Sinofert : ANNOUNCEMENT - DISCLOSEABLE TRANSACTION - PROVISION OF GUARANTEE

pursuant to which Sinochem Fertilizer agreed to provide the Guarantee for the due performance of the repayment obligations of Yangmei Pingyuan to Sinochem Finance under the Loan Contract. On the same day, Sinochem Fertilizer entered into the Guarantee Fee Agreement with Yangmei Pingyuan, pursuant to which Yangmei Pingyuan agreed to pay to Sinochem Fertilizer a guarantee fee with respect to the Guarantee on an annual basis at a rate of 1% per year of the maximum guarantee amount under the Guarantee Contract.

PRINCIPAL TERMS OF THE GUARANTEE CONTRACT

PRINCIPAL TERMS OF THE GUARANTEE FEE AGREEMENT

Finance therefore requests Sinochem Fertilizer to assume the debt obligations of Yangmei Pingyuan pursuant to the Guarantee Contract, then Sinochem Fertilizer shall have the right to withhold any amounts payable to Yangmei Pingyuan for its purchase of products from Yangmei Pingyuan, or request Yangmei Pingyuan to deliver its products to Sinochem Fertilizer, so as to set off against the principal of the New Loan or any interests accrued thereon as may be repaid by Sinochem Fertilizer for Yangmei Pingyuan.

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REASONS FOR AND BENEFITS OF THE PROVISION OF THE GUARANTEE

Yangmei Pingyuan is a supplier of Sinochem Fertilizer for nitrogen fertilizer products and also an associate of Sinochem Fertilizer. Sinochem Fertilizer is the second largest shareholder of Yangmei Pingyuan, holding its 36.75% equity interest. Yangmei Chemical and Sinochem Fertilizer (as the largest and the second largest shareholders of Yangmei Pingyuan, respectively) have been providing financial supports to Yangmei Pingyuan in accordance with the Capital Increase Agreement entered into by them with Yangmei Pingyuan (for details, please refer to the announcements of the Company dated 25 October 2012, 31 October 2012 and 11 December 2012). Sinochem Fertilizer provided the Entrusted Loan in a principal amount of RMB670,000,000 to Yangmei Pingyuan through Sinochem Finance, which was due for repayment on 22 July 2021 as originally scheduled (for details, please refer to the announcement of the Company dated 22 July 2020).

To satisfy its needs for business expansion, Sinochem Fertilizer has requested Yangmei Pingyuan to make an early repayment of the Entrusted Loan, and Yangmei Pingyuan has repaid the principal of the Entrusted Loan and any interests accrued thereon in full to Sinochem Fertilizer on 31 March 2021. In order to continue to perform its obligations under the Capital Increase Agreement to provide financial supports to Yangmei Pingyuan, Sinochem Fertilizer agreed to provide the Guarantee with respect to the New Loan sought by Yangmei Pingyuan from Sinochem Finance.

The provision of the Guarantee will enable Yangmei Pingyuan to obtain sufficient capitals for the furtherance of its business development and the enhancement of its overall competitiveness, thus facilitating the Group to have a constant supply of quality nitrogen fertilizers and increasing its investment income.

The Directors (including the independent non-executive Directors) are of the view that the provision of the Guarantee is entered into by the Group in its ordinary and usual course of business, on normal commercial terms, is fair and reasonable and in the interests of the Company and its shareholders as a whole.

IMPLICATIONS OF THE LISTING RULES

Given that one or more of the applicable percentage ratios in respect of the provision of the Guarantee are more than 5% but less than 25%, the provision of the Guarantee constitutes a discloseable transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

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, distribution and agricultural services of fertilizers and forms a vertically integrated business model combining upstream and downstream businesses.

Sinochem Fertilizer, an indirect wholly-owned subsidiary of the Company, is principally engaged in the production, import and export, distribution and retail of raw materials and finished products of crop nutrition products, provision of technological research and development and services relating to the crop nutrition business and products.

Yangmei Pingyuan is principally engaged in the production and sale of urea, methanol, ammonium acid carbonate and melamine, etc. Yangmei Pingyuan is owned as to 51%, 36.75% and 12.25% by Yangmei Chemical, Sinochem Fertilizer and Pingyuan Juyuan, respectively. Yangmei Chemical is ultimately owned by the State-owned Assets Supervision and Administration Commission of Shanxi Provincial Government, and Pingyuan Juyuan is ultimately owned by the State-owned Assets Supervision and

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For and on behalf of the Board

SINOFERT HOLDINGS LIMITED

Qin Hengde

Executive Director and Chief Executive Officer

Hong Kong, 31 March 2021

As at the date of this announcement, the executive directors of the Company are Mr. Qin Hengde (Chief Executive Officer), Mr. Feng Mingwei and Mr. Harry Yang; the non-executive director of the Company is Mr. J. Erik Fyrwald (Chairman); and the independent non-executive directors of the Company are Mr. Ko Ming Tung, Edward, Mr. Lu Xin and Mr. Tse Hau Yin, Aloysius.

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