On January 27, 2006, Potash Corporation of Saskatchewan Inc. ("PotashCorp") formally notified Sinochem Hong Kong (Group) Company Limited ("SHK"), the controlling shareholder of Sinochem Hong Kong Holdings Limited (Stock code: 297) (the "Company"), of its intention to exercise the option to acquire additional 10.01% shares of the Company. The option was granted to PotashCorp under the Strategic Investment Agreement between PotashCorp and SHK dated June 7, 2005 when PotashCorp acquired initial 9.99% shares in the Company. Pursuant to the Strategic Investment Agreement, PotashCorp may exercise the option no earlier than January 27, 2006, the six month anniversary from the closing of the initial investment. PotashCorp has decided to exercise the option on the first eligible day.
Mr. William J. Doyle, President & Chief Executive Officer of PotashCorp commented on his company's decision to exercise the option. He said, "we are very confident in the management and prospects of Sinochem Hong Kong Holdings Limited and look forward to extending our relationship (with the Company) through the exercise of the option".
Mr. Liu Deshu, President of Sinochem Corporation and Chairman of Sinochem Hong Kong Holdings Limited, also commented: "We welcome PotashCorp's decision to increase its investment in Sinochem Hong Kong Holdings Limited, and look forward to strengthening the strategic alliance between PotashCorp and the Company globally in the future".
The closing for the exercise of the option expects to take place before the end of February.
Sinochem Hong Kong Holdings Limited is a leading fertilizer enterprise in China, offering a wide range of fertilizer and agricultural related products. It is one of the largest importers of fertilizer products in the PRC in terms of import volume and the largest distributor of imported fertilizer products in terms of sales volume in China. By the end of November 2005, the company has 14 branch offices and 1,036 sales centers, accounting for 76% of total sown lands in China. The company is also a major producer of phosphate-based fertilizer in China in terms of production output.
PotashCorp is the world's largest fertilizer enterprise and a leading supplier to three distinct market categories: agriculture, with the largest capacity in the world in Potash, third largest in phosphate and fourth largest in nitrogen; animal nutrition, with the world's largest capacity in phosphate feed ingredients; and industrial chemicals, the largest global producer of industrial nitrogen products and one of the only three North American suppliers of industrial phosphates.