Stock Code: 000553 (200553) Stock abbreviation: ADAMA A (B) Announcement No. 2024-28
ADAMA Ltd.Announcement on the Arbitration Matters about Fulfillment ofPerformance Commitments Related to a Controlled Subsidiary
The Company and all members of its board of directors hereby confirm that allinformation disclosed herein is true, accurate and complete with no false recording,misleading statement or material omission.
Key Points:
1. Progress of the arbitration case
Shanghai International Economic and Trade Arbitration Commission (ShanghaiInternational Arbitration Centre) has accepted but not yet heard the case.
2. The standing of the listed company in the case: the Applicant
3. Value involved in the case
The Applicant requested the payment of price adjustment of RMB 64,535,827 yuan,compensation for corresponding losses and all costs incurred for initiating thearbitration, including fees for the attorney and the arbitration.
4. Impact on the profit and losses of the listed company
Since the arbitration has not yet been heard, the conclusion and its impact on theCompany's profits and losses cannot be reliably measured yet.I. Basic information on Acceptance of the Arbitration MatterADAMA Ltd. (hereinafter referred to as “the Company”, “ADAMA” or the“Applicant” ) received on May 8
th, 2024 the “Notice of Acceptance of Arbitration Casein respect of Disputes relating to the Equity Purchase Agreement (6.11.2019), theSupplementary Agreement to the Equity Purchase Agreement (26.2.2020) and the
Supplementary Agreement to the Equity Purchase Agreement (II) (28.10.2020)”[ShangGuo Zhong (2024) No. 1292] issued by Shanghai International Arbitration Centre(hereinafter referred to as the “Arbitration Commission”). The arbitration applicationfiled by the Company as the Applicant to the Arbitration Commission against JiangsuHuifeng Bio-agriculture Co., Ltd. (hereinafter referred to as the “Respondent” or“Jiangsu Huifeng”) as the claimant has been accepted.Basic information about the arbitration institution and the parties to the arbitration ispresented as follows.(I) Arbitration InstitutionName of the Arbitration Institution: Shanghai International Economic and TradeArbitration Commission (Shanghai International Arbitration Centre)(II) Parties to the Arbitration
1. Applicant: ADAMA Ltd.
2. Respondent: Jiangsu Huifeng
Legal representative: Zhong HangenRegistered Address: South of Wanggangzha, Dafeng District, Yancheng City, JiangsuProvince, ChinaII. Background Information of the Arbitration(I) Facts and Causes of the DisputeOn 25 March, 2024, the “Proposal on Realization of Performance Commitments relatedto a Controlled Subsidiary” was considered and approved by the 30th Meeting of the9th Session of the Board of Directors of the Company. Pursuant to the SupplementaryAgreement signed between the Company and Jiangsu Huifeng, Jiangsu Huifengundertakes that the average annual gross profit of ADAMA Huifeng (Shanghai)generated by the business of Nongyi E-commerce (Beijing) Co., Ltd. (“Nongyi”), aminority-owned company of Jiangsu Huifeng and Nongyi’s subsidiaries (hereinafter
referred to as the “Nongyi Business”) for the year of 2021, 2022 and 2023 (“GrossProfit by Nongyi Business") should be at least RMB 8.6 million (“Nongyi BusinessBenchmark”). If the Gross Profit by Nongyi Business fails to reach the Nongyi BusinessBenchmark, Jiangsu Huifeng should pay the price to the Company in accordance withthe following formula: the payable value by Jiangsu Huifeng (“Price AdjustmentPayment”) = (Nongyi Business Benchmark – Gross Profit by Nongyi Business) x 13.In addition, Jiangsu Huifeng should be liable for all the taxes and expenses which theCompany will bear due to the Price Adjustment Payment. The gross profit of ADAMAHuifeng (Shanghai) arising from the Nongyi Business during the period from 2021 to2023 totaled RMB 10,907,117 yuan, with an average annual gross profit of RMB3,635,706 yuan, meaning Jiangsu Huifeng should pay the Price Adjustment Paymentof RMB 64,535,827 yuan to the Company.For details of the aforesaid, please refer to the “Announcement of Resolutions of the30th Meeting of the 9th Session of the Board of Directors” (Announcement No. 2024-
4), “Announcement on the Fulfillment of Performance Commitments Related to aControlled Subsidiary (Announcement No. 2024-9) ” and the Special Report onDifference between Actual and Promised Gross Profits for Purchase of ADAMAHuifeng (Shanghai) Agricultural Technology Co., Ltd. (De Shi Bao (He) Zi (24) No.E00116) issued by Deloitte (Special Ordinary Partnership).On February 21
st, 2024, the Company issued the “Notification Letter Regarding thePrice Adjustment Payment related to the Performance Commitment of Nongyi Business”to Jiangsu Huifeng, requesting the entity to pay the Price Adjustment Payment of RMB64,535,827 yuan within five working days commencing from 18 February 2024. OnApril 26
th, 2024, the Company issued a follow-up “Notice Regarding the PriceAdjustment Payment related to the Performance Commitment of Nongyi Business”,informing Jiangsu Huifeng that it would resort to the necessary dispute resolutionprocedures and urging the entity again to duly perform the payment obligation.As of the date on which this Announcement is disclosed, Jiangsu Huifeng has not paidthe Price Adjustment Payment to the Company. In order to safeguard the legitimate
rights and interests of the Company and all its shareholders, the Company has initiatedthe arbitration proceedings against Jiangsu Huifeng.(II) Main Requests of the Arbitration
1. To request the Respondent to pay the Applicant the Price Adjustment Payment ofRMB 64,535,827 yuan.
2. To request the Respondent to pay the Applicant the compensation for the lossescaused by the failure of the Respondent to pay the Price Adjustment Payment on time(based on the Price Adjustment Payment payable of RMB 64,535,827 yuan, calculatedin accordance with the quoted interest rate for one-year loans in the market publishedby the National Center for Interbank Lending for the same period, starting from 23February 2024 until the date on which the Price Adjustment Payment is actually paidwith full amount).
3. To request the Respondent to bear the Applicant's attorney fee of 150,000 USDincurred for initiating this arbitration.
4. To request the Respondent to bear all costs incurred by the Applicant for initiatingthis arbitration, including the arbitration fee.III. Other Litigation and Arbitration Matters Not Disclosed YetAs of the date of disclosure of this announcement, the Company and its controlledsubsidiaries have litigations and arbitrations whose value involved do not meet thedisclosure threshold for material litigation and arbitration matters set out in the RulesGoverning the Listing of Stocks on the Shenzhen Stock Exchange. The Company doesn’thave litigations and arbitrations that should be disclosed but have not been disclosed.IV. Possible Impact of this Arbitration on the Company's Profits for the Currentand Subsequent PeriodsThe arbitration session has not yet commenced. Therefore, its conclusion and theimpact on the Company’s profits and losses cannot be reliably measured yet.
The Company will closely monitor to the progress of this arbitration matter, andactively take various measures to safeguard the legitimate rights and interests of theCompany and fulfill the information disclosure obligations in a timely manner.Investors are reminded to pay attention to the relevant announcements and investmentrisks.V. Documents for Reference
1. Application for Arbitration of ADAMA Ltd.
2. Notice of Acceptance of Dispute Arbitration Case in respect of the Equity PurchaseAgreement (2019.11.6), the Supplementary Agreement to Equity Purchase Agreement(2020.2.26) and the Supplementary Agreement to Equity Purchase Agreement (II)(2020.10.28) [Shang Guo Zhong (2024) No. 1292] issued by Shanghai InternationalEconomic and Trade Arbitration Commission (Shanghai International ArbitrationCentre)
Board of Directors of ADAMA Ltd.
May10
th
, 2024