Stock Code: 000553(200553) Stock Abbreviation: ADAMA A (B) NO. 2024-51
ADAMA Ltd.Announcement on the Intended Renewal of the Financial
Service Agreement with Sinochem Finance Co., Ltd.,
constituting a related-party transaction
The Company and all members of the Company’s Board of Directors confirm that allinformation disclosed herein is true, accurate and complete, with no false or misleadingstatement or material omission.
I．Basic Information on the TransactionIn order to continuously optimize financial management, improve capital efficiency, andreduce financing costs and risks, on January 13, 2022 ADAMA Ltd. (hereinafter referred toas “the Company”) signed a Financial Service Agreement (hereinafter referred to as " theOriginal Agreement") with Sinochem Finance Co., Ltd. (hereinafter referred to as the"Finance Company"), according to which the Finance Company would provide relevantfinancial services to the Company and its subsidiaries for a three-year term ending on January12, 2025. For details, please refer to the Announcement on the Signing of a Financial ServiceAgreement with Sinochem Finance Co., Ltd., constituting a related-party transaction(Announcement No.2021-50) disclosed on December 24, 2021.The Company wishes to continue to receive financial services from the Finance Company,including deposits, clearance, credit and additional financial services approved by theNational Financial Regulatory Administration, and therefore wishes to renew the FinancialService Agreement with the Finance Company (hereinafter referred to as “the Transaction”and the “Renewed Agreement”).The Finance Company is a subsidiary controlled by Sinochem Holdings Corporation Ltd.(hereinafter referred to as “Sinochem Holdings”), the indirect controlling shareholder of theCompany through Syngenta Group Co., Ltd.. According to the Listing Rules of the ShenzhenStock Exchange, the Finance Company is therefore a related party to the Company due to themboth being under the common control of Sinochem Holdings, and the Transaction constitutesa related-party transaction.The Transaction has been reviewed and approved by the 7
th
Meeting of the 10
thsession of the
Board of Directors of the Company. Among the five directors of the Company, the related-party director, Mr. Liu Hongsheng refrained from voting, while among the remaining votesof the four directors, there were four affirmative votes, zero negative votes and zeroabstentions. This Transaction has been reviewed by the Specialized Meeting of IndependentDirectors of the Company and approved by all independent directors.The Transaction requires the approval of the Company’s shareholders. Syngenta Group Co.,Ltd. will refrain from voting.The Transaction does not constitute a major asset reorganization as stipulated in theManagement Measures for Major Asset Restructuring of Listed Companies.II. Description of the Related Party
1. Basic Information of the Related Party
Name of the Related Party: Sinochem Finance Co., Ltd.Registered Address: 3/F, Central Tower, Chemsunny World Trade Center, No.28Fuxingmennei Street, Xicheng District, BeijingOwnership Property: Other Limited Liability CompanyUnified Social Credit Code: 911100007109354688Licensed Financial Institution Code: L0091H211000001Legal Representative: Xia YuRegistered Capital: RMB 6,000 millionDate of Establishment: June 4
th
, 2008Business scope: Services for Enterprise Group as Finance Company.Credit status: After searching on the website of disclosure of enforcement information ofChina, it appears that the Finance Company is not a debtor subject to enforcement.
2. Shareholders and their Shareholding Proportion
The Finance Company is jointly owned by Sinochem Holdings and its two subsidiaries ofSinochem Holdings. The shareholders and their shareholding proportion are as follows:
Sinochem Holdings 37%, Sinochem Corporation 35% and Sinochem Capital Co., Ltd. 28%.3．Financial Status of the Finance CompanyThe most recent financial situation of the Finance Company is as follows:
In RMB ’0000
| At Sep 30, 2024 | At Dec 31,2023 | |
| Total Assets | 6,259,800 | 6,527,900 |
| Total Liabilities | 5,156,800 | 5,452,200 |
| Shareholders’ Equity | 1,103,000 | 1,075,600 |
| Capital Adequacy Ratio | 13.66% | 14.04% |
| Jan to Sep 2024 | 2023 | |
| Revenue | 47,612.95 | 87,207.83 |
| Total Profit (pre-tax income) | 32,347.81 | 70,832.90 |
4. Relations between the Related Parties
The controlling shareholder of the Company, Syngenta Group Co., Ltd., is a subsidiaryindirectly controlled by Sinochem Holdings. The Finance Company is a subsidiary indirectlycontrolled by Sinochem Holdings. Therefore, both the Company and the Finance Companyare ultimately controlled by Sinochem Holdings.III．Basic Information on the Subject of the TransactionThe Finance Company shall provide the Company and its subsidiaries with relevant financialservices including deposits, clearance, credit and other relevant financial services approvedby the National Financial Regulatory Administration, all in accordance with the provisions ofthe Renewed Agreement.IV. Main Content and Pricing Principle of the Transaction AgreementADAMA Ltd. (“Party A”) and Sinochem Finance Co., Ltd. (“Party B”) intend to sign theRenewed Agreement, such that Party B shall continue to provide Party A and its subsidiariesrelevant financial services in accordance with the terms and conditions thereof.For the avoidance of ambiguity, Party A’s subsidiaries refer to its wholly-owned subsidiaries,controlling or share-holding subsidiaries. Party A and its subsidiaries shall comply with theprovisions of the Administrative Measures on Finance Companies of Enterprise Groupregarding the group member entities.
1. Scope of Services
Party B shall provide Party A and its subsidiaries with the following financial services withinthe business scope approved by the National Financial Regulatory Administration:
(1) Deposit:
Party A and its subsidiaries shall open separate deposit accounts in Party B. The accounts shallbe used for deposit of funds with the freedom to deposit and withdraw at any time. The type
of the account may be demand deposit, time deposit, notice deposit and agreement deposit,etc.Subject to regulatory requirements, the deposit interest rate provided by Party B to Party Aand its subsidiaries shall not be lower than that of the same type: (i) identified by the People’sBank of China during the same period; or (ii) in major domestic commercial banks during thesame period;Party A and its subsidiaries’ daily maximum deposit balance and interest in Party B shall notbe more than RMB 1.5 billion yuan in principle;Party B shall deposit all funds that Party A and its subsidiaries shall have deposited intoaccounts of commercial banks that are established with approval by the National FinancialRegulatory Administration, such as China Construction Bank, Bank of China, Bank ofCommunications, etc. Party B shall ensure the security of the deposit of Party A and itssubsidiaries;Party A shall have the right to terminate this Agreement if Party B fails to pay the principal ofor the interest on the deposits due to Party A and its subsidiaries in full and on time, and PartyA or its subsidiaries affected by such failure shall have the right to offset any loan rendered toany of them by Party B with such overdue principal and interest of the deposits payable tothem in accordance with laws;If Party A and/or Party A’s subsidiaries suffers economic losses due to other breach of contractby Party B, the latter shall compensate Party A for the full amount of such losses and Party Ashall have the right to terminate this Agreement.
(2) Clearance:
Party B shall provide payment, collection and other supporting services related to theclearance in accordance with Party A and its subsidiaries’ instructions;Party B shall provide Party A and its subsidiaries with free clearance services mentioned above;Party B shall ensure the safety of network operation for fund clearance, guarantee fundsecurity, control risks of assets and liabilities and satisfy Party A and its subsidiaries’ paymentdemands.
(3) Credit:
In accordance with relevant national laws and regulations, Party B may provide Party A andits subsidiaries with comprehensive credit service according to their operation anddevelopment needs. Party A and its subsidiaries may use the credit line defined by Party B forloans, bill acceptance, bill discounting, non-financing guarantee and other forms of financingservices. Party B shall prioritize Party A and its subsidiaries’ needs within its own financialcapacity;
Party B shall provide Party A and its subsidiaries with a preferential interest rate of loans thatshould not be higher than that of the same-grade of the same type loan obtained by Party Aand its subsidiaries in other domestic financial institutions during the same period of time;In accordance with the regulatory requirements, the accumulated credit lines set by Party B toParty A and its subsidiaries shall not exceed RMB 2 billion yuan, but the specific amount shallbe subject to the actual approval of Party B's credit approval committee;Party B and Party A and its subsidiaries shall sign separate loan agreements and otheragreements concerning specific matters of credit service as required to provide the services.
(4) Other Financial Services:
The Parties may agree from time to time during this Agreement that Party B shall provideParty A and its subsidiaries with other relevant financial services (“Other Financial Services”)within its business scope in accordance with Party A and its subsidiaries’ instructions andrequirements, subject to the execution of a separate written agreement between the Partieswith respect to the nature, scope and fees regarding the Other Financial Services;The fees charged by Party B for the Other Financial Services shall not be higher than thosecharged by major financial institutions in China for the same type of services.
2. Term of Validity
This Agreement shall be signed by both Parties and shall take effect when the OriginalAgreement signed on January 13, 2022 expires as well as being approved by the board ofdirectors and the general meeting of shareholders of Party A in accordance with the listingrules and applicable laws and regulations.This Agreement shall be valid for three years from the effective date.V. Risk Assessment and Risk Prevention Measures On November 6, 2024, the 7
th
Meeting of the 10
th
Session of the Board of Directors of theCompany approved the Finance Company’s risk appraisal report, stating that: (i) the FinanceCompany holds a valid Financial Institution License and a Business License; (ii) no violationof the “Administrative Measures on Finance Companies of Enterprise Group ” promulgatedunder Decree [2022] No.6 of the China Banking and Insurance Regulatory Commission hasbeen identified; and (iii) its various regulatory indicators are in line with the requirements ofArticle 34 of the Measures. The 7
th
Meeting of the 10
th
Session of the Board of Directors of the Company approved theContingency Plan for Deposits at Sinochem Finance Co., Ltd. to protect the safety andliquidity of the Company and its subsidiaries' deposits in the Finance Company.VI. Purpose of the Transaction and its Impact on the Company
By signing the Renewed Agreement, the Finance Company will provide financial services tothe Company and its subsidiaries, which is conducive to optimize the financial managementof the Company, reduce the cost of capital and improve the efficiency of its financing. Thetransaction is aligned with the interests of the Company and all shareholders, and will not havea negative impact on the regular business activities and financial situation of the Company.VII. Status of Different Kinds of Executed Related Party Transactions between theCompany and Sinochem HoldingsThe status of different kinds of executed related party transactions between the Company andsubsidiaries of Sinochem Holdings are as follows:
1. The Company and its subsidiaries’ Deposits and Loans in the Finance Company: As ofthe date of this announcement, the balance of deposits remains RMB 379.79 million andUSD 2.14 million, and the loan amount is RMB 50 million, which have been approved bythe 1st
Interim Shareholders Meeting in 2022.
2. From January 1, 2024 till June 30, 2024, the occurred related party transactions withsubsidiaries of Sinochem Holdings in the ordinary course of business is RMB 1,335.25million. The estimated related party transaction amount in the ordinary course of businessapproved by the 2023 Annual Shareholders Meeting is RMB 4,143.71 million.
3. The 33
rd
meeting of the 9th session of the Board of Directors approved the Proposal onCredit Facility from the Related Party according to which Syngenta Group (NL) B.V., asubsidiary of the Company's controlling shareholder Syngenta Group Co., Ltd., shall enterinto an additional Facility Agreement and provide an amount of USD 200 million creditfacility in favor of Adama Fahrenheit B.V., an indirectly wholly-owned subsidiary of theCompany, and the transaction has been approved by the 2024 1st Interim ShareholdersMeeting.
4. The 3
rd
meeting of the 10th session of the Board of Directors considered the Proposal onthe Purchase of Liability Insurance for Directors, Supervisors and Senior Executives andthe Related-party Transaction, according to which the Company will purchase a Directorsand Officers liability insurance policy by way of adding the Company to the Directors andOfficers liability insurance policy of Syngenta Group Co., Ltd., and the transaction hasbeen approved by the 2024 2nd Interim Shareholders Meeting.VIII. Independent Directors’ Prior Approval
1. The Company’s Specialized Meeting of Independent Directors approved the Transaction
and the independent directors have given approval opinions on the Transaction: The
Finance Company is a normative non-banking financial institution approved by theNational Financial Regulatory Administration (formerly the China Banking and InsuranceRegulatory Commission). The rendering of financial services by the Finance Company tothe Company and its subsidiaries according to the Financial Service Agreement is withinits business scope and complies with related laws and regulations;
2. The Renewed Agreement to be signed follows the principle of equality and voluntariness,and is based on the principles of fairness and transparency. It does not harm the interestsof the Company or its minority shareholders; the Transaction is conducive to increasingthe Company’s return on capital and improving its financing capabilities;
3. The Finance Company’s risk appraisal report fully reflects the Finance Company’soperating qualifications, business and risk status. As a non-banking financial institution,its business scope, business content and procedures, internal risk control system and othermeasures are all subject to strict supervision by National Financial RegulatoryAdministration. Under the above-mentioned risk control conditions, the independentdirectors approve that the Finance Company will provide relevant financial services to theCompany and its subsidiaries;
4. The Contingency Plan for Deposits at Sinochem Finance Co., Ltd. formulated by theCompany can effectively and timely prevent, control and resolve the Company’s financialrisks and secure its funds;
5. The decision-making procedures for the Transaction conform to the Company Law of thePeople’s Republic of China, the Securities Law of the People’s Republic of China as wellas the Articles of Association of the Company and other laws and regulations. Theindependent directors agree to submit the proposal to the Company’s Board of Directorsfor approval.IX. Documents for Future Reference
1. Resolution of the 7
th
Meeting of the 10
thSession of the Board of Directors of the Company;
2. The resolutions of the Specialized Meeting of Independent Directors;
3. Renewed Financial Service Agreement to be Signed.
The Announcement is hereby made.
The Board of Directors of ADAMA Ltd.
November 7, 2024