(the "Issuer") (Incorporated in the Cayman Islands) (Registration No. CT-152302)

HK$250,000,000 Zero Coupon Guaranteed Convertible Bonds due 2011 convertible into ordinary shares of the Issuer


The Issuer refers to its HK$250,000,000 Zero Coupon Guaranteed Convertible Bonds due 2011 (the
"Bonds") convertible into ordinary shares of the Issuer constituted by the Trust Deed dated 20
December 2006 and supplemented by a supplemented trust deed dated 16 December 2011 (the "Trust Deed") made between the Issuer, as issuer, Huge Glory Holding Limited ("Huge Glory") and Honour Wealth International Limited ("Honour Wealth", together with Huge Glory, the "Guarantors"), as guarantors and The Hongkong and Shanghai Banking Corporation Limited, as trustee (the "Trustee").
The Issuer wishes to provide, through this announcement, more details on its inability to make timely payment for the Third Redemption due on 31 December 2012.
At the end of August, the annual potato harvest season began and the Issuer utilised its cash resources to purchase potatoes from farmers who mostly dealt on a cash-only basis. This resulted in a depletion of the Issuer's cash balances from September through to November. Due to the challenging operating environment that mainly stemmed from the exceptional market condition that
occurred in 2Q FY20121, the Issuer saw lower sales volume and turnover as its customers adopted a
wait-and-see approach to purchasing potato starch due to depressed potato starch prices affecting their turnovers. As a result of impacted turnovers, the Issuer's customers were slow to repay the Issuer's receivables.
From the end of the harvest season around mid-November, the Issuer stepped up its efforts to recover its trade receivables to minimise ageing receivables and meet its working capital requirements. A month later in mid-December, it became apparent that the pace of collection was not as swift as hoped despite the extra effort placed into retrieving the payments due from the Issuer's customers.
On 24 December 2012, the Issuer began discussions with the Bondholders on the possibility of postponing the Third Redemption payment which was due on 31 December 2012. At the same time, the Issuer continued to press on with its efforts to recover its trade receivables for the payment of the Third Redemption.
On 28 December 2012, it became clear to the Issuer that its available cash was only sufficient for its operations and that it would be unable to repay the Third Redemption on time. The Issuer then made an announcement on the same day on SGXNET to update the market on the situation.

1

Potato harvest occurs once annually from August to November in Northeast China where the Company's production facilities

are based. Due to the high potato prices experienced in 2010, farmers were building up their inventory of potatoes at the start of the harvest season in August and September 2011, which in turn pushed up prices of potatoes during that period. Consequently, the inventory build-up led to a supply glut which caused a sudden and unprecedented sharp fall in the prices of potatoes and potato starch in late September 2011. This is referred to as "exceptional market condition".

The Issuer is committed to meeting its obligation under the Bonds. Although the Issuer's initial proposal to postpone the Third Redemption to mid-March 2013 was rejected by the Bondholders on
29 December 2012, the Issuer is currently in discussions with the Bondholders and the Trustee on
alternative proposals concerning the postponement of the Third Redemption. The Issuer continues to seek solutions to the outstanding debt issue as well as work its way out of this difficult operating market. Timely updates will be made by way of public announcement on SGXNET as appropriate.
The Issuer's Directors are of the view that the Issuer is of going concern as the Bondholders have not demanded the immediate payment of the Third Redemption after its due date. In addition, the Issuer's Directors are of the view that there is sufficient information in the market for the Issuer to resume trade on the Mainboard of the SGX-ST.

ON BEHALF OF THE BOARD

Zhao Libin
Executive Chairman
7 January 2013

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