Sinofert and Hualu Hengsheng Jointly Strengthen Coal Chemical Business     

After more than one year's alliance Sinofert Holdings Limited (HK Stock Code: 297) and Shandong Hualu Hengsheng Chemical Co., Ltd. (SH: 600426) have jointly take actions of acquisition.
   The two companies announced jointly on January 28th that they will purchase a 75% stake in Shandong Deqilong Chemical Group Co., Ltd. Both sides are to create Shandong coal chemical industry base.
   Deqilong and Hualu Hengsheng are both important coal chemical enterprises in Dezhou of Shandong province. The total assets of Deqilong reached RMB3.6 billion in 2007 and the capacity of urea was 1.0 million t/a. The company also has a 300 000 t/a methanol unit. An explosion happened on July 11th, 2007 when its 160 000 t/a ammonia/methanol and 250 000 t/a urea expansion project was conducting commissioning and the production has not been restored by now. After the equity participation, the production and operation of Deqilong will mainly be run by Hualu Hengsheng. Hualu Hengsheng will use its advantages in technology and management to conduct renovation to Deqilong and restore the production. Hualu Hengsheng and Deqilong are both located in Dezhou and they totally own a capacity of 2.0 million t/a urea. 300 000 tons of methanol produced in Deqilong can be used as major raw material for the DMF and acetic acid production in Hualu Hengsheng.
   According to local media in Dezhou, on January 9th Sinofert, Hualu Hengsheng and Dezhou Municipal Government signed a framework agreement on strategic cooperation in construction of the coal chemical industry base and the logistics base. According to the agreement, Sinofert and Hualu Hengsheng will participate in the construction of the coal chemical industry base in Dezhou. They will also cooperate with local logistics enterprises and participate in the construction of the logistics base in the city.
   Sinofert acquired the 4.54% equity in Hualu Hengsheng in November 2006, being the second largest shareholder of Hualu Hengsheng. (CCR2006 No. 34)