10:11 SINOCHEM HK<00297>-Announcement & Resumption of Trading(14) H. IMPLICATIONS OF THE TAKEOVERS CODE AND WHITEWASH WAIVER As at the date of this announcement, Sinochem HK and its concert parties owns approximately 21.16% of the existing issued ordinary share capital of the Company. Sinochem HK also holds 103 unlisted Preference Shares, representing all the outstanding Preference Shares. None of Sinochem HK or its concert parties have dealt in any securities of the Company in the 6 months prior to the date of this announcement. Upon Completion, Sinochem HK and its concert parties shall be interested in 5,127,847,763 New Shares or 51,278,477,633 Ordinary Shares if the Capital Reorganisation has not been given effect to on or before Completion, in either case representing approximately 94.65% of the issued ordinary share capital of the Company as enlarged by the issue of the Consideration Shares upon Completion. Not only would this level of voting rights give Sinochem HK effective control of general meetings of the Company, it may also be possible for Sinochem HK to increase its shareholdings without incurring any further obligation under Rule 26 of the Takeovers Code to make a general offer. As such, Sinochem HK will, upon Completion, be required to make a mandatory general offer for all the issued shares of the Company not already owned or agreed to be acquired by Sinochem HK and parties acting in concert with it under Rule 26.1 of the Takeovers Code unless a waiver from strict compliance with Rule 26.1 of the Takeovers Code is granted by the Executive. Sinochem HK intends to make an application to the Executive for the granting of the Whitewash Waiver as soon as possible, which, if granted, would be subject to the approval of the Independent Shareholders at the SGM by way of a poll. Whether Mr. Chu Yu Lin, David and Mrs. Chu Ho Miu Hing, executive Directors, will be eligible to vote is to be determined. If the Whitewash Waiver is granted by the Executive, Sinochem HK and parties acting in concert with it would not be required to make a mandatory offer which would otherwise be required as a result of the allotment and issue of the Consideration Shares pursuant to the Acquisition Agreement. The Executive may or may not grant the Whitewash Waiver. If the Whitewash Waiver is not granted, the Acquisition Agreement will lapse and the Acquisition will not proceed. I. RELATIONSHIP WITH SINOCHEM HK, SINOCHEM CORPORATION AND NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS Sinochem HK is an investment holding company incorporated under the laws of Hong Kong and wholly-owned by Sinochem Corporation. Sinochem Corporation is a state-owned enterprise under the supervision of SASAC. Founded as a state-owned import/export company in China in 1950 and formerly known as the China National Chemicals Import & Export Corporation, Sinochem Corporation is currently one of the largest state-owned conglomerates in the PRC, with operations in core businesses such as petroleum, fertilizer, rubber, plastic, chemical products, and inbound/outbound trade. It also expanded into business areas including finance, insurance, logistics and real estate. In 2002, the Sinochem Group had total sales of approximately US$18.76 billion and realized net profit of approximately US$101 million. Immediately upon Completion, Sinochem HK will own approximately 94.65% of the then issued ordinary share capital of the Company. As such, Sinochem Corporation will be the ultimate controlling shareholder of the Company on Completion. Sinochem Corporation is a connected person of the Company by virtue of it being the parent company of Sinochem HK. Upon Completion, various companies within the Fertiliser Group will become subsidiaries of the Company. On-going provision of services and sale and purchase of products are expected to take place between members of the Sinochem Group (other than the Company and its subsidiaries) and members of the Fertiliser Group which will constitute continuing connected transactions under the Listing Rules. Some of these continuing connected transactions may constitute Non-exempt Continuing Connected Transactions and are subject to approval by the Independent Shareholders at the SGM. The Acquisition is conditional on, among other things, the approval of the Non-exempt Continuing Connected Transactions by the Independent Shareholders. Details of the continuing connected transactions will be disclosed in a further announcement and in the Circular. Sinochem Corporation is also expected to enter into the Non-competition Undertaking in favour of the Company. Pursuant to the Non-competition Undertaking, Sinochem Corporation is expected to undertake to the Company that, so long as: (i) Sinochem Corporation is the ultimate controlling shareholder of the Company; and (ii) the Company's ordinary shares are listed on the Stock Exchange,