CHINA AGRI PROD : Change of Use of Proceeds of the Rights Issue

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 for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities in China Agri-Products Exchange Limited.

(Incorporated in Bermuda with limited liability)

Reference is made to the prospectus of China Agri-Products Exchange Limited (the "Company") dated
21 April 2015 (the "Prospectus") in relation to, among others, the rights issue to be undertaken by the Company, which subsequently became unconditional on Tuesday, 12 May 2015, and the results of which were set out in the announcement of the Company dated Wednesday, 13 May 2015 ("13 May Announcement"). Capitalised terms used but not otherwise defined in this announcement shall have the same meanings ascribed to them in the Prospectus.
The subsection headed "A. Application of proceeds" of the section headed "Use of proceeds of the Rights Issue" of the Prospectus outlined the Company's original intended use of the net proceeds to be raised from the Rights Issue, which is estimated to be approximately HK$501.7 million. As set out in the 13 May Announcement, as a result of the over-subscription of the Rights Shares, none of the Underwriters were required to take up any Underwritten Shares and accordingly, no set-off of a portion of the net proceeds against the outstanding aggregate principal amount owing by the Company to Winning Rich under the 2019
CAP Bonds, as described in the Prospectus, was required.

As at the date of this announcement, the Company has not yet solicited any particular land acquisition opportunities in the PRC to supplement the growth of its business in accordance with its long term commercial and development objectives, notwithstanding that as disclosed in the Prospectus, the Group had been involved in negotiations with the relevant governmental authorities in the PRC with a view to evaluating opportunities to acquire land in various PRC cities, including Fuzhou, Chenzhou and Puyang. In view of certain construction costs to be payable for the development of the Group's various agricultural exchange projects in the PRC, the Board has resolved to change the proposed use of the net proceeds of the Rights Issue of approximately HK$501.7 million to as follows:
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(a) approximately HK$80.0 million will be utilised for land or new projects acquisition opportunities in the
PRC;
(b) approximately HK$145.5 million will be utilised for payment of construction costs in the PRC;
(c) approximately HK$229.9 million will be used to repay outstanding and upcoming indebtedness of the
Company; and
(d) the remaining balance of approximately HK$46.3 million will be utilised for general working capital of the Group (the largest components of which will be operating expenses such as rental, marketing and salary expenses).
In other words, the Board has resolved that approximately HK$113.0 million of the approximately HK$193.0 million portion of the aggregate net proceeds of the Rights Issue that was originally intended to be utilised for land acquisition opportunities in the PRC will now be directed towards the payment of construction costs in the PRC. Of this approximately HK$113.0 million, approximately HK$18.8 million, approximately HK$38.25 million, approximately HK$15.95 million and approximately HK$40.0 million will be allocated towards the development of the Huai'an City project, phase two of the Kaifeng City project, the Panjin City project and phase two of the Yulin City project, respectively. As a result of this re-allocation, approximately HK$18.8 million, approximately HK$57.0 million, approximately HK$29.7 million and approximately HK$40.0 million of the aggregate net proceeds of the Rights Issue will now be utilised for the payment of construction costs of the development of the Huai'an City project, phase two of the Kaifeng City project, the Panjin City project and phase two of the Yulin City project (construction of which has been completed, as disclosed in the Prospectus, and the remaining balance of which is due for payment), respectively. Approximately HK$80.0 million of the aggregate net proceeds of the Rights Issue will be allocated towards financing land or new projects acquisition opportunities in the PRC if and when such opportunities, which are consistent with the Group's commercial and development objectives, arise.
Further details about the Huai'an City project, the Kaifeng City project, the Panjin City project and the Yulin City project, as well as the estimated construction costs of the Kaifeng City project and the Panjin City project based on their current configurations, are set out in the section headed "The Group's agricultural wholesale markets in the PRC", and the subsection headed "C. Allocation of proceeds for construction and land acquisition" in the section headed "Use of proceeds of the Rights Issue", respectively, of the Prospectus.
The proposed allocation of the aggregate net proceeds from the Rights Issue towards the repayment of outstanding and upcoming indebtedness of the Company, and for the general working capital of the Group, as set out in section headed "Use of proceeds of the Rights Issue" of the Prospectus, remains unchanged. Please refer to that section of the Prospectus for further details.
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The Board considers that the above change in use of the net proceeds of the Rights Issue will facilitate a more efficient allocation of the financial resources of the Group in light of (i) the Group's current commitments to contractors in respect of the development of the above mentioned projects, and (ii) the Company not yet having solicited any particular land acquisition opportunities in the PRC as at the date of this announcement, and is therefore fair and reasonable and in the interests of the Company and the Shareholders as a whole.
By Order of the Board

Chairman and Chief Executive Officer

Hong Kong, 26 May 2015

As at the date of this announcement, the Board comprises Mr. Chan Chun Hong, Thomas, Mr. Leung Sui Wah, Raymond and Mr. Yau Yuk Shing as executive Directors, and Mr. Ng Yat Cheung, Ms. Lam Ka Jen, Katherine and Mr. Lau King Lung, as the independent non-executive Directors.

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