SinoGas West Inc. Signs Letter of Intent with ARA Safety Inc.



CALGARY, April 16 /CNW/ - SinoGas West Inc. ("SinoGas"), a capital pool company ("CPC") listed on the TSX Venture Exchange (the "Exchange"), entered into a letter of intent (the "LOI") dated April 15, 2010 for the acquisition (the "Acquisition") of 100% of ARA Safety Inc. ("ARA"), a reporting issuer incorporated and existing under the laws of British Columbia. The Acquisition is intended to constitute SinoGas' qualifying transaction (the "Transaction") under the policies of the Exchange. ARA is a British Columbia-based corporation incorporated on March 5, 2001 engaged in the business of developing, manufacturing and distributing a line of fire protection and other life-safety products, which are either self-developed proprietary products or sourced from various third-party manufacturers, and have multi-purpose life-safety applications for commercial, industrial and institutional environments. The proposed acquisition of ARA is not a Non-Arm's Length Qualifying Transaction as defined by Exchange policies.

Pursuant to the terms of the LOI, the principal terms of the Transaction are as follows:

    -   SinoGas will consolidate (the "Consolidation") all of its issued and
        outstanding share capital on the basis of not less than 1-for-3
        with a name change (the "Name Change") to ARA Safety Holdings Inc.
        (or such other name acceptable to ARA) (the "Resulting Issuer");

    -   ARA will complete a combined brokered and non-brokered private
        placement (the "Private Placement") of units (each a "Unit") of not
        less than $2,200,000 and not more than $5,000,000 at a price of
        approximately $0.75 per Unit from arms' length investors. Each Unit
        shall consist of one common share of ARA (each, an "ARA Share") and
        one-half share purchase warrant (each whole warrant a "Warrant");
        each Warrant shall be exercisable for a period of 24 months at a
        price of $1.00 each;

    -   In order to acquire ARA, SinoGas will continue its existence (the
        "Continuation") under the Business Corporations Act (British
        Columbia) to complete an amalgamation (the "Amalgamation") with ARA
        and SinoGas whereby all of the securityholders of ARA (including
        subscribers to the Private Placement) (the "ARA Securityholders")
        will exchange all of their securities of ARA on the basis of 5/3-for-
        1 for like post-Consolidation securities of the Resulting Issuer and
        ARA will amalgamate with SinoGas so that SinoGas will become the
        Resulting Issuer;

    -   Assuming the minimum Private Placement, SinoGas will acquire all of
        the securities of ARA in consideration of the issuance of a total of
        38,494,742 post-Consolidation common shares at a pre-Consolidation
        price of $0.15 per share ($0.45 per share post-Consolidation). That
        number of shares issued is based on acquiring all of the shares of
        ARA, including the shares of ARA issued pursuant to the minimum
        Private Placement;

    -   Increase the size of Sinogas' board from five to six directors to be
        reconstituted with five nominees of ARA and one nominee of SinoGas;

    -   Upon completion of the Transaction after giving effect to the
        Consolidation, the minimum Private Placement and the Acquisition, it
        is expected that the Resulting Issuer will have a total of 42,561,409
        common shares issued and outstanding (51,556,811 common shares, fully
        diluted); and

    -   As a consequence of the Transaction, ARA will be amalgamated with
        SinoGas and the business of ARA will become the business of the
        Resulting Issuer.

As the Transaction does not constitute a Non-Arm's Length Qualifying Transaction, no shareholder approval of SinoGas shareholders is required, but SinoGas will seek approval of its shareholders for the proposed Consolidation, Name Change, Continuation and Amalgamation as well as to address normal annual corporate business. The Transaction is expressly subject to:

    (i)    approvals from the boards of SinoGas and ARA;

    (ii)   completion of due diligence review by each of SinoGas and ARA
           other than confirmatory due diligence;

    (iii)  execution of the definitive amalgamation agreement (the
           "Definitive Agreement") to effect the Transaction;

    (iv)   the approval of the Amalgamation by the two-thirds of the votes
           cast by the shareholders of ARA at a properly constituted meeting
           of ARA and the approval of the Consolidation, Name Change,
           Continuation and Amalgamation by special resolution of the votes
           cast by the shareholders of SinoGas at a properly constituted
           meeting of SinoGas;

    (v)    completion of the Private Placement;

    (vi)   the receipt of all necessary regulatory, corporate and third party
           approvals, including approval of the Exchange and compliance with
           all applicable regulatory requirements and conditions in
           connection with the Transaction;

    (vii)  maintenance of SinoGas' listing on the Exchange;

    (viii) confirmation of the representations and warranties of each party
           to the Definitive Agreement, as set out in the agreement;

    (ix)   absence of material adverse effect on the financial and
           operational condition of the assets of each of the parties to the
           Definitive Agreement; and

    *    delivery of standard Transaction completion documentation and
           fulfillment of other customary transaction conditions precedent.

Business of ARA

ARA is a British Columbia-based corporation incorporated on March 5, 2001 engaged in the business of developing, manufacturing and distributing a line of fire protection products in the life-safety industry. ARA's products includes a Fire Interruption Technology(R) in the form of aerosol powder fire suppression devices, high performance photoluminescent signage and intumescent coatings. ARA's products are either self-developed proprietary products or sourced from various third-party manufacturers, and have multi-purpose life-safety applications for commercial, industrial and institutional environments. ARA is also developing fire retardant oriented strand board for the residential construction market. ARA is presently a reporting issuer in British Columbia but is not listed on a public stock exchange. For more information about ARA, please refer to ARA's prospectus dated January 18, 2008 which is available on the SEDAR website at under ARA's profile to see a discussion on the development of ARA's business since inception.

    Selected Financial Information of ARA

The following table presents certain selected financial information on an annual basis for the years ended May 31, 2009, 2008 and 2007, as well as for the six months ended November 30, 2009, which should be read in conjunction with the corresponding financial statements of ARA that are available on SEDAR under ARA's profile at

                              Six months
                                   ended  Year ended  Year ended  Year ended
                                 Nov. 30,     May 31,     May 31,     May 31,
                                    2009        2009        2008        2007
    Total Revenue                 53,488     849,262     374,000      77,640
    Net Income (Loss)         (1,228,131) (3,101,681) (2,032,142)   (913,688)
      per share                    (0.08)      (0.20)      (0.13)      (0.07)
    Current Assets               456,205   1,076,331   1,336,272     691,718
    Current Liabilities          518,565     451,201     252,028     140,455
    Working Capital              (62,360)    625,130   1,084,244     551,263
    Total Assets                 568,727   1,190,080   1,516,032   1,081,472
    Long Term Liabilities      539,414*          -           -           -
    Shareholders' Equity        (489,252)    738,879   1,264,004     941,017
    Common Shares             15,923,137  15,908,516  15,242,589  13,413,606
    * Long Term Liabilities consists entirely of shareholder loans to be
        eliminated by way of a debt-to-equity conversion prior to completion
        of the Qualifying Transaction.

Qualifying Transaction

The acquisition of ARA is intended to constitute SinoGas' Qualifying Transaction under the polices of the Exchange and is subject to the prior approval of the TSXV. ARA is negotiating to engage an agent (the "Agent") for the Private Placement. Under such contemplated engagement, the Agent would agree to raise gross proceeds of up to $2,200,000 on a commercially reasonable basis concurrent with the Transaction by a Private Placement of Units at $0.75 per Unit. As an Agent has not yet been engaged, the details of Agent's compensation will be disclosed in a follow-up news release by ARA once an Agent has been engaged. Assuming completion of the Transaction, the net proceeds of the Private Placement will be used by the Resulting Issuer for general working capital.

Upon completion of the Transaction, but subject to review and approval of the Exchange, it is expected that the Resulting Issuer of the Qualifying Transaction of SinoGas and ARA would be a Tier 2 Industrial Issuer under the policies of the Exchange.

It is anticipated that in conjunction with the completion the Transaction the present directors of SinoGas will resign and will be replaced with the current directors of ARA: Michael Ainsworth, James P. Fierro, Hon. John D. Reynolds, Dr. Emilio T. Gonzalez and Michael Anderer; and one nominee of SinoGas.

The completion of the Transaction is intended to occur on the tenth business day following the satisfaction or waiver of the conditions precedent or such other date as is mutually agreed by the parties, but in no event later than September 30, 2010. If the Transaction is not completed on or before September 30, 2010, the terms of the LOI or the Definitive Agreement (if applicable) will be terminated. Each party shall be responsible for the payment of its own professional fees (including but not limited to legal and accounting fees) and other expenses incurred by it in connection with the Transaction. SinoGas will also be responsible for the payment of 50% of the sponsorship fee and related costs and expenses (including legal fees) of the sponsor for the Transaction from time to time.

SinoGas intends to call a shareholders' meeting to be held on or about mid/late-June, 2010 to consider, among other things, the Consolidation, Name Change, Continuation and Amalgamation. It is expected that the principal shareholders of SinoGas, including Wise Wong, Harry Cheung, George Tai, Alan Ross, and Milos Djokovic will enter into a voting support agreement to approve the Consolidation, Name Change, Continuation and Amalgamation and such other matters in support of the Transaction at the meeting of the SinoGas shareholders.

Principals, Directors and Insiders of ARA and the Resulting Issuer

It is the intention of SinoGas and ARA to establish and maintain a board of directors with a combination or appropriate skill sets which is compliant with all regulatory and corporate governance requirements, including any applicable independence requirements. The board of directors of SinoGas currently consists of five members. Upon completion of the Transaction, the board of SinoGas will be increased to six members, five to be nominated by ARA, which is expected to include: Michael Ainsworth, James P. Fierro, Hon. John D. Reynolds, Dr. Emilio T. Gonzalez and Michael Anderer, and one directors to be nominated by SinoGas. Information respecting the SinoGas nominee director will be provided in a follow up news release when available.

Upon completion of the Transaction, it is expected that the insiders of the Resulting Issuer will be the following directors and officers of ARA: Michael Ainsworth, James P. Fierro, Hon. John D. Reynolds, Dr. Emilio T. Gonzalez and Michael Anderer together with one director nominee of SinoGas.

A brief description of the backgrounds of the insiders of ARA and intended insiders of the Resulting Issuer are as follows:

Michael Ainsworth is the Chief Executive Officer and a director of ARA. He has over 15 years experience leading Ainsworth Lumber Company Ltd. ("Ainsworth Lumber"), a globally successful public company. Until recently he was the Executive Vice-President for Ainsworth Lumber, the world's fourth largest producer of Oriented Strand Board (OSB), serving markets in North America, Europe, Japan, China, South America, and South East Asia. In 1993 Mr. Ainsworth was instrumental in taking Ainsworth Lumber from a private company to a family controlled public company. In 2004 he assumed responsibility for Ainsworth Lumber's finance and accounting, human resources, IT and timberlands activities and led the successful acquisitions of Voyageur Forest Products (an OSB manufacturer in Ontario, Canada) for approximately $195 million and three OSB mills located in Minnesota from Potlatch Corp. for approximately $460 million.

During his tenure at Ainsworth Lumber, Mr. Ainsworth built a team that successfully transitioned from the private to public sector, raised more than a $1.0 billion in capital, and saw revenue grow from $110 million to more than $1.2 billion annually as the company transformed from a small softwood lumber producer to the fourth largest producer of structural engineered wood products in the world.

Mr. Ainsworth holds a Bachelor's degree in Wood Science and a Master's degree in Marketing, both from the University of British Columbia. He has served as a board member on numerous industry associations and was Chairman of APA-The Engineered Wood Association.

James P. Fierro is the Executive Chair, a director and a former President and Chief Executive Officer, of ARA. Mr. Fierro is an independent contractor who spends approximately 85% of his time working for ARA. He is the founding partner of Venture Resources Group, an organization involved in the identification, development and financing of emerging growth companies. He has been directly involved in the due diligence, negotiation and operations of all aspects of the business from inception. He is on the board of and/or actively involved in a number of start-up ventures, including Recipco Corporation, a transaction business that organizes information regarding tradable goods and services of various companies into a unique, structured marketplace where corporations can buy and sell each other's unused, available or excess capacity, and Corporation, an online provider of vacation packages to and from the Caribbean. In 1998, Mr. Fierro through Venture Resources Group, launched, the first company to provide fully integrated Internet grocery shopping, warehouse and delivery services.

The Hon. John D. Reynolds, P.C. is a director of ARA and has served as both an MLA in British Columbia and as a Member of Parliament in Ottawa. Prior to his retirement from Federal politics he was the Official Opposition House Leader for the Conservative Caucus. Previously he had been Leader of the Opposition in the House of Commons for the Canadian Alliance Caucus. He is currently a Member of the Queen's Privy Council for Canada and a Senior Strategic Advisor for the law firm of Lang Michener LLP.

Dr. Emilio T. Gonzalez is a director of ARA and is currently the Chief Executive Officer of Indra USA, the U.S. subsidiary of Indra Sistemas S.A., a leading Spanish IT and Defense Systems Company. Dr. Gonzalez is an international affairs specialist who has spent the majority of his professional career at the forefront of US foreign affairs and international security policy issues. Appointed by President George W. Bush and confirmed by the U.S. Senate in 2005, Dr. Gonzalez served as Director of United States Citizenship and Immigration Services (USCI), and undersecretary position within the Department of Homeland Security. Previously, Dr. Gonzalez was Director for Western Hemisphere Affairs at the National Security Council where he was a key National Security and Foreign Policy Advisor to President Bush and Dr. Condoleezza Rice.

Dr. Gonzalez completed a distinguished twenty-six year career in the U.S. Army. Dr. Gonzalez holds a B.A. in International Studies from the University of South Florida, and M.A. in Latin American Studies from Tulane University, an M.A. in Strategic Studies and National Security Affairs from the US Naval War College, and a Ph.D. in International Relations from the Graduate School of International Studies, University of Miami.

Michael Anderer is a director of ARA and is a founder of S2 and Silicon StemCell and currently serves of Chairman of the Board and Chief Executive Officer for both incubators. He built Silicon StemCell into a next-generation Internet incubator/accelerator with several highly successful start-ups in various stages of growth coming out of the work at Silicon StemCell. S2 is a larger and more ambitious follow-up to the incubation and acceleration work begun at Silicon StemCell.

Mr. Anderer founded his first company, a systems integration and software development firm, when he was 22. He currently serves on the board and is an investor in numerous Internet startups. He is a member of the M&A Group, a Director for OrderFusion, Medicity, NetGen, FutureVision, and BroadBand Avenue. He is also a co-founder and co-inventor of AirClic, a new print media Internet start-up.

Mr. Anderer previously served as Chairman of the Board and Chief Executive Officer of USConnect, an international consortium of systems integration firms. He also served several terms on the Microsoft, Novell and Citrix Reseller Advisory Boards.

In addition to the foregoing directors and officers, ARA will select a Chief Financial Officer and Corporate Secretary prior to completion of the Transaction and subject to Exchange approval.

As of the date of this release, only Mr. James Fierro holds a controlling interest in ARA consisting of 4,318,171 common shares of ARA (26.97%) which he holds directly or indirectly through a holding company he owns and controls. Mr. Fierro is the Executive Chair and a director of ARA, and is a resident of British Columbia.

About SinoGas

SinoGas, a capital pool company within the meaning of the policies of the Exchange, was incorporated December 21, 2007 and was listed on the exchange on or about January 7, 2010. SinoGas does not have any operations and has no assets other than cash. SinoGas' business is to identify and evaluate businesses and assets with a view to completing a qualifying transaction under the policies of the Exchange.

Trading in the common shares of SinoGas has been halted pending satisfaction of the conditions to the proposed Transaction and will resume trading on the completion of the Transaction. SinoGas expects to be exempt from sponsorship requirements in accordance with Exchange policies as result of the contemplated Private Placement.

Except for statements of historical fact, all statements in this news release, including, but not limited to, statements regarding future plans, objectives and payments are forward-looking statements that involve various risks and uncertainties.

Completion of the contemplated qualifying transaction is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance and if applicable pursuant to TSX Venture Exchange requirements, majority of the minority approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange has in no way passed on the merits of the proposed transaction and has neither approved or disapproved the contents of this news release.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.


This news release contains forward-looking statements and information that are based on the beliefs of management and reflect SinoGas' current expectations. When used in this news release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology, are intended to identify forward-looking statements and information. Such statements and information reflect the current view of SinoGas with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: risks associated with marketing and sale of securities; the need for additional financing; reliance on key personnel; the potential for conflicts of interest among certain officers, or directors with certain other projects; the volatility of our common share price and volume. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and, except as required in accordance with applicable securities legislation, SinoGas undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Investors are cautioned against attributing undue certainty to forward-looking statements.

There are a number of important factors that could cause SinoGas' actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others, risks related to ARA's business such as failure of the business strategy, integrity of its patents and proprietary intellectual property, availability of raw materials, competition in the fire safety energy industry; risks related to ARA's operations, such as additional financing requirements and access to capital, reliance on key and qualified personnel, environmental risks and hazards of storing and shipping ARA's products, insurance, intellectual property and reliable supply chains; and risks related to ARA and its business generally.

SinoGas cautions that the foregoing list of material factors is not exhaustive. When relying on SinoGas' forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. SinoGas has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.



For further information: For further information: on SinoGas please see the corporate profile on SEDAR at or contact: Wise Wong, President and Chief Executive Officer, Telephone: (416) 820-0416, Facsimile: (403) 230-7878

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