchase quantities to be 1,300,000 tonnes, 1,450,000 tonnes and 1,550,000 tonnes for the three years ending 31 December 2017, respectively. When estimating the potash price for the three years ending 31 December 2017, the Group has made reference to the average international market price of potash in 2014 and also taken into account the potential price changes for the estimated import prices of potash in the future.

The historical amounts of such continuing connected transactions for the two years ended 31 December 2013 and the eleven months ended 30 November 2014 were approximately US$361,080,000 (equivalent to approximately HK$2,799,959,000), US$409,122,000 (equivalent to approximately HK$3,172,496,000) and US$283,616,000 (equivalent to approximately HK$2,199,272,000), respectively. The fluctuation in the historical amount is mainly due to the fact that (i) the Group made additional purchases of potash from Canpotex during the year of 2013 following the decline in market price of potash in 2013, as a result of which, despite the drop in unit price, the transaction amount increased approximately 13.3% as compared to 2012; and (ii) the Group made purchases from Canpotex at even lower prices in 2014, which explained the comparatively lower transaction amount for the eleven months ended 30 November 2014 as compared to 2013.

Reasons of and Benefits for the Continuing Connected Transactions

With the increasing demand for potash in the PRC, by entering into the New MOU, the Group will further enrich its operational resources and ensure a stable supply of the relatively rare mineral fertilizer of potash. The production of potash in the PRC falls short of domestic demand. Each year the PRC needs to import considerable quantities of potash to meet the increasing demand of potash for domestic agricultural production. The import of potash products from Canpotex under the New MOU will help enrich the operational resources of the Group.

The Directors (including the independent non-executive Directors) are of the view that the continuing connected transactions contemplated under the New MOU have 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 the shareholders as a whole, and that the annual caps for the continuing connected transactions contemplated under the New MOU are fair and reasonable.

Dr. Stephen Francis Dowdle and Ms. Xiang Dandan are regarded as having a material interest in the New MOU and have abstained from voting on the relevant Board resolution passed to approve the New MOU and the transactions contemplated thereunder.

– 7 –

LETTER FROM THE BOARD

Implications of the Listing Rules

Sinochem Macao is an indirect wholly-owned subsidiary of the Company. Potash Corporation is a substantial shareholder of the Company holding approximately 22.26% of the issued share capital of the Company. Canpotex, owned as to 33.33% by Potash Corporation, is an associate of Potash Corporation, and is therefore a connected person of the Company. As such, the transactions contemplated under the New MOU constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules. Given that the relevant applicable percentage ratios in respect of the annual caps of the continuing connected transactions under the New MOU are more than 5%, such transactions are subject to the reporting, announcement, annual review and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The transaction amounts of the continuing connected transactions under the New MOU will be closely monitored to ensure that they fall within 5% of the applicable percentage ratios as defined in the Listing Rules, prior to obtaining approval from the Independent Shareholders at the SGM.

General Information

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 security in the PRC.

Sinochem Macao is principally engaged in sourcing fertilizer products and other related agricultural products for the Group from overseas.

Canpotex is principally engaged in offshore marketing of potash products for its three owners. Canpotex is owned as to 33.33% by Potash Corporation, one of the largest potash producers in the world.

SGM

A resolution approving the New MOU, the transactions contemplated thereunder and the proposed annual caps shall be proposed at the SGM.

In view of Potash Corporation’s interests in the New MOU, Potash Corporation and its associates are required to abstain and shall abstain from voting on the resolution to be proposed at the SGM to approve the New MOU, the transactions contemplated thereunder and the proposed annual caps.

A notice convening the SGM to be held at Salon I, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong on 17 March 2015 at 10:00 a.m., is set out on pages 24 to 25 of this circular.

– 8 –

LETTER FROM THE BOARD

A form of proxy for the SGM is enclosed herewith. Whether or not shareholders are able to attend and vote at the SGM, they are requested to complete the enclosed form of proxy and return the same to the branch share registrar and transfer office of the Company in Hong Kong, Tricor Secretaries Limited, Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong in accordance with the instructions printed thereon as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof. Completion and return of the form of proxy as instructed will not prevent shareholders from subsequently attending and voting at the SGM or any adjourned meeting if they so wish.

RECOMMENDATION

The Directors (including the independent non-executive Directors) are of the view that the continuing connected transactions contemplated under the New MOU have 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 the shareholders as a whole, and that the annual caps for the continuing connected transactions contemplated under the New MOU are fair and reasonable. The Directors therefore recommend the Independent Shareholders to vote in favour of the resolution set out in the notice of the SGM.

FURTHER INFORMATION

The Independent Board Committee comprising two independent non-executive Directors has been formed to advise the Independent Shareholders in respect of the New MOU, the transactions contemplated thereunder and the proposed annual caps. Somerley has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in such regard. Accordingly, your attention is drawn to the letter from the Independent Board Committee set out on pages 10 to 11 of this circular, which contains its advice to the Independent Shareholders and the letter from the Independent Financial Adviser set out on pages 12 to 20 of this circular, which contains its advice to the Independent Board Committee and the Independent Shareholders.

Your attention is also drawn to the additional information set out in the Appendix to this circular.

Yours faithfully, For and on behalf of the Board of Sinofert Holdings Limited Wang Hong Jun

Executive Director and Chief Executive Officer

– 9 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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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)

26 February 2015

To: the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS UNDER THE NEW MOU

We refer to the circular of the Company dated 26 February 2015 (the “ Circular ”) to the shareholders, of which this letter forms part. Terms defined in the Circular have the same meanings in this letter unless the context otherwise requires.

In compliance with the Listing Rules, we have been appointed to advise the Independent Shareholders as to whether, in our opinion, the New MOU and the transactions contemplated thereunder (including the proposed annual caps) are entered into by the Group in its ordinary and usual course of business, on normal commercial terms, in the interests of the Company and the shareholders as a whole and are fair and reasonable so far as the Independent Shareholders are concerned. In this connection, Somerley has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the New MOU and the transactions contemplated thereunder (including the proposed annual caps).

We wish to draw your attention to the letter from the Board set out on pages 4 to 9 of the Circular, and the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders set out on pages 12 to 20 of the Circular which contains its opinion in respect of the New MOU and the transactions contemplated thereunder (including the proposed annual caps).

Having taken into account the advice of the Independent Financial Adviser and its recommendation in relation thereto, we consider that the New MOU and the transactions contemplated thereunder (including the proposed annual caps) are entered into by the Group in its ordinary and usual course of business, on normal commercial terms, in the interests of

• For identification purposes only

– 10 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

the Company and the shareholders as a whole and are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend that you vote in favour of the resolution set out in the notice of the SGM.

Yours faithfully, Independent Board Committee of Sinofert Holdings Limited Tse Hau Yin, Aloysius Ko Ming Tung, Edward

– 11 –

LETTER FROM SOMERLEY

The following is the text of the letter of advice from Somerley to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of inclusion in this circular.

SOMERLEY CAPITAL LIMITED

20th Floor China Building 29 Queen’s Road Central Hong Kong

26 February 2015

• To: the Independent Board Committee and the Independent Shareholders

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS UNDER THE NEW MOU

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee and the Independent Shareholders in relation to the purchases of Canadian potash by Sinochem Macao from Canpotex pursuant to the terms of the New MOU for the three years ending 31 December 2017 (the “ Continuing Connected Transactions ”), including the proposed annual caps (the “ Annual Caps ”), for which the Independent Shareholders’ approval is being sought. Details of the Continuing Connected Transactions and the Annual Caps are contained in the circular of the Company to the Shareholders dated 26 February 2015 (the “ Circular ”), of which this letter forms part. Unless the context otherwise requires, terms used in this letter shall have the same meanings as defined in the Circular.

Sinochem Macao is a wholly-owned subsidiary of the Company. Potash Corporation is a substantial shareholder of the Company, interested in approximately 22.3% of the issued Shares as of the Latest Practicable Date. Canpotex, which is approximately 33.3% owned by Potash Corporation, is an associate of Potash Corporation and therefore a connected person of the Company under the Listing Rules. Accordingly, the transactions contemplated under the New MOU constitute continuing connected transactions of the Company under the Listing Rules. As the relevant applicable percentage ratios in respect of the Annual Caps are more than 5%, the Continuing Connected Transactions are subject to the reporting, announcement, annual review and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

In view of Potash Corporation’s interests in the New MOU, Potash Corporation and its associates are required to abstain from voting on the resolution to be proposed at the SGM to approve the Continuing Connected Transactions (including the Annual Caps).

– 12 –

LETTER FROM SOMERLEY

The Independent Board Committee comprising both independent non-executive Directors, namely Mr. Tse Hau Yin, Aloysius and Mr. Ko Ming Tung, Edward, has been established to advise the Independent Shareholders whether the terms of the Continuing Connected Transactions (including the Annual Caps) are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. We, Somerley, have been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

During the past two years, Somerley and Somerley Limited (now known as “Somerley International Limited” and a fellow subsidiary of Somerley) have acted as independent financial advisers to the independent board committee and independent shareholders of the Company in relation to certain continuing connected transactions of the Group (details of which were set out in the circulars of the Company dated 8 January 2014, 25 April 2014 and 27 January 2015). The past engagements were limited to providing independent advisory services to the independent board committee and independent shareholders of the Company pursuant to the Listing Rules, for which Somerley and Somerley Limited received normal professional fees and consequently we do not consider any conflict of interest arises from them. As at the Latest Practicable Date, there were no relationships or interests between (a) Somerley and (b) the Group, Canpotex and their respective subsidiaries and associates that could reasonably be regarded as a hindrance to our independence as defined under Rule 13.84 of the Listing Rules to act as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Continuing Connected Transactions as detailed in the Circular.

In formulating our opinion and recommendation, we have relied on the information and facts supplied, and the opinions expressed, by the Directors and management of the Company and have assumed that such information, facts and opinions were true, accurate and complete in all material aspects and will remain so up to the time of the SGM. We have also sought and received confirmation from the Directors that no material facts have been omitted from the information supplied and opinions expressed to us. We consider that the information we have received is sufficient for us to reach an informed view and have no reason to believe that any material information has been withheld, or to doubt the truth, accuracy or completeness of the information provided. We have not conducted any independent investigation into the business, affairs and financial position of the Group or Canpotex, nor have we carried out any independent verification of the information supplied.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation on the terms of the Continuing Connected Transactions (including the Annual Caps), we have taken the following principal factors and reasons into consideration:

1. Information on Sinochem Macao and Canpotex

Sinochem Macao is incorporated in Macao. As a wholly-owned subsidiary of the Company, Sinochem Macao is principally engaged in sourcing fertilizer products and other related agricultural products for the Group from overseas suppliers.

– 13 –

LETTER FROM SOMERLEY

Canpotex is a Canadian corporation owned by Potash Corporation and two other potash producers. It is principally engaged in offshore marketing of potash products for its three owners. Potash Corporation, one of the shareholders of Canpotex, is also a Canadian corporation with its shares listed on the Toronto Stock Exchange and the New York Stock Exchange.

2. Background to and reasons for the Continuing Connected Transactions

Since 2005, Sinochem Macao has been purchasing Canadian potash from Canpotex. We are advised by the management of the Group that the PRC needs to import considerable quantities of potash each year for domestic agricultural production, principally because the production of potash in the PRC falls short of domestic demand. The previous supply of Canadian potash to the Group was governed by the MOU dated 13 December 2013, for a term of one year, which was approved by the then independent shareholders at a shareholders’ meeting held on 24 January 2014.

Since the MOU has expired on 31 December 2014, the Group considers that the New MOU is required. Accordingly, on 12 January 2015, the New MOU was entered into between Sinochem Macao and Canpotex International Pte. Limited (on behalf of Canpotex) to specify the quantities of Canadian potash to be supplied by Canpotex to Sinochem Macao for the three years ending 31 December 2017. We are advised by the management of the Group that the main reason why the transactions with Canpotex are being renewed for three years under the New MOU, instead of for one year, is to ensure a stable supply of the relatively rare mineral fertilizer of potash in the coming years.

3. Principal terms of the Continuing Connected Transactions

Pursuant to the New MOU, Sinochem Macao will purchase a minimum of 500,000 tonnes, 650,000 tonnes and 750,000 tonnes of red standard grade potash for the three years ending 31 December 2017. In addition to red standard grade potash, Sinochem Macao will have the option to purchase from Canpotex a maximum of 800,000 tonnes of other grades of Canadian potash for each of the three years ending 31 December 2017. As a reference, the annual seaborne potash imports to the PRC were approximately 4.1 million tonnes and 6.7 million tonnes in 2013 and 2014 respectively.

Sinochem Macao will have the exclusive right to sell red standard grade potash sourced from Canpotex in the PRC market under the circumstances specified in the New MOU.

Pursuant to the New MOU, prices for the Canadian potash to be supplied will be determined on a six month basis through mutual negotiations between the parties with reference to prevailing international market potash prices and competitive sea import prices to the PRC, which can be obtained from various sources published by certain independent commodity information providers. If Sinochem Macao and Canpotex cannot reach final agreement on prices pursuant to the New MOU by certain specified dates, Sinochem Macao will be free to pursue business through alternative channels.

– 14 –

LETTER FROM SOMERLEY

Payments for the Canadian potash may be settled by way of letter of credit or such other means as may be decided upon by the parties of the New MOU. Sinochem Macao and Canpotex will enter into specific agreements to set out detailed terms of the transactions pursuant to the New MOU. The New MOU may be terminated by either party giving a written notice to the other party by 30 June for termination on 31 December of the same year.

Apart from the above quantities of purchases pursuant to the New MOU, other principal terms and provisions under the New MOU remain unchanged as compared to the MOU.

Comparison on terms of the New MOU with independent third parties

We have discussed with the management of the Group and reviewed sample contracts for the purchases of Canadian potash by Sinochem Macao from Canpotex and compared them with contracts for similar purchases from independent suppliers. We note that the terms for transactions contemplated under the New MOU are similar to the transaction terms between Sinochem Macao and independent third parties.

4. International market price of potash

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Source: commodity spot price from the World Bank, Bloomberg

As shown above, the market price of potash was at a relatively high level of approximately US$480 per tonne in early 2012, before it started declining towards second half of the year. During the first half of 2013, potash price remained relatively flat. Following the news in July 2013 relating to the break-up of one of the world’s largest potash production groups, Belarusian Potash Company, the international market price of potash substantially dropped and reached a 2013 low of approximately US$330 per tonne towards the end of 2013.

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LETTER FROM SOMERLEY

The declining trend continued in the first half of 2014, which sent the price of potash to its low in the second and third quarter of 2014. The price of potash rebounded from the trough to approximately US$310 per tonne towards the end of 2014.

5. Annual Caps of the Continuing Connected Transactions

(a) Review of historical figures

Set out below are the historical transaction amounts for the two years ended 31 December 2013 and for the eleven months ended 30 November 2014:

				For the eleven
	**For the financial **	**year **	ended	months ended
	31 December			30 November
	2012		2013	2014
	Audited		Audited	Unaudited
	(’000)		(’000)	(’000)
Historical purchases from
Canpotex	US$361,080	US$409,122		US$283,616*
Relevant annual caps	US$730,000	US$870,000		US$350,000*
Utilisation rates	49.5%		47.0%	81.0%*

• Historical amount in 2014 covers purchases from Canpotex for the eleven months ended 30 November 2014, whereas the relevant annual cap governs purchases from Canpotex for the full year of 2014.

Following the decline in market price of potash in 2013 compared to 2012 as analysed above, the Group made additional import purchases of potash from Canpotex during the year of 2013. Accordingly, despite the drop in unit price, the transaction value between Sinochem Macao and Canpotex reached approximately US$409.1 million in 2013, representing an increase of approximately 13.3% when compared to 2012.

In 2014, the Group made purchases from Canpotex at even lower prices than in 2013, as prices in general followed the suppressed trend. This explains the comparatively lower transaction value for the eleven months ended 30 November 2014 of approximately US$283.6 million. On the other hand, due to the reduction in relevant annual cap in 2014, the utilisation rate increased to 81% for the eleven months ended 30 November 2014, which is a substantially higher utilisation rate than 2012 and 2013.

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LETTER FROM SOMERLEY

(b) Assessment of the Annual Caps

Set out below are the Annual Caps for the three years ending 31 December 2017:

	For the years ending 31 December	For the years ending 31 December	For the years ending 31 December
	2015	2016	2017
	(US$’000)	(US$’000)	(US$’000)
Annual Caps of Canadian potash
purchases from Canpotex	435,500	500,250	550,250

In assessing the reasonableness of the Annual Caps for the three years ending 31 December 2017, we have discussed with the management of the Group the basis and assumptions underlying the projections of the Annual Caps. The Annual Caps are determined based on the agreed terms with Canpotex and the Group’s estimated purchase prices of Canadian potash to be separately agreed with Canpotex.

Proposed annual cap for the year ending 31 December 2015

Sinochem Macao has agreed under the New MOU to purchase a minimum of 500,000 tonnes of red standard grade potash with the option to purchase a maximum of 800,000 tonnes of other grades of Canadian potash, in 2015. Accordingly, in deriving the proposed annual cap for the year ending 31 December 2015, the Directors estimated the purchase quantities of Canadian potash to be 1,300,000 tonnes.

Shareholders should note that under the New MOU, the quantity of red standard grade potash to be purchased by the Group in each of the coming three years, 500,000 tonnes in 2015 for example, represents a minimum. That is, the Group will be required to purchase at least such quantity from Canpotex in that particular year. However, the Group is at the same time granted an exclusivity to sell red standard grade potash sourced from Canpotex in the PRC market in coming three years. On the other hand, the maximum of 800,000 tonnes of other grades of Canadian potash for each of 2015 to 2017 represents a purchase option to be held by the Group, not an obligation. After our discussion with management and our review of relevant historical transactions, we consider such structure under the New MOU, which provides (i) a minimum level of purchases of red standard grade potash, that the Group considers prudent based on historical purchase level; and (ii) the further purchase option for other grades of Canadian potash, together allow the Group to secure an adequate supply of potash for its distribution in the PRC market, and also cater for additional flexibility for potential business growth.

In estimating the potash price in 2015, the management of the Group has made reference to the average international market price of potash in 2014 and also taken into account potential price changes for the estimated import prices of potash in 2015. According to the management of the Group, such projected price change is based on market information on the estimated change in import price of potash expected by the overseas suppliers. Based on our review of the independent research report on fertilizer industry, such price forecast for 2015 is in line with the Group’s estimation.

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LETTER FROM SOMERLEY

Proposed annual caps for the year ending 31 December 2016 and 2017

Pursuant to the terms under the New MOU, Sinochem Macao agrees to purchase a minimum of 650,000 tonnes and 750,000 tonnes of red standard grade potash in 2016 and 2017 respectively, with the option to purchase a maximum of 800,000 tonnes of other grades of Canadian potash in each of 2016 and 2017. In deriving the proposed annual caps in 2016 and 2017, the Directors estimated the purchase quantities of Canadian potash to be 1,450,000 tonnes in 2016 and 1,550,000 tonnes in 2017, respectively.

Given that there has been insufficient domestic production of potash to meet demand and a reliance on potash imports to the PRC in recent years, we concur with the Company that in arriving at the relevant Annual Caps for the years 2016 and 2017, a growth in purchases should be factored in to cater for the PRC domestic demand of potash. In estimating the potash price in 2016 and 2017, the management of the Group has applied a slight percentage increase to the projected price of 2015 as discussed above, which we consider appropriate.

Generally speaking, in our opinion, it is in the interests of the Group and the Shareholders to determine the Annual Caps in a way that can accommodate the potential growth of the Group’s business. Provided that the Continuing Connected Transactions are subject to annual review by the independent non-executive Directors and auditors of the Company (as summarised below) as required under the Listing Rules, the Group would have desirable flexibility in conducting its business if the Annual Caps, in this case the purchases from Canpotex for the Group’s distribution in the PRC market, are tailored to future business activities. In assessing the reasonableness of the Annual Caps, we have discussed with the management of the Company the factors taken into account as stated earlier in this section. We consider it reasonable for the Company to use the above factors in determining the Annual Caps.

6. Reporting requirements and conditions of the Continuing Connected Transactions

Pursuant to Rules 14A.55 to 14A.59 of the Listing Rules, the Continuing Connected Transactions are subject to the following annual review requirements:

• (a) the independent non-executive Directors must review the Continuing Connected Transactions and confirm in the annual report and accounts that the Continuing Connected Transactions have been entered into:

• (i) in the ordinary and usual course of business of the Group;

• (ii) on normal commercial terms or better; and

• (iii) according to the agreements governing them on terms that are fair and reasonable and in the interests of the Shareholders as a whole;

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LETTER FROM SOMERLEY

• (b) the Company must engage its auditors to report on the Continuing Connected Transactions every year. The Company’s auditors must provide a letter to the Board (with a copy to be provided to the Stock Exchange at least ten business days before the bulk printing of the Company’s annual report) confirming whether anything has come to their attention that causes them to believe that the Continuing Connected Transactions:

• (i) have not been approved by the Board;

• (ii) were not, in all material respects, in accordance with the pricing policies of the Group if the Continuing Connected Transactions involve the provision of goods or services by the Group;

• (iii) were not entered into, in all material respects, in accordance with the relevant agreements governing the Continuing Connected Transactions; and

• (iv) have exceeded the Annual Caps;

• (c) the Company must allow, and ensure that the counterparties to the Continuing Connected Transactions allow, the Company’s auditors sufficient access to their records for the purpose of the reporting on the Continuing Connected Transactions as set out in paragraph (b);

• (d) the Company must promptly notify the Stock Exchange and publish an announcement if the independent non-executive Directors and/or auditors of the Company cannot confirm the matters as required.

In light of the reporting requirements attached to the Continuing Connected Transactions, in particular, (i) the restriction of the value of the Continuing Connected Transactions by way of the Annual Caps; and (ii) the ongoing review by the independent non-executive Directors and auditors of the Company of the terms and the Annual Caps not being exceeded, we are of the view that appropriate measures will be in place to monitor the conduct of the transactions and assist to safeguard the interests of the Independent Shareholders.

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LETTER FROM SOMERLEY

RECOMMENDATION

Having taken into account the above principal factors and reasons, we consider that the Continuing Connected Transactions are on normal commercial terms, in the ordinary and usual course of business of the Group and in the interests of the Company and the shareholders as a whole. We also consider that the Continuing Connected Transactions (including the Annual Caps) are fair and reasonable. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend, that the Independent Shareholders vote in favour of the ordinary resolution to be proposed at the SGM to approve the Continuing Connected Transactions (including the Annual Caps).

Yours faithfully, for and on behalf of SOMERLEY CAPITAL LIMITED

John Wong

Director

Mr. John Wong is a licensed person registered with the SFC and as a responsible officer of Somerley to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO and has over seven years of experience in the corporate finance industry.

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GENERAL INFORMATION

APPENDIX I

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. INTEREST IN SECURITIES

Save as disclosed below, as at the Latest Practicable Date, none of the Directors and chief executives of the Company had any interest or short position in the Shares, underlying Shares and debt securities of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) nor had any interest in the right to subscribe for Shares in the Company which had to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO, to be entered in the register of the Company referred to therein or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

As at the Latest Practicable Date, a Director of the Company had long position in the Shares of the Company as follows:

			Percentage of the
Name of		Number of Shares	issued share capital
Director	Capacity	held	of the Company
Harry Yang	Beneficial owner	600	0.000009%

3. DIRECTORS’ SERVICE CONTRACTS

On 15 May 2014, Mr. Wang Hong Jun, executive Director and Chief Executive Officer of the Company, entered into a service contract with the Company for a term of three year. On 15 May 2014, Mr. Harry Yang, executive Director and Deputy General Manager of the Company, renewed his service contract with the Company for a term of three years. Pursuant to the terms stipulated in the service contracts of Mr. Wang and Mr. Yang, the respective service contract with the Company may be (i) terminated prior to its expiry if either party serves two months’ prior notice to the other in writing; or (ii) terminated by the Company in case of bankruptcy, diseases and any other significant faults of a director as described in the respective service contract. Should the Company terminate the respective service contract with Mr. Wang Hong Jun or Mr. Harry Yang prior to its expiry, Mr. Wang Hong Jun or Mr. Harry Yang will be entitled to receive a cash compensation equivalent to 11 months of his annual director ’s salary, save for the circumstances described in item (ii) above.

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GENERAL INFORMATION

APPENDIX I

Saved as disclosed above, as at the Latest Practicable Date, none of the Directors had entered into or proposed to enter into any service contract with the Company or any of its subsidiaries which is not determinable by the Group within one year without payment of compensation (other than statutory compensation).

4. COMPETING INTERESTS

As at the Latest Practicable Date, Mr. Harry Yang, executive Director and Deputy General Manager of the Company, is also a director of US Agri-Chemicals Corporation, which is a wholly-owned subsidiary of Sinochem Group and was engaged in the production of fertilizer prior to its cessation of business in November 2005. Although US Agri-Chemicals Corporation still maintained its company registration with the relevant authorities in the United States, as at the Latest Practicable Date, it had ceased its operation and accordingly, there is no competing business with the Group. As at the same date, other than Mr. Harry Yang, none of the directors of US Agri-Chemicals Corporation held any positions or assumed any role in the Group.

In addition, as at the Latest Practicable Date, Dr. Stephen Francis Dowdle, non-executive Director of the Company, is a director of Canpotex Limited, a Canadian corporation equally owned by Potash Corporation and two other potash producers. Canpotex Limited is principally engaged in offshore marketing of potash products for its three owners and is currently one of the major suppliers of fertilizer products to the Group. Since the Group and Canpotex Limited currently focus on different sales regions, the Company believes that there is no competition between the Group and Canpotex Limited. As at the same date, other than Dr. Stephen Francis Dowdle, none of the directors of Canpotex Limited held any positions or assumed any role in the Group.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and their respective close associates were interested in any business apart from the business of the Group, which competes or is likely to compete, either directly or indirectly, with the business of the Group.

5. OTHER ARRANGEMENTS INVOLVING DIRECTORS

As at the Latest Practicable Date:

• (a) none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date and which was significant in relation to the business of the Group; and

• (b) none of the Directors had any direct or indirect interest in any assets which had been since 31 December 2013 (the date to which the latest published audited consolidated financial statements of the Company were made up), (i) acquired or disposed of by; or (ii) leased to; or (iii) are proposed to be acquired or disposed of by; or (iv) are proposed to be leased to any member of the Group.

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GENERAL INFORMATION

APPENDIX I

6. MATERIAL ADVERSE CHANGES

Save as disclosed in the Company’s announcements dated 5 August and 21 August 2014, as at the Latest Practicable Date, the Directors were not aware of any material adverse changes in the financial or trading position of the Company since 31 December 2013, being the date to which the latest published audited consolidated financial statements of the Group were made up.

7. EXPERTS

The following is the qualification of the expert who has given its opinions or advice, which are contained or referred to in this circular:

Qualification

Name Qualification Somerley a licenced corporation to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities as defined under the SFO

As at the Latest Practicable Date, Somerley:

• (a) has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter dated 26 February 2015 and references to its name, in the form and context in which it appears;

• (b) did not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group; and

• (c) did not have any direct or indirect interest in any assets which had been since 31 December 2013 (the date to which the latest published audited consolidated financial statements of the Company were made up), acquired, disposed of by, or leased to any member of the Group or were proposed to be acquired or disposed of by, or leased to any member of the Group.

8. GENERAL

In the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

9. DOCUMENTS AVAILABLE FOR INSPECTION

A copy of each of (i) the MOU; (ii) the New MOU; and (iii) the service contracts mentioned in paragraph 3 above is available for inspection during normal business hours on any weekday (excluding Saturdays, Sundays and public holidays) at the principal place of business of the Company at Units 4601-4610, 46th Floor, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong up to and including the date of the SGM.

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NOTICE OF SPECIAL GENERAL MEETING

==> picture [77 x 76] intentionally omitted <==

SINOFERT HOLDINGS LIMITED 中化化肥控股有限公司*

(Incorporated in Bermuda with limited liability)

(Stock Code: 297)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting of Sinofert Holdings Limited (the “ Company ”) will be held at Salon I, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong on 17 March 2015 at 10:00 a.m., or any adjournment thereof, to consider and, if thought fit, pass, with or without modifications, the following resolution as ordinary resolution of the Company:

ORDINARY RESOLUTION

1. “THAT:

• (a) the New MOU (as defined and described in the circular to the shareholders of the Company dated 26 February 2015 (the “ Circular ”), a copy of which has been produced to the meeting marked “A” and signed by the Chairman of the meeting for the purpose of identification) and the execution thereof and implementation of all transactions thereunder be and are hereby approved, ratified and confirmed;

• (b) the proposed annual caps of the transactions contemplated under the New MOU as described in the Circular be and are hereby approved, ratified and confirmed; and

• (c) the directors of the Company or any other person authorized by the directors of the Company be and are hereby authorized to sign, execute, perfect and deliver all such documents and do all such deeds, acts, matters and things as they may in their absolute discretion consider necessary or desirable for the purpose of or in connection with the implementation of the New MOU and all transactions and other matters contemplated thereunder or ancillary thereto, to waive compliance

• For identification purposes only

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NOTICE OF SPECIAL GENERAL MEETING

from and/or agree to any amendment or supplement to any of the provisions of the New MOU which in their opinion is not of a material nature and to effect or implement any other matters referred to in this resolution.”

For and on behalf of the Board of Sinofert Holdings Limited Wang Hong Jun

Executive Director and Chief Executive Officer

Hong Kong Special Administrative Region of the People’s Republic of China

26 February 2015

Notes:

• 1 The register of members of the Company will be closed from 16 March 2015 to 17 March 2015, both days inclusive, during which period no transfer of shares of the Company will be registered. In order to qualify for voting at the special general meeting of the Company, all transfers of shares of the Company accompanied by the relevant share certificates must be lodged for registration with the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited, Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, by not later than 4:30p.m. on 13 March 2015.

• 2 Any member of the Company entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote on his behalf. A proxy need not be a member of the Company.

• 3 To be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of that power or authority, must be deposited at the branch share registrar and transfer office of the Company in Hong Kong, Tricor Secretaries Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof.

• 4 Where there are joint holders of any ordinary share of the Company, any one of such holders may vote at the meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such holders be present at the meeting personally or by proxy, that one of such holders so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.

• 5 Voting of the ordinary resolution set out in this notice will be by way of poll.

As at the date of this notice, the executive directors of the Company are Mr. Wang Hong Jun (Chief Executive Officer) and Mr. Harry Yang; the non-executive directors of the Company are Mr. Liu De Shu (Chairman), Mr. Yang Lin, Dr. Stephen Francis Dowdle and Ms. Xiang Dandan; and the independent non-executive directors of the Company are Mr. Ko Ming Tung, Edward and Mr. Tse Hau Yin, Aloysius.

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