Agritrade Resources : Announcements and Notices - Discloseable Transaction in Relation to Disposal of A Vlcc Grade Oil Tanker

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(Incorporated in Bermuda with limited liability)

(Stock Code: 1131)

DISCLOSEABLE TRANSACTION IN RELATION TO

DISPOSAL OF A VLCC GRADE OIL TANKER

The Board announces that on 31 July 2018 (after trading hours), the Seller, an indirect non-wholly owned subsidiary of the Company, entered into the Agreement with the Buyer, in relation to the disposal of the Vessel at a consideration of US$22.5 million (approximately HK$176.6 million).

As the applicable percentage ratios as set out in the Listing Rules in respect of the Disposal are more than 5% but less than 25%, the Disposal constitutes a discloseable transaction for the Company under Rule 14.06 of the Listing Rules and is required to be disclosed by way of announcement.

INTRODUCTION

The board (the ''Board'') of directors (the ''Director(s)'') of Agritrade Resources Limited (the ''Company'', together with its subsidiaries referred to as the ''Group'') announces that on 31 July 2018 (after trading hours), Sea Latitude Limited (the ''Seller''), an indirect non-wholly owned subsidiary of the Company, as seller, entered into a memorandum of agreement (the ''Agreement'') with Da Shun Shipping (Pte.) Ltd. (the ''Buyer''), as buyer, in relation to the disposal (the ''Disposal'') of a very large crude carrier (the ''VLCC'' ).A summary of the major terms of the Agreement is set out below.

The Seller owns the Vessel and is engaged in the shipping solution (energy storage and transportation) business by provision of vessel storage and relevant logistics services for crude oil to various global customers under long-term contracts.

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, the Buyer is a leading global oil trader based in Singapore, which supplies and distributes petroleum products within Asia and globally, and owns and operates vessels and tankers providing bunker supply, inland diesel supply and road logistic services and ship-to-ship operations.

Asset to be disposed of:

MT Sea Latitude (the ''Vessel''), a South Korean-built VLCC-grade oil tanker with capacity of approximately 309,300 DWT (deadweight tonnage) built in December 2001. The Vessel is classified by Lloyd's Register, being one of the leading vessel classification societies in the world and a member of International Association of Classification Societies. As at 31 July 2018, the unaudited carrying value of the Vessel in the book of the Seller was approximately HK$177.6 million. Set out below is the net profit (before and after tax) attributable to the Vessel for the financial years ended 31 March 2017 and 2018:

Net profit before tax Net profit after tax

Consideration:

Cash consideration of United States dollars (''US$'') 22,500,000.

Payment terms:

The consideration will be paid in full to the Seller's designated bank accounts upon the delivery of the Vessel to the Buyer.

Expected time and place of delivery:

The Vessel shall be delivered at a safe and accessible anchorage at Port of Kuala Sungai Linggi, Melaka, Malaysia at the Seller's option. The delivery of the Vessel is expected to take place on or before 7 August 2018.

BASIS OF CONSIDERATION

The consideration for the Disposal was determined on normal commercial terms after arm's length negotiations between the parties taking into account of (i) the market intelligence as gathered by the Group from shipbrokers; (ii) the Group's own analysis of recently concluded sale and purchase transactions of vessels of comparable size and year of build in the market; (iii) the latest unaudited book value of the Vessel of approximately HK$177.6 million as at 31 July 2018; and (iv) the latest appraised value of the Vessel of approximately US$21,000,000 as at 20 March 2018 as performed by an independent valuer.

RELATIONSHIP WITH THE BUYER AND ITS ULTIMATE BENEFICIAL OWNERS

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiry, the Buyer and its ultimate beneficial owners are not connected persons (as defined in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ''Listing Rules'')) of the Company, and are third parties independent of the Company and its connected persons (as defined in the Listing Rules).

Save for the transaction disclosed in this announcement, during the twelve-month period prior to the date of the Agreement and this announcement, the Group has not entered into any transaction with any of the Buyer or its ultimate beneficial owners or with parties connected or otherwise associated with one another which may require aggregation under Rule 14.22 of the Listing Rules.

FINANCIAL IMPACT OF THE DISPOSAL

Subject to the actual carrying value of the Vessel to be finalised on the date of completion of the Disposal, it is expected that the Group would record a pre-tax loss of approximately HK$4.9 million upon completion of the Disposal, which represents the difference between the net consideration for the Disposal of approximately HK$172.7 million (after deducted agent commission) and the unaudited book value of the Vessel of approximately HK$177.6 million as at 31 July 2018. Such pre-tax loss is an estimate calculated and provided for illustrative purposes only and the finalised loss as a result of the Disposal will be subject to the actual carrying value of the Vessel and exchange rate adopted as at the date of the completion of the Disposal and further adjustments (if any) to be made following review by the auditors of the Company.

The net proceeds from the Disposal are intended to be used for the general working capital of the Group and the repayment of bank borrowings.

REASONS FOR AND BENEFITS OF THE DISPOSAL

The principal activities of the Group are (a) mining, exploration, logistics, sale of coal and other mining-related activities; (b) the provision of shipping transportation, vessel storage and relevant logistics services for crude oil and petrochemical products under time chartering or long-term contracts; and (c) the production, generation, provision and sale of fuel and energy and other energy-related operations.

The Group's vessel storage operation is mainly conducted through its two sets of VLCCs. The Group will regularly perform review and assessment on the utilisation and management of the VLCCs during the course of its vessel storage operation, which may cover the vessel market conditions, VLCC conditions and prevailing market rate for vessel chartering services. Recently, the Group received the offer from the Buyer with the intention to acquire the Vessel. After taking into account (i) the age of the Vessel of more than 16 years which is considered to be old and less attractive as the charterers in the market prefer younger vessels; (ii) the age of the Vessel implies higher cost of maintenance, which is likely to exceed the future chartering return generated by the Vessel; (iii) the offer price by the Buyer is considered as attractive for VLCCs of similar age with reference to the prevailing vessel market conditions and vessel valuation; and (iv) the proceeds from the Disposal will further enhance and strengthen the Group's financial position and liquidity, the Board is of the view that the Disposal is beneficial to the Group's overall operation and financial position in response to the prevailing market conditions, which allows the Group to strategise its operations by striking an optimal balance between costs and benefits and to consolidate and reallocate the Group's financial resources across its various business segments.

The Directors believe that the terms of the Agreement, which were normal commercial terms and determined after arm's length negotiations, are fair and reasonable and in the interests of the Company and its shareholders as a whole.

LISTING RULES IMPLICATION

As the applicable percentage ratios (as calculated in accordance with Rule 14.07 of the Listing Rules) for the Disposal are more than 5% but less than 25%, the Disposal constitutes a discloseable transaction for the Company under Rule 14.06 of the Listing Rules and is required to be disclosed by way of this announcement.

By order of the Board

Agritrade Resources Limited

Ng Xinwei

Chief Executive Officer

Hong Kong, 31 July 2018

As at the date of this announcement, the Board comprises Mr. Ng Say Pek (Chairman), Mr. Ng Xinwei, Ms. Lim Beng Kim, Lulu and Mr. Ashok Kumar Sahoo as executive Directors and Mr. Chong Lee Chang, Mr. Siu Kin Wai, Mr. Terence Chang Xiang Wen, Mr. Cheng Yu and Mr. Phen Chun Shing Vincent as independent non-executive Directors.