Stock Code: 000553(200553) Stock Abbreviation: ADAMA A (B) NO. 2019-32
ADAMA Ltd.
Announcement on the Signing of Supplemental Financial Services
Agreement in a Related-Party Transaction with ChemChina Finance
Co., Ltd.
The Company and all members of the Company’s Board of Directors confirm that all
information disclosed herein is true, accurate and complete, with no false or misleading
statement or material omission.
I．Basic Information on the Related Party Transaction
With the approval of the 2nd Interim Shareholders Meeting in 2017, the Company signed a
Financial Services Agreement (hereinafter referred to as the “Original Agreement”) with
ChemChina Finance Co., Ltd. (hereinafter referred to as the “Finance Company”) on
September 22, 2017. For details, please refer to the Announcement on Providing Financial
Services to the Company by the Finance Company (announcement number 2017-48)
disclosed on August 16, 2017.
On March 29, 2019, the Company purchased 100% of the equity interests in Jiangsu Anpon
Electrochemical Co., Ltd. (“Anpon”). The Finance Company provided financial services to
Anpon prior to its acquisition by the Company, and is willing to continue to provide it with
financial services. Therefore, the Company plans to sign a Supplemental Financial Services
Agreement with the Finance Company to revise certain clauses of the Original Agreement.
The Finance Company is a subsidiary controlled by China National Chemical Corporation
Ltd. (hereinafter referred to as “ChemChina”). According to the Listing Rules of Shenzhen
Stock Exchange, the Finance Company is a related party to the Company due to the common
control by ChemChina.
The related-party transaction matter has been reviewed and approved at the 14th Meeting of
the 8th session of the Board of Directors of the Company. Among the five directors of the
Company, there were four affirmative votes, zero negative votes and zero abstentions, while
the one related-party director (Mr. Yang Xingqiang) refrained from voting.
The related-party transaction matter shall be further approved by the shareholders. China
National Agrochemical Co., Ltd.(hereinafter referred to as “CNAC”), and Jingzhou Sanonda
Holdings Co., Ltd. will refrain from voting.
II. Introduction to the Related Party
1. Basic Information of the Related Party
Name of the Related Party: ChemChina Finance Co., Ltd.
Registered Address: No. 62, West of the North Fourth Ring Road, Haidian district,
Beijing
Ownership Property: Limited Liability Company
Unified Social Credit Code: 91110000100019622W
Licensed Financial Institution Code: L0100H211000001
Legal Representative: Shi Jie
Registered Capital: RMB 841.225 million
Date of Establishment: May 14th, 1996
Business scope: handling financial and financing consultants, credit certificates and
related consulting and agency services for member companies; assisting member
companies in receiving and paying transaction funds; approved insurance agency
business; providing guarantees to member companies; handling entrusted loans and
investments among member companies; handling bill acceptance and discounting for
member companies; internal transfer settlement among member companies and design
of corresponding settlement and liquidation arrangement; absorption of deposits from
member companies; offering loans, financing and leasing for member companies;
inter-bank lending; underwriting corporate bonds and fixed-income securities
investments. (Enterprises shall independently select operating projects and carry out
business activities in compliance with laws; operating projects that are subject to
approval according to laws and the approval of relevant departments; No engagement in
any business activity that is forbidden or restricted by the municipal industry policies is
allowed.)
Credit status: After searching on the website of disclosure of enforcement information
of China, Finance Company is not a dishonest party subject to enforcement.
Shareholders and their Shareholding Proportion:
The Finance Company is jointly funded by ChemChina and three of its subsidiaries. The
shareholders and their shareholding proportion are as follows:
ChemChina holding 49.41%, China Blue Star (Group) Co., Ltd with a ratio of 26.88%,
China Haohua Chemical Group Co., Ltd. with a ratio of 15.81% and CNAC with a ratio
of 7.9%.
3．Financial Status of the Finance Company
As of the end of 2018, the total assets of the Finance Company were RMB 13.37 billion,
total liabilities RMB 11.99 billion and ownership equity RMB 1.38 billion. Its revenue
reached RMB 408.086 million and total profit RMB 99.164 million. It has a capital
adequacy ratio of 16.96%.
4. Relations between Related Parties
The controlling shareholder of the company, CNAC, is a wholly-owned subsidiary of
ChemChina. The Finance Company is a holding subsidiary of ChemChina. Therefore, both
the Company and the Finance Company are controlled by ChemChina.
III. Pricing Principle of the Related Party Transaction
This related party transaction is based on the pricing principle of similar services in the
market, and the price of this related party transaction is fair.
IV. Contents of the Supplemental Financial Services Agreement
1. The financial services under the Original Agreement shall be granted by the Finance
Company to each of the Company and Anpon separately.
2. Anpon, upon signing the confirmation, confirms its consent to receive the financial
services according to the Original Agreement attached as Annex A of this Agreement,
including all rights and obligations deriving thereof.
3. Article 1 (3) of section II “Services” of the Original Agreement shall be revised as
follows:
The original wordings:
“Party A's daily maximum deposit balance and interest in Party B shall not be more
than RMB 300 million yuan in principle”.
The revised wordings:
“Party A's The aggregated daily maximum deposit balance and interest in Party B
made by Party A and Anpon shall not be more than RMB 400 million yuan in
principle”.
4. Except the above revisions, no other change is made to the Original Agreement.
V. Risk Assessment
On March 21, 2019, the Company disclosed the Finance Company's risk assessment report
for 2018 on the website of Juchao Information, stating that the Finance Company has a
legally valid Financial License and Business License for Legal Persons of Enterprises; no
violation against the "Administrative Measures for Financial Companies of Enterprise
Groups" promulgated by the China Banking Regulatory Commission has been identified;
and its various regulatory indicators are in line with the requirements of Article 34 of the
Measures.
The 14th meeting of the 8th session of the Board of Directors of the Company approved the
revised "Risk and Emergency Disposal Plan of ADAMA Ltd. for Deposits in ChemChina
Finance Co., Ltd." to protect the safety and liquidity of the Company's deposits in the
Finance Company.
VI. Purpose of Related Party Transaction and its Impact on the Company
This related-party transaction is conducive to further optimize the financial management of
Anpon, reduce the cost of capital and improve the efficiency of capital operation. It is in line
with the interests of the Company and all shareholders, and will not have an impact on the
normal business activities and financial situation of the Company.
VII. Status of Different Kinds of Related Party Transactions between the Company
and ChemChina
From January 1, 2019 till the date of this Announcement, the status of different kinds of
related party transactions between the Company and ChemChina are as follows:
1. The balance of the deposits of the Company deposited in the Finance Company is RMB
300 million, which had been approved by the 2nd Interim Shareholders Meeting of the
Company.
2. The matter of related party transactions in the ordinary course of business in 2019 with a
total amount of RMB 1,914.43 million which had been approved by the 1st Interim
Shareholders Meeting in 2019.
3. Anpon acquisition by the Company with a total amount of RMB 820 million which had
been approved by the 12th meeting of the Board of Directors Meeting.
VIII. Independent Directors’ Opinions
This related party transaction is caused by the Company's acquisition of the equity interest in
Anpon. The parties agree to revise the Original Agreement to reflect the actual business
needs of Anpon. It is conducive to improving capital returns and capital operation capacity
of Anpon. This related party transaction is based on the principles of fair and open. It
doesn’t harm the interests of the Company and its shareholders. The decision-making
procedures for this related party transaction conform to the Company Law of the People’s
Republic of China, the Rules of Shenzhen Stock Exchange for the Listing of Stocks, the
Articles of Association and other laws and regulations. The independent directors agree to
submit the proposal to the shareholders for approval.
IX. Opinion of Guotai Jun’an Securities Co., Ltd as the Financial Consultant
After verification, the independent financial consultant is of the opinion that this related
party transaction has been approved at the 14th Meeting of the 8th session of the Board of
Directors of the Company, on which occasion related director withdrew from the voting,
independent directors expressed affirmative opinions and necessary procedures were
implemented. The related-party transaction matter is subject to approval of the Shareholders.
CNAC and Jingzhou Sanonda Holding Co., Ltd as related shareholders will refrain from the
voting. The deliberation procedures are in line with the Company Law, AoA of the
Company and relevant rules. The independent financial consultant does not have objection
to the signing of the Supplemental Financial Services Agreement.
X. Documents for Future Reference
1. The resolution made at the 14th Meeting of the 8th session of the Board of Directors of
the Company;
2. Independent directors’ prior written approval;
3. Independent directors’ opinions;
4. Opinion of Guotai Junan Securities Co., Ltd on the Supplemental Financial Service
Agreement in a Related-Party Transaction with ChemChina Finance Co., Ltd.
The Announcement is hereby given.
The Board of Directors of ADAMA Ltd.
April 30, 2019
