Fufeng Group Limited — Capital/Financing Update 2010

Mar 26, 2010

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

This announcement is not an offer to sell or the solicitation of an offer to buy any securities and neither this announcement nor anything herein forms the basis for any contract or commitment whatsoever. Neither this announcement nor any copy hereof may be taken into or distributed in the United States.

The information contained in this announcement is not for distribution, directly or indirectly, in or into the United States (including its territories and dependencies, any State of the United States and the District of Columbia). These materials do not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The Bonds mentioned herein have not been, and will not be, registered under the Securities Act. The Bonds may not be offered or sold in the United States except pursuant to registration or an exemption from the registration requirements of the Securities Act. The offering is not being made in the United States to U.S. persons.

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Fufeng Group Limited 阜豐集團有限公司

(incorporated in the Cayman Islands with limited liability) (Stock code: 546)

PROPOSED ISSUE OF RMB DENOMINATED USD SETTLED 4.5% CONVERTIBLE BONDS DUE 2015 (WITH AN OPTION FOR THE ISSUE OF FURTHER RMB DENOMINATED USD SETTLED 4.5% CONVERTIBLE BONDS DUE 2015)

Joint Bookrunners and Joint Lead Managers

Citi

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The Board is pleased to announce that on 25 March 2010, the Company and the Joint Lead Managers entered into the Subscription Agreement, pursuant to which each of the Joint Lead Managers has severally agreed to subscribe and pay for, or to procure subscribers to subscribe and pay for, the Firm Bonds to be issued by the Company in an initial aggregate principal amount of RMB820.0 million (equivalent to approximately US$120.1 million). In addition, the Company has granted to the Joint Lead Managers an option (the “ Option ”) to subscribe for all or any of the Option Bonds up to a further aggregate principal amount of RMB205.0 million (equivalent to approximately US$30.0 million), and the Option shall be exercisable on one or more occasions, in whole or in part, solely at the discretion of the Joint Lead Managers and subject to the consent of the Company, at any time on or before the 30th day following the Closing Date.

Based on the initial Conversion Price of HK$7.03 and assuming full conversion of the Bonds (assuming the Option Bonds are issued in full) at the initial Conversion Price, the Bonds will be convertible into 165,742,524 Shares, representing approximately 9.98% of the issued share capital of the Company as at the date of this announcement and approximately 9.08% of the issued share capital of the Company, as enlarged. The New Shares will be allotted and issued pursuant to the general mandate of the Company granted to the Directors at the annual general meeting held on 28 April 2009 and will rank pari passu in all respects with the Shares then in issue on the relevant conversion date. The issue of the Bonds is not subject to the approval of the Shareholders. As at the date of this announcement, there has been no issue of Shares under the general mandate granted.

The gross proceeds from the issue of the Bonds (assuming the Option is not exercised) is approximately US$120.1 million or if the Option Bonds are issued in full, US$150.1 million. The total expenses and commissions amount to approximately US$3.7 million. The Company will receive net proceeds in the amount of US$146.4 million from the issue of the Bonds (assuming the Option is exercised in full). The Company intends to use the net proceeds for funding capital expenditure in connection with the expansion of its operations and financing possible acquisitions should suitable opportunities arise in the future and for general corporate and working capital purposes.

The Company has received approval-in-principle from the Singapore Stock Exchange for the listing of the Bonds and will apply to the Hong Kong Stock Exchange for the listing of, and permission to deal in, the New Shares.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Joint Lead Managers are independent third parties not connected with the Company or any of its Subsidiaries or any of their respective directors, chief executives or substantial shareholders or any of their respective associates.

The Joint Lead Managers have informed the Company that they intend to offer and sell the Bonds to no less than six independent placees (who will be independent individual, corporate and/or institutional investors). To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, each of the placees (and their respective ultimate beneficial owners) is and will be independent third parties not connected with the Company or any of its Subsidiaries or any of their respective directors, chief executives or substantial shareholders or any of their respective associates.

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The Joint Lead Managers and their Subsidiaries or affiliates may purchase the Bonds for their own account and enter into transactions, including (i) credit derivatives, including assets swaps, repackaging and credit default swaps relating to the Bonds and/or the Company’s securities or (ii) equity derivatives and stock transfer transactions relating to the Shares at the same time as the offer and sale of the Bonds or in secondary market transactions (including synthetic short positions for investors of the Bonds).

The Company will promptly notify the Hong Kong Stock Exchange upon becoming aware of any dealing in the Bonds by any connected person of the Company.

Completion of the Subscription Agreement is subject to the satisfaction and/or waiver of the conditions precedent therein. In addition, the Subscription Agreement may be terminated in certain circumstances. Please refer to the paragraph headed “The Subscription Agreement” below for further information.

As the subscription and issue of the Bonds may or may not complete, Shareholders and prospective investors are advised to exercise caution when dealing in the Shares.

THE SUBSCRIPTION AGREEMENT

Date: 25 March 2010 Parties: Company

Joint Lead Managers

Proposed issue of the Bonds:

Subject to the fulfilment of the conditions set out below in the section headed “Conditions Precedent”, the Joint Lead Managers have severally agreed to subscribe and pay for, or to procure subscribers to subscribe and pay for, the Firm Bonds to be issued by the Company in an initial aggregate principal amount of RMB820.0 million (equivalent to approximately US$120.1 million). In addition, the Company has granted to the Joint Lead Managers the Option to subscribe for all or any of the Option Bonds up to a further aggregate principal amount of RMB205.0 million (equivalent to approximately US$30.0 million), exercisable on one or more occasions, in whole or in part, solely at the discretion of the Joint Lead Managers and subject to the consent of the Company, at any time on or before the 30th day following the Closing Date. Accordingly, the maximum aggregate principal amount of the Bonds to be issued will be RMB1,025.0 million (equivalent to approximately US$150.1 million).

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Conversion of the Bonds:

Distribution:

Based on the initial Conversion Price of HK$7.03 and assuming full conversion of the Bonds at the initial Conversion Price, the Bonds will be convertible into 165,742,524 Shares, representing approximately 9.98% of the issued share capital of the Company as at the date of this announcement and approximately 9.08% of the issued share capital of the Company as enlarged assuming full conversion of the Bonds (assuming the Option Bonds are issued in full). The New Shares will be allotted and issued pursuant to the general mandate of the Company granted to the Directors at the annual general meeting held on 28 April 2009 and will rank pari passu in all respects with the Shares then in issue on the relevant conversion date. The issue of the Bonds is not subject to the approval of the Shareholders. As at the date of this announcement, there has been no issue of Shares under the general mandate granted.

The Bonds and the New Shares have not been and will not be registered under the Securities Act and, subject to certain exceptions, may not be offered or sold within the United States. The Bonds will be offered and sold in an institutional offering outside the United States in reliance on Regulation S of the Securities Act. None of the Bonds will be offered to the public in Hong Kong or the Cayman Islands nor will they be placed to any connected persons of the Company. The Bonds have not been offered or sold and will not be offered or sold in Hong Kong to the public within the meaning of the Companies Ordinance.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Joint Lead Managers are independent third parties not connected with the Company or any of its Subsidiaries or any of their respective directors, chief executives or substantial shareholders or any of their respective associates.

The Company will promptly notify the Hong Kong Stock Exchange upon becoming aware of any dealing in the Bonds by any connected person of the Company.

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Lock-up Undertaking:

The Company has undertaken with the Joint Lead Managers that neither the Company nor any person acting on its behalf will (i) issue, offer, sell, pledge, contract to sell or otherwise dispose of or grant options, issue warrants or offer rights entitling persons to subscribe or purchase any interest in any Shares or securities of the same class as the Bonds or the Shares or any securities convertible into, exchangeable for or which carry rights to subscribe or purchase the Bonds, the Shares or securities of the same class as the Bonds, the Shares or other instruments representing interests in the Bonds, the Shares or other securities of the same class as them, (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of the ownership of the Shares, (iii) enter into any transaction with the same economic effect as, or which is designed to, or which may reasonably be expected to result in, or agree to do, any of the foregoing, whether any such transaction of the kind described in (i), (ii) or (iii) is to be settled by delivery of Shares or other securities, in cash or otherwise or (iv) announce or otherwise make public an intention to do any of the foregoing, in any such case without the prior written consent of the Joint Lead Managers between the date hereof and the date which is 90 days after the Closing Date (or if any Option Bonds are issued, after the last Option Closing Date) (both dates inclusive) except for the Bonds and the New Shares issued on conversion of the

Bonds.

Shareholder Undertaking:

Motivator Enterprises Limited (“ Motivator ”) undertakes that, for a period from the date of the Subscription Agreement up to 90 days after the Closing Date (or if any Option Bonds are issued, after the last Option Closing Date) (both dates inclusive), neither it nor any of its subsidiaries (if applicable) or affiliates or spouse (if applicable) or family members (if applicable) over which it exercises management or voting control, nor any person acting on its or their behalf will, without the prior written consent of the Joint Lead Managers, issue, offer, sell, contract to sell, pledge or otherwise dispose of (or publicly announce any such issuance, offer, sale or disposal), any Shares or securities convertible or exchangeable into or exercisable for Shares or warrants or other rights to purchase Shares or any security or financial product whose value is determined directly or indirectly by reference to the price of the Shares, including equity swaps, forward sales and options representing the right to receive any Shares (whether or not such contract is to be settled by delivery of Shares or such other securities, in cash or otherwise) except for the lending of Shares by Motivator to Citigroup Global Markets Limited and The Royal Bank of Scotland N.V., London Branch pursuant

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to (i) a global master securities lending agreement dated 25 March 2010 between Motivator and Citigroup Global Markets Limited and (ii) a global master securities lending agreement dated 24 March 2010 between Motivator and The Royal Bank of Scotland N.V., London Branch.

Conditions Precedent:

The obligations of the Joint Lead Managers to subscribe and pay for the Bonds are subject to, among others, the following conditions precedent:

1. Other contracts: the execution and delivery (on or before the Closing Date) of the trust deed constituting the Bonds and the paying and conversion agency agreement in relation to the Bonds, each in a form reasonably satisfactory to the Joint Lead Managers, by the respective parties;

2. Lock-up: Motivator shall have executed a lock-up agreement on or before the Closing Date in the form set out in the Subscription Agreement;

3. Auditors’ letters: upon the date of the Subscription Agreement and on the Closing Date and the Option Closing Date (if any), there having been delivered to the Joint Lead Managers letters, in form and substance satisfactory to the Joint Lead Managers, dated the date of the final offering circular in the case of the first letter and dated the Closing Date and the Option Closing Date (if any) in the case of the subsequent letters, and addressed to the Joint Lead Managers from PricewaterhouseCoopers, Certified Public Accountants to the Company;

4. Compliance: at the Closing Date and the Option Closing Date (if any):

5. (i) the representations and warranties of the Company in the Subscription Agreement being true, accurate and correct at, and as if made on such date;

6. (ii) the Company having performed all of its obligations under the Subscription Agreement to be performed on or before such date; and

7. (iii) there having been delivered to the Joint Lead Managers a certificate, dated as of such date, of a duly authorised officer of the Company to such effect;

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1. Material adverse change: after the date of the Subscription Agreement or, if earlier, the dates as of which information is given in the offering circular up to and at the Closing Date (in the case of the Firm Bonds) and the Option Closing Date (if any) (in the case of the Option Bonds), there shall not have occurred any change (nor any development or event involving a prospective change), in the financial or business condition, prospects, results of operations or general affairs of the Company or of the Consolidated Group from that set out in the offering circulars, which, in the opinion of the Joint Lead Managers, is material and adverse in the context of the issue and offering of the Firm Bonds or, as the case may be, the Option Bonds;

2. Other consents: on or prior to the Closing Date there shall have been delivered to the Joint Lead Managers copies of all consents and approvals necessary for the Company in relation to the issue of the Bonds and the performance of the Company’s obligations under the trust deed, the paying and conversion agency agreement and the Bonds (including the consents and approvals required from all lenders);

3. Certificate of no default: on the date of the Subscription Agreement, there having been delivered to the Joint Lead Managers a certificate of no default dated as of such date, of a duly authorised officer of the Company;

4. Listing: the Hong Kong Stock Exchange having agreed to list the New Shares upon conversion of the Bonds and the Singapore Stock Exchange having agreed, subject to any conditions reasonably satisfactory to the Joint Lead Managers, to list the Bonds (or, in each case, the Joint Lead Managers being reasonably satisfied that such listing will be granted); and

5. Legal opinions: on or before the Closing Date and the Option Closing Date (if any), there having been delivered to the Joint Lead Managers opinions, in form and substance satisfactory to the Joint Lead Managers, dated the Closing Date or the Option Closing Date, as the case may be, of legal counsels, and such other resolutions, consents, authorities and documents relating to the issue of the Bonds, as the Joint Lead Managers may reasonably require.

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The Joint Lead Managers may, at their discretion and upon such terms as they think fit waive compliance with the whole or any part of the conditions precedent.

Termination:

The Joint Lead Managers may, by notice to the Company given at any time prior to payment of the net subscription monies for the Firm Bonds or the Option Bonds (if any) to the Company, terminate this Agreement in any of the following circumstances:

1. if there shall have come to the notice of the Joint Lead Managers any breach of, or any event rendering untrue or incorrect in any respect, any of the warranties and representations contained in the Subscription Agreement or any failure to perform any of the Company’s undertakings or agreements in the Subscription Agreement;

2. if any of the conditions precedent have not been satisfied or waived by the Joint Lead Managers on or prior to the Closing Date or the Option Closing Date, as the case may be;

3. if in the opinion of the Joint Lead Managers, there shall have been, since the date of the Subscription Agreement, any change, or any development involving a prospective change, in national or international monetary, financial, political or economic conditions (including any disruption to trading generally, or trading in any securities of the Company on any stock exchange or in any over-the-counter market) or currency exchange rates or foreign exchange controls such as would, in its view, be likely to prejudice materially the success of the offering and distribution of the Bonds or dealings in the Bonds in the secondary market;

4. if, in the opinion of the Joint Lead Managers, there shall have occurred any of the following events: (i) a suspension or a material limitation in trading in securities generally on the New York Stock Exchange, the London Stock Exchange plc, the Singapore Stock Exchange, the Shanghai Stock Exchange and/or the Hong Kong Stock Exchange and/or any other stock exchange on which the Company’s securities are traded; (ii) a suspension or a material limitation in trading in the Company’s securities on the Hong Kong Stock Exchange and/or any other stock exchange on which the Company’s

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securities are traded; or (iii) a general moratorium on commercial banking activities in the United States, Singapore, Hong Kong, the PRC and/or the United Kingdom declared by the relevant authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States, Hong Kong, Singapore or the United Kingdom;

1. if, in the opinion of the Joint Lead Managers, there shall have occurred any event or series of events (including the occurrence of any local, national or international outbreak or escalation of disaster, hostility, insurrection, armed conflict, act of terrorism, act of God or epidemic) as would in their view be likely to prejudice materially the success of the offering and distribution of the Bonds or dealings in the Bonds in the secondary market; or

2. if there shall have occurred any new law or regulation or any change or development involving a prospective change in existing laws or regulations which, in the Joint Lead Managers’ view, would or would be likely to have a material adverse effect on the financial position of the Group.

Subject to the foregoing, completion of the subscription and issue of the Firm Bonds or the Option Bonds (if any) will take place on the Closing Date or the Option Closing Date (if any).

The Directors consider that the terms and conditions of the Subscription Agreement and the Bonds are fair and reasonable, on normal commercial terms and in the interests of the Company and its shareholders as a whole.

PRINCIPAL TERMS OF THE BONDS

The principal terms of the Bonds are summarised as follows:

Issuer: the Company. Principal amount of Firm Bonds: RMB820.0 million aggregate principal amount of USD Settled 4.5% Convertible Bonds due 2015, convertible into fully-paid ordinary shares with a par value of HK$0.10 each in the share capital of the Company.

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Option Bonds:

• The Company has granted to the Joint Lead Managers an option which can be exercised subject to the consent of the Company, in whole or in part and on one or more occasions, at any time on or before the 30th day following the Closing Date to subscribe for an additional RMB205.0 million in aggregate RMB principal amount of USD Settled 4.5% Convertible Bonds due 2015.

• Number of Placees: Not less than six placees (who will be independent individual, corporate and/or institutional investors) and each of them and their respective ultimate beneficial owners will be independent third parties not connected with the Company or any of its Subsidiaries or any of their respective directors, chief executives or substantial shareholders or any of their respective associates.

• US Dollar Settlement: All amounts due under, and all claims arising out of or pursuant to, the Bonds and/or the trust deed from or against the Company shall be payable and settled in US Dollars only.

• Issue price: 100% of the RMB principal amount of the Bonds.

• Form and Denomination:

• The Bonds will be issued in registered form in the denomination of RMB100,000 each or integral multiples thereof without coupons attached.

• Subscription Price: The subscription amount payable in respect of each Bond on the Closing Date is approximately US$14,645.58 based on an exchange rate of RMB6.8280 to US$1.00.

• Interest: The Bonds bear interest from (and including) 1 April 2010 at the rate of 4.5% per annum calculated by reference to the RMB principal amount of the Bonds and payable in US Dollars at the US Dollar equivalent semi-annually in arrear in equal instalments on 1 April and 1 October in each year.

• Maturity date: 1 April 2015 (the “ Maturity Date ”)

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Negative pledge:

Conversion period:

• So long as any Bond remains outstanding, the Company will not, and will ensure that none of its Subsidiaries will, create or have outstanding, any Encumbrance, upon the whole or any part of its present or future undertaking, assets or revenues (including any uncalled capital) to secure any Relevant Indebtedness, or any guarantee or indemnity in respect of any Relevant Indebtedness unless, at the same time or prior thereto, the Company’s obligations under the Bonds are secured equally and rateably (i) by the same Encumbrance or (ii) at the option of the Company, by such other security, guarantee, indemnity or other arrangement as either (a) the Trustee shall in its absolute discretion deem not materially less beneficial to the interests of the Bondholders or (b) shall be approved by an extraordinary resolution of the Bondholders.

• On or after the 41st day after the Closing Date up to the close of business (at the place where the certificate evidencing such Bond is deposited for conversion) on the 10th day prior to the Maturity Date or, if the Bonds shall have been called for redemption by the Company before the Maturity Date, then up to the close of business (at the place aforesaid) on a date no later than 10 days (both days inclusive and in the place aforesaid) prior to the date fixed for redemption thereof or if notice requiring redemption has been given by the holder of such Bond then up to the close of business (at the place aforesaid) on the day prior to the giving of such notice.

The number of Shares to be issued on conversion of a Bond will be determined by dividing the RMB principal amount of the Bond to be converted (translated into Hong Kong dollars at the fixed rate of RMB0.8797 to HK$1.00) by the Conversion Price then in effect.

Conversion price:

The initial Conversion Price is HK$7.03 per Share with a fixed exchange rate applicable on conversion of the Bonds of RMB0.8797 to HK$1.00.

The Conversion Price will be subject to adjustment for, among other things, subdivision, reclassification or consolidation of Shares, bonus issues, rights issues, capital distributions, distributions and other dilutive events as described in the terms and Conditions of the Bonds. The Conversion Price may not be reduced so that, on conversion of the Bonds, Shares would fall to be issued at a discount to their par value.

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For the avoidance of doubt, no adjustment to the Conversion Price shall be made in respect of the cash dividend declared or paid by the Company for the fiscal year ended 31 December 2009.

Final redemption:

Redemption at the Option of the Company:

Unless previously redeemed, converted or purchased and cancelled in the circumstances referred to in the terms and conditions of the Bonds, the Company will redeem each Bond at the US Dollar equivalent of its RMB principal amount, together with accrued but unpaid interest on the Maturity Date.

On giving not less than 30 nor more than 90 days’ notice to the Bondholders and the Trustee (which notice will be irrevocable), the Company:

• (i) may at any time after 1 April 2013 redeem all, but not some only, of the Bonds for the time being outstanding at the US Dollar equivalent of their RMB principal amount, together with accrued but unpaid interest to the date fixed for redemption, provided that the closing price of the Shares, translated into RMB at the prevailing rate applicable to the relevant Trading Day, for any 20 out of 30 consecutive Trading Days prior to the date upon which notice of such redemption is published was at least 130 per cent. of the Conversion Price then in effect translated into Renminbi at the Fixed Exchange Rate; or

• (ii) may at any time redeem all, but not some only, of the Bonds being outstanding at a redemption price equal to the US Dollar equivalent of their RMB principal amount, together with accrued but unpaid interest to the date fixed for redemption provided that prior to the date of such notice at least 90 per cent. in RMB principal amount of the Bonds originally issued (including any Option Bonds) has already been converted, redeemed or purchased and cancelled.

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Tax Redemption and Non-Redemption Right:

• Redemption at the option of the Bondholders:

• Redemption upon Delisting or Change of Control:

The Bonds may be redeemed at the option of the Company in whole, but not in part, at any time, on giving not less than 30 nor more than 60 days' irrevocable notice (a “ Tax Redemption Notice ”) to the Bondholders at the US Dollar equivalent of their RMB principal amount (the “ Tax Redemption Date ”), together with accrued but unpaid interest to the date fixed for redemption, if the Company satisfies the Trustee immediately prior to the giving of such notice that (i) the Company has or will become obliged to pay additional tax amounts as a result of any change in, or amendment to, the laws or regulations of the Cayman Islands or Hong Kong or any political subdivision or any authority thereof or therein having power to tax, or any change in the general application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after 25 March 2010, and (ii) such obligation cannot be avoided by the Company taking reasonable measures available to it, provided that no Tax Redemption Notice shall be given earlier than 90 days prior to the earliest date on which the Company would be obliged to pay such additional tax amounts were a payment in respect of the Bonds then due.

On 1 April 2013, the holder of each Bond has the right, at such holder’s option, to require the Issuer to redeem all or some only of the Bonds at an amount equal to the US Dollar equivalent of their RMB principal amount, together with accrued but unpaid interest to the date fixed for redemption.

• Following the occurrence of a Relevant Event, the holder of each Bond will have the right at such holder’s option, to require the Company to redeem all, but not some only, of such holder’s Bonds on the Relevant Event Redemption Date (as defined below) at a price equal to the US Dollar equivalent of their RMB principal amount, together with accrued but unpaid interest to the date fixed for redemption. To exercise such right, the holder of the relevant Bond must deposit at the specified office of any paying agent a duly completed and signed notice of redemption, in the form for the time being current, obtainable from the specified office of any paying agent (“ Relevant Event Redemption Notice ”), together with the certificate evidencing the Bonds to be redeemed by not later than 60 days following a Relevant Event, or, if later, 60 days following the date upon which notice thereof is given to Bondholders by the Company in accordance with the terms and conditions of the Bonds. The “ Relevant Event Redemption Date ” shall be the fourteenth day after the expiry of such period of 60 days as referred to above.

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Listing: Approval in-principle for the listing of the Bonds has been received from the Singapore Stock Exchange. The Bonds will be traded and settled in US Dollars only. The Bonds will be traded on the Singapore Stock Exchange in a minimum board lot size of US$200,000 for so long as the Bonds are listed on the Singapore Stock Exchange.

An application will be made to the Hong Kong Stock Exchange for the listing of, and permission to deal in, the New Shares.

Voting rights:

Unless and until the Bondholders acquire the Shares upon conversion of the Bonds, they will have no rights with respect to the Shares, including any voting rights or rights to receive any regular dividends or other distributions with respect to the Shares.

• Transferability:

The Bonds are freely transferrable.

Status: The Bonds constitute direct, unsubordinated, unconditional and (subject to the terms and conditions) unsecured obligations of the Company and shall at all times rank pari passu and without any preference or priority among themselves. The payment obligations of the Company under the Bonds shall, save for such exceptions as may be provided by mandatory provisions of applicable law and subject to the terms and conditions at all times rank at least equally with all of its other present and future senior, unsecured and unsubordinated obligations.

EFFECT ON THE SHARE CAPITAL OF THE COMPANY AS A RESULT OF CONVERSION

Based on the initial Conversion Price of HK$7.03 per Share and assuming full conversion of the Bonds (assuming the Option Bonds are issued in full), the Bonds will be convertible into 165,742,524 Shares, representing approximately 9.98% of the issued share capital of the Company as at the date of this announcement and approximately 9.08% of the issued share capital of the Company as enlarged by the issue of the New Shares.

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The following table summarises the potential effects on the shareholding structure of the Company as a result of the Bond issue (by reference to the shareholdings as at the date of this announcement and assuming full conversion of the Firm Bonds and the Option Bonds):

					Assuming the Firm Bonds and	Assuming the Firm Bonds and
			Assuming the Firm Bonds are		the Option Bonds are fully
			fully converted into Shares at		converted into Shares at the
	Existing (as at	the date of this	the initial Conversion Price of		initial Conversion Price of
	announcement)		HK$7.03 each		HK$7.03 each
		% of		% of enlarged		% of enlarged
		issued share		share capital		share capital
		capital of the		of the		of the
Shareholder	No. of Shares	Company	No. of Shares	Company	No. of Shares	Company
Motivator Enterprises	786,000,000	47.35%	786,000,000	43.85%	786,000,000	43.05%
Limited (Note 1)
Ever Soar Enterprises	185,112,000	11.15%	185,112,000	10.32%	185,112,000	10.14%
Limited (Note 2)
Bondholders	–	–	132,594,019	7.40%	165,742,524	9.08%
Other Shareholders	688,888,000	41.50%	688,888,000	38.43%	688,888,000	37.73%
Total	1,660,000,000	100.00%	1,792,594,019	100.00%	1,825,742,524	100.00%

Notes:

1. The interest in these Shares is held by Motivator Enterprises Limited, the entire issued share capital of which is wholly and beneficially owned by Mr. Li Xuechun, an executive Director and the Chairman of the Company. Ms. Shi Guiling is the spouse of Mr. Li Xuechun. Accordingly, she is also deemed to be interested in the 786,000,000 Shares held by Motivator Enterprises Limited.

2. Ever Soar Enterprises Limited is owned as to 15% by Mr. Feng Zhenquan, 15% by Mr. Xu Guohua, 15% by Mr. Li Deheng (all of whom are executive Directors), 25% by Mr. Wu Xindong (a former executive director who resigned with effect from 9 March 2010), 15% by Mr. Yan Ruliang (a former executive director who resigned with effect from 15 May 2009) and 15% by Ms. Guo Yingxi.

REASONS FOR AND BENEFITS OF THE BOND ISSUE

The Directors consider that the entry into of the Subscription Agreement and the issue of the Bonds pursuant to it represent an opportunity to broaden the capital base of the Company and to obtain immediate funding on attractive terms. The Directors considers that the terms of the Subscription Agreement are fair and reasonable and in the interests of the Shareholders and the Company as a whole.

USE OF PROCEEDS

The gross proceeds from the issue of the Bonds (assuming the Option is not exercised) is approximately US$120.1 million or, if the Option Bonds are issued in full, US$150.1 million. The total expenses and commissions amount to approximately US$3.7 million. The Company will receive net proceeds in the amount of approximately US$146.4 million from the issue of the Bonds (assuming the Option is exercised in full). The Company intends to use the net proceeds for funding capital expenditure in connection with the expansion of its operations and financing possible acquisitions should suitable opportunities arise in the future and for general corporate and working capital purposes.

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SECURITIES LENDING AGREEMENT

Motivator Enterprises Limited (the “ Lender ”) entered into a securities lending agreement with each of:

• (a) Citigroup Global Markets Limited dated 25 March 2010; and

• (b) The Royal Bank of Scotland N.V., London Branch (the “ Borrowers ” and each of them, a “ Borrower ”) dated 24 March 2010,

to effect the lending of up to 53,000,000 Shares (the “ Maximum Number of Shares ”) in aggregate by the Lender to the Borrowers.

The Maximum Number of Shares subject to the securities lending agreements represent 32.0% of the Shares into which the aggregate number of Bonds (assuming the Option Bonds are issued in full) may be converted based on the initial Conversion Price.

COMPARISON OF CONVERSION PRICE

The initial Conversion Price of HK$7.03 represents:

• (1) a premium of approximately 20.0% over the closing price of HK$5.86 per Share as quoted on the Hong Kong Stock Exchange on the Last Trading Day;

• (2) a premium of approximately 14.2% over the volume weighted average closing price of HK$6.16 per Share for the last five consecutive trading days up to and including the Last Trading Day; and

• (3) a premium of approximately 14.5% over the volume weighted average closing price of HK$6.14 per Share for the last ten consecutive trading days up to and including the Last Trading Day.

The initial Conversion Price was determined after arm’s length negotiations between the Company and the Joint Lead Managers with reference to the closing price of the Shares quoted on the Hong Kong Stock Exchange on the Last Trading Day.

GENERAL MANDATE

By a resolution of the shareholders of the Company passed at the annual general meeting held on 28 April 2009, the Company granted a general mandate to the Directors to allot and issue up to 20% of the issued share capital of the Company, being 332,000,000 Shares. The Directors have not exercised the power to allot and issue any new Shares pursuant to the general mandate granted. As at the date of this announcement, the Company is entitled to issue up to 332,000,000 Shares pursuant to such general mandate. The New Shares will be issued under such general mandate.

FUND RAISING ACTIVITY BY THE COMPANY IN THE LAST 12 MONTHS

The Company has not carried out any capital fundraising activities since the listing of its Shares on the Main Board of the Hong Kong Stock Exchange on 8 February 2007.

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INFORMATION ABOUT THE GROUP

The Company is one of the leading vertically integrated manufacturers of glutamic acid, MSG and xanthan gum in the PRC and in the world and has been listed on the Main Board of the Hong Kong Stock Exchange since 8 February 2007.

DEFINITIONS

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

“Alternative Stock Exchange” at any time, in the case of the Shares, if they are not at that time listed and traded on the Hong Kong Stock Exchange, the principal stock exchange or securities market on which the Shares are then listed or quoted or dealt in

• “Board”

the board of Directors

“Bonds” the Firm Bonds and the Option Bonds (if any)

• “Bondholders” holder(s) of the Bonds from time to time

• “Change of Control”

• a “Change of Control” occurs when:

• (i) any Person or Persons (other than the Permitted Holders) acting together acquires Control of the Company if such Person or Persons does not or do not have, and would not be deemed to have, Control of the Company on the Issue Date;

• (ii) the Company consolidates with or merges into or sells or transfers all or substantially all of the assets of the Company to any other Person, unless the consolidation, merger, sale or transfer will not result in the other Person or Persons acquiring Control over the Company or the successor entity; or

• (iii) one or more Persons (other than any Person referred to in sub-paragraph (i) above) acquires the legal or beneficial ownership of all or substantially all of the issued share capital of the Company

“Closing Date”

• 1 April 2010 or such other date as the Company and the Joint Lead Managers may agree

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• “Closing Price” “Closing Price” for the Shares for any Trading Day shall be the price published in the daily quotation sheet published by the Hong Kong Stock Exchange or, as the case may be, the equivalent quotation sheet of an Alternative Stock Exchange for such day

• “Companies Ordinance” the Companies Ordinance (Chapter 32 of the Laws of Hong Kong)

• “Company” Fufeng Group Limited, a company incorporated in the Cayman Islands with limited liability, the ordinary shares of which are listed on the Main Board of the Hong Kong Stock Exchange

• “connected person(s)” has the meaning ascribed to it under the Listing Rules

• “Consolidated Group”

• the Company and its Subsidiaries

• “Control”

• the acquisition or control of more than 50 per cent. of the voting rights of the issued share capital of the Company or the right to appoint and/or remove all or the majority of the members of the Company’s board of directors or other governing body, whether obtained directly or indirectly, and whether obtained by ownership of share capital, the possession of voting rights, contract or otherwise, and the terms “Controlling” and “Controlled” have meanings correlative to the foregoing

• “Conversion Price” the price at which New Shares will be issued upon conversion of the Bonds which will initially be HK$7.03 per Share and will be subject to adjustment in the manner provided in the terms and conditions of the Bonds

• “Director(s)”

• director(s) of the Company

• “Encumbrance”

• a mortgage, charge, pledge, lien or other encumbrance or security interest securing any obligation of any person or any other arrangement with similar economic effect

• “Firm Bonds”

• the RMB Denominated USD Settled 4.5% Convertible Bonds due 2015 of an initial aggregate principal amount of RMB820.0 million (equivalent to approximately US$120.1 million)

• “Fixed Exchange Rate” HK$1.00 = RMB0.8797

• “Group”

the Company and its Subsidiaries and affiliates

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• “HK$” Hong Kong Dollars, the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the PRC “Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Joint Lead Managers” Citigroup Global Markets Limited and ABN AMRO Bank N.V., Hong Kong Branch (to be renamed The Royal Bank of Scotland N.V., Hong Kong Branch in due course)

• “Last Trading Day” 25 March 2010, being the last full trading day immediately before the time at which the Subscription Agreement is signed

• “Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

• “New Shares” Shares to be allotted and issued by the Company upon conversion of the Bonds

• “Option Bonds” the additional RMB Denominated USD Settled 4.5% Convertible Bonds due 2015 of up to an aggregate principal amount of RMB205.0 million (equivalent to approximately US$30.0 million)

• “Option Closing Date” a date to be specified by the Joint Lead Managers upon exercise of the option to subscribe for all or any of on which the Option Bonds, being a date which is at least two business days before the date on which the Option Bonds are to be issued by the Company against payment for the Option Bonds and no later than 5 business days after the date on which the option shall have been exercised

• “Permitted Holders” means Li Xuechun, Shi Guiling, Wu Xindong, Yan Ruliang, Feng Zhenquan, Xu Guohua, Li Deheng and Cheah Cheng Hye and any affiliate or related person of any of them

• “Person” includes any individual, company, corporation, firm, partnership, joint venture, undertaking, association, organisation, trust, state or agency of a state (in each case whether or not being a separate legal entity) but does not include the board of directors of the Company or any other governing board and does not include the wholly-owned direct or indirect Subsidiaries of the Company

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• “PRC”

• “Regulation S”

• “Relevant Event”

the People’s Republic of China (for the purpose of this announcement excluding Hong Kong, Macau Special Administrative Region of the People’s Republic of China and Taiwan)

Regulation S under the Securities Act

• A “Relevant Event” occurs:

• (i) when the Shares cease to be listed or admitted to trading or suspended for trading for a period equal to or exceeding 90 consecutive days on the Hong Kong Stock Exchange or, if applicable, the Alternative Stock Exchange; or

• (ii) when there is a Change of Control

• “Relevant Indebtedness”

• “RMB” or “Renminbi”

• “Securities Act”

• “Share(s)”

• “Shareholder(s)”

• “Singapore Stock Exchange”

• “Subscription Agreement”

includes any future or present indebtedness in the form of or represented by debentures, loan stock, bonds, notes, bearer participation certificates, depositary receipts, certificates of deposit or other similar securities or instruments or by bills of exchange drawn or accepted for the purpose of raising money which are, or are capable of being, quoted, listed, ordinarily dealt in or traded on any stock exchange or over-the-counter or on any other securities market (whether or not initially distributed by way of private placement) and for the avoidance of doubt does not include bilateral loans, syndicated loans or club deal loans

• Renminbi yuan, the lawful currency of the PRC

• the US Securities Act of 1933, as amended

• the ordinary share(s) with par value of HK$0.10 each in the share capital of the Company

the holder(s) of the Shares

• Singapore Exchange Securities Trading Limited

the subscription agreement entered into between the Company and the Joint Lead Managers dated 25 March 2010 in respect of the issue of the Bonds

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“Subsidiary(ies)”

any company or other business entity of which that person owns or controls (either directly or through one or more other Subsidiaries) more than 50% of the issued share capital or other ownership interest having ordinary voting power to elect directors, managers or trustees of such company or other business entity or any company or other business entity which at any time has its accounts consolidated with those of that person or which, under Cayman Islands law or Hong Kong law, regulations or generally accepted accounting principles from time to time, should have its accounts consolidated with those of that person

• “Trading Day”

• a day when the Hong Kong Stock Exchange or, as the case may be an Alternative Stock Exchange is open for dealing business, provided that if no Closing Price is reported for one or more consecutive dealing days such day or days will be disregarded in any relevant calculation and shall be deemed not to have been dealing days when ascertaining any period of dealing days

• “Trustee”

Citicorp International Limited

• “US” or “United States”

the United States of America

• “US$”, “USD” or

• "US Dollars”

• United States dollars, the lawful currency of the United States

• “%”

per cent.

By order of the Board Fufeng Group Limited Li Xuechun Chairman

Hong Kong, 26 March 2010

As at the date of this announcement, the Board comprises: (1) Mr. Li Xuechun, Mr. Wang Longxiang, Mr. Feng Zhenquan, Mr. Xu Guohua, Mr. Li Deheng, and Mr. Gong Qingli as executive Directors; (2) Mr. Choi Tze Kit, Sammy, Mr. Chen Ning and Mr. Liang Wenjun as independent non-executive Directors.

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