Stock Code: 000553(200553) Stock Abbreviation: ADAMA A (B) NO. 2020-42
ADAMA Ltd.
Announcement on the Intended Renewal of the Financial
Service Agreement with ChemChina Finance Co., Ltd.,
constituting a related-party transaction
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 Transaction
In order to continuously optimize financial management, improve capital efficiency, and
reduce financing costs and risks, in 2017 ADAMA Ltd. (hereinafter referred to as “the
Company”) entered into a Financial Service Agreement with ChemChina Finance Co., Ltd.
(hereinafter referred to as the “Finance Company”) , according to which the Finance
Company would provide relevant financial services to the Company and its wholly-owned
subsidiary, ADAMA Anpon (Jiangsu) Ltd. (hereinafter referred to as “Anpon”) for a 3-year
period ending on September 21, 2020 (hereinafter referred to as “the Original Agreement”).
The Company wishes to continue to receive financial services from the Finance Company,
including deposits, clearance, credit and additional financial services approved by the China
Banking and Insurance Regulatory Commission, and therefore wishes to enter into a new
Financial Service Agreement with the Finance Company similar to the Original Agreement
(hereinafter referred to as “the Transaction” and the “Renewed Agreement”).
The Finance Company is a subsidiary of China National Chemical Corporation Ltd.
(hereinafter referred to as “ChemChina”), the indirect controlling shareholder of the
Company through Syngenta Group Co., Ltd.. According to the Listing Rules of the Shenzhen
Stock Exchange, the Finance Company is therefore a related party to the Company due to
them both being under the common control of ChemChina, and the Transaction constitutes a
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related-party transaction.
The Transaction has been reviewed and approved by the 26th Meeting of the 8th session of
the Board of Directors of the Company. Among the five directors of the Company, there
were five affirmative votes, zero negative votes and zero abstentions. The independent
directors had a prior review on the Transaction and issued independent opinions.
The Transaction requires the approval of the Company’s shareholders. Syngenta Group Co.,
Ltd. and Jingzhou Sanonda Holdings Co., Ltd. will refrain from voting.
The Transaction does not constitute a major asset reorganization as stipulated in the
Management 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: 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. (Market Entities shall independently select
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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
state and municipal industry policies is allowed.)
Credit status: After searching on the website of disclosure of enforcement information of
China, it appears that the Finance Company is not a judgement debtor subject to
enforcement.
2. Shareholders and their Shareholding Proportion
The Finance Company is jointly owned by ChemChina and three of its subsidiaries. The
shareholders and their shareholding proportion are as follows:
ChemChina 49.41%, China Blue Star (Group) Co., Ltd 26.88%, China Haohua Chemical
Group Co., Ltd. 15.81% and China National Agrochemical Co., Ltd. 7.9%.
3．Financial Status of the Finance Company
The most recent financial situation of the Finance Company is as follows:
Currency: RMB
At Jun 30, 2020 At Dec 31,2019
Total Assets (billion) 11.089 16.656
Total Liabilities (billion) 9.67 15.248
Shareholders’ Equity (billion) 1.418 1.408
Capital Adequacy Ratio 20.61% 14.4%
January to June 2020 2019
Revenue (million) 188.9307 383
Total Profit (pre-tax income) (million) 80.4999 104
4. Relations between the Related Parties
The controlling shareholder of the Company, Syngenta Group Co., Ltd., is a subsidiary
indirectly controlled by ChemChina. The Finance Company is a subsidiary directly
controlled by ChemChina. Therefore, both the Company and the Finance Company are
ultimately controlled by ChemChina.
III．Basic Information on the Subject of the Transaction
The Company and its wholly-owned subsidiary Anpon shall hold separate deposit accounts
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in the Finance Company, and the Finance Company shall provide the Company and Anpon
with relevant financial services including deposits, clearance, credit and additional financial
services approved by the China Banking and Insurance Regulatory Commission, all in
accordance with the provisions of the Renewed Agreement.
IV. Main Content and Pricing Principle of the Transaction Agreement
The Company and ADAMA Anpon (Jiangsu) Ltd. (“Anpon ”) (collectively referred to as
“Party A”) and ChemChina Finance Co., Ltd. (“Party B”) intend to sign the Renewed
Agreement, such that Party B shall continue to provide Party A with relevant financial
services in accordance with the terms and conditions thereof.
1. Scope of Services
Party B shall provide Party A with the following financial services:
(1) Deposit:
Each of the Company & Anpon shall open separate deposit accounts in Party B. The
accounts shall be 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...
The deposit interest rate provided by Party B to Party A shall not be lower than that of the
same type: (i) identified by the People’s Bank of China during the same period; or (ii) in
major domestic commercial banks during the same period; or (iii) given by Party B to other
subsidiaries of ChemChina during the same period time;
Party A’s accumulated daily maximum deposit balance and interest in Party B shall not be
more than RMB 400 million yuan in principal;
Party B shall deposit all funds that Party A shall have deposited into accounts of commercial
banks that are established with approval by the China Banking and Insurance Regulatory
Commission, such as China Construction Bank, Bank of China, Bank of Communications,
etc. Party B shall ensure the security of the deposit of Party A;
If Party B fails to repay the deposit to Party A in full amount and on time, Party A shall have
the right to terminate this Agreement and may offset the unpaid amount from any due loan
provided by Party B in accordance with laws and regulations;
If Party A suffers economic losses due to other breach of contract by Party B, the latter shall
compensate Party A for the full amount of such losses and Party A shall have the right to
terminate this Agreement.
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(2) Clearance:
Party B shall provide payment, collection and other supporting services related to the
clearance in accordance with Party A’s instructions;
Party B shall provide Party A with free clearance services mentioned above;
Party B shall ensure the safety of network operation for fund clearance, guarantee fund
security, control risks of assets and liabilities and satisfy Party A’s payment demands.
(3) Credit:
In accordance with relevant national laws and regulations, Party B may provide each of the
Company and Anpon with comprehensive credit service according to their operation and
development needs. The Company and Anpon may use the credit line defined by Party B for
loans, bill acceptance, bill discounting, guarantees and other forms of financing services.
Party B shall prioritize Party A’s needs within its own financial capacity;
Party B shall provide Party A with a preferential interest rate of loans that should not be
higher than that of the same-grade loan obtained or that may be obtained by Party A in other
domestic financial institutions during the same period of time;
The accumulated annual credit lines set by Party B to Party A shall not exceed RMB 900
million yuan;
Party B and each of the Company and Anpon shall sign separate loan agreements and other
agreements concerning specific matters of credit service as required to provide the services.
(4) Additional Financial Services:
The Parties may agree from time to time during this Agreement that Party B shall provide
Party A with additional financial services (“Additional Financial Services”) within its
business scope in accordance with Party A’s instructions and requirements, subject to the
execution of a separate written agreement between the Parties with respect to the nature,
scope and fees regarding the Additional Financial Services;
The fees charged by Party B for the Additional Financial Services shall not be higher than
those charged by major financial institutions in China for the same type of services.
2. Term of Validity
This Agreement shall become effective after being signed by all Parties and following the
approval of the relevant organs of the Parties, including the Shareholders meeting of the
Company, and shall remain in effect for three years.
V. Risk Assessment
On August 21, 2020, the Company disclosed the Finance Company’s risk appraisal report
on the website of Juchao Information, stating that: (i) the Finance Company holds a valid
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Financial Institution License and a Business License; (ii) no violation of the “Administrative
Measures for Financial Companies of Enterprise Groups” promulgated by the China
Banking Regulatory Commission has been identified; and (iii) its various regulatory
indicators are in line with the requireents 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 the Transaction and its Impact on the Company
By signing the Renewed Agreement, the Finance Company will provide financial services to
the Company and its wholly-owned subsidiary Anpon, which is conducive to continuously
optimize the financial management of the Company, reduce the cost of capital and improve
the efficiency of its financing. The transaction is aligned with the interests of the Company
and all shareholders, and will not have a negative impact on the regular business activities
and financial situation of the Company.
VII. Status of Different Kinds of Executed Related Party Transactions between the
Company and ChemChina
From January 1, 2020 till the date of this Announcement, the status of different kinds of
executed related party transactions between the Company and ChemChina are as follows:
1. The Company and Anpon’s deposits and loans in the Finance Company: As of the date
of this announcement, the balance of deposits remains RMB 15,587,026.48 and USD
44,826,665.84, and the loan amount is 20,000,000 yuan, which have been approved by
the 2nd Interim Shareholders Meeting in 2017 and the 2nd Interim Shareholders Meeting
in 2019.
2. Estimated related party transactions in the ordinary course of business in 2020 of an
aggregate of RMB 3,631.557 million, were approved by the 2019 Annual General
Meeting.
VIII. Independent Directors’ Opinions
The Company’s independent directors have provided independent opinions on the
Transaction:
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1. The Finance Company is a normative non-bank financial institution approved by the
China Banking and Insurance Regulatory Commission. The provision of financial
services by the Finance Company to the Company and its wholly-owned subsidiary
Anpon is within its 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 interests
of the Company or its minority shareholders; the Transaction is conducive to increasing
the Company’s return on capital and improving its financing capabilities;
3. The Finance Company’s risk appraisal report fully reflects the Finance Company’s
operating qualifications, business and risk status. As a non-bank financial institution, its
business scope, business content and procedures, internal risk control system and other
measures are all subject to strict supervision by the China Banking and Insurance
Regulatory Commission. Under the above-mentioned risk control conditions, the
independent directors approve that the Finance Company will continue to provide
relevant financial services to the Company and its wholly-owned subsidiary Anpon;
4. The Risk Emergency Disposal Plan of ADAMA Ltd. for Deposits in ChemChina Finance
Co., Ltd. formulated by the Company can effectively and timely prevent, control and
resolve the Company’s financial risks and maintain security of its funds;
5. The decision-making procedures for the Transaction conform to the Company Law of the
People’s Republic of China, the Securities Law of the People’s Republic of China, the
Articles of Association of the Company and other laws and regulations. The independent
directors agree to submit the proposal to the Company’s shareholders for approval.
IX. Documents for Future Reference
1. Resolution of the 26th Meeting of the 8th Session of the Board of Directors of the
Company;
2. Independent Directors’ Prior Written Approval;
3. Independent Directors’ Opinions;
4. Renewed Financial Service Agreement to be Signed.
The Announcement is hereby made.
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The Board of Directors of ADAMA Ltd.
August 21, 2020
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