Algonquin Power & Utilities Corp. Sends Letter to Gas Natural Inc. Board of Directors

 Algonquin Power & Utilities Corp. Sends Letter to Gas Natural Inc. Board of

PR Newswire

TORONTO, July 23, 2014

Algonquin has Extended Multiple Proposals to Acquire Gas Natural

Gas Natural Tells Algonquin the Company is "Not for Sale" and Refuses to
Discuss a Proposed Transaction

Through its Self-preserving Pursuit of an Undefined and Uncertain Standalone
Plan, Gas Natural Board is Preventing Shareholders from Receiving an Immediate
and Compelling Premium for their Shares

Algonquin Urges Gas Natural Shareholders to Demand that the Gas Natural Board
Maximize Shareholder Value through a Sale Process

Algonquin Encourages other Shareholders to Withhold Support for Incumbent
Directors and Value Destructive Resolutions in Advance of the July 30, 2014
Annual Shareholders' Meeting

TORONTO, July 23, 2014 /CNW/ -Algonquin Power & Utilities Corp. ("APUC")
(TSX: AQN) today announced that it sent the following letter to the Gas
Natural Inc. (NYSE: EGAS) board of directors:

July 23, 2014

Board of Directors
Gas Natural Inc.
8500 Station Street, Suite 300
Mentor, Ohio 44060

Dear Sirs:

As you know, our parent company Algonquin Power & Utilities Corp. ("APUC"),
currently owns approximately 4.9% of the outstanding shares of Gas Natural.
Over the past seven months we have sent three letters and reached out numerous
times to discuss a potential acquisition of Gas Natural by Liberty Utilities
Co. ("Liberty Utilities"). The proposed transaction would provide an immediate
and compelling premium to all Gas Natural shareholders. We urge Gas Natural
shareholders to exercise their rights by insisting that the Board immediately
commence a process to maximize shareholder value through a sale of the

We have advised that Liberty Utilities is prepared to move quickly to complete
a transaction with Gas Natural that provides superior shareholder value
creation with low execution risk, especially when compared to Gas Natural's
poorly articulated and highly uncertain standalone strategy.

Notwithstanding, with our parent company being a large holder of Gas Natural
stock, weshare theinterest of all shareholders of Gas Natural in maximizing
shareholder value. To that end, we are supportive of a transaction structure
that would permit a broader sale process and the realization of more than
$13.00 per share should a higher offer be made by another qualified party.
Notably, however, the only way such value can be delivered to Gas Natural
shareholders is for you to commence a process to maximize shareholder value
through a sale of the company. 


APUC, the parent of Liberty Utilities, is a growing distribution, generation
and transmission utility company with approximately $3.7 billion in assets
across North America, and which operates through two primary business units:
Liberty Utilities and Algonquin Power Co. Liberty Utilities is a reliable,
cost effective provider of rate regulated water, electricity and gas
distribution and transmission utility services to more than 485,000 customers
across the United States. Liberty Utilities has robust access to capital and a
firm commitment to investing in the utilities it owns.

Liberty Utilities continues to grow through strong organic growth and capital
reinvestment within our utility business and, most importantly, accretive
acquisitions. The Liberty Utilities management team has a very strong track
record of successfully acquiring and consolidating regulated utility
companies, which has produced benefits for all stakeholders. In the last two
and a half years alone, Liberty Utilities has acquired natural gas
distribution utilities that provide regulated service to more than 285,000
customers in six states.


Our multiple proposals regarding a potential transaction have been
consistently rebuffed without any negotiation or significant discussion. On
May 7, 2014, we sent our most recent letter to the Gas Natural board in which
we expressed interest in acquiring all outstanding shares of Gas Natural at a
price of $13.00 per share – a premium of approximately 40% to Gas Natural's
share price as of January 13, 2014, the day before we approached the Gas
Natural board regarding a transaction. Importantly, the $13.00 per share price
of our proposal also exceeds Gas Natural's all-time high share price of

Unfortunately,you once again refused to engage in any dialogue. In fact,your
response letter stated unconditionally that Gas Natural is "not for sale." We
were, of course, taken aback by such a response, given the challenges facing
the company.


We believe that the only viable value maximization strategy is a sale of the
company for the following reasons:

  oPoorly articulated and uncertain growth strategy: Gas Natural's management
    has failed to articulate a clearly quantified growth strategy to deliver
    returns to shareholders superior to those provided by our proposal.
    Whatever management's strategy may be, we are confident that Gas Natural's
    relatively high cost of capital and the multiple challenges created by the
    board and senior management described below will continue to impair the
    ability to deliver shareholder value under a standalone plan, certainly as
    compared to the value creation available under our proposal.
  oPoisoned regulatory relationships: After conducting an investigative audit
    of Gas Natural in 2013, the Public Utilities Commission of Ohio (PUCO)
    concluded that certain public utility subsidiaries of Gas Natural had
    "severe organizational dysfunction" and openly questioned "the judgment of
    the current management of [such companies] and whether they are
    sufficiently responsible and capable to continue to manage a public
    utility." As reflected by the significant loss of Gas Natural's market
    value following the release of the PUCO's findings, we believe that trust
    between a utility and its regulators is a critical driver of value and
    that, once broken, such trust is not easily or quickly reestablished,
    absent a dramatic and fundamental change of the nature that a sale of the
    company would offer.
  oInexperienced, nepotistic management team: On May 15, 2014, Gas Natural
    announced that its board of directors had appointed Greg Osborne as Chief
    Executive Officer. It is our understanding that the board did so without
    having conducted any formal executive search process. Greg Osborne is the
    son of Richard Osborne, the previous Gas Natural CEO, and does not have
    the utility management experience that we believe is necessary to address
    the significant challenges facing the company. We are particularly
    troubled by his appointment given the deteriorated relationship between
    state regulators and the company under the leadership of his father, noted
    above, and the web of relationships between the company and entities
    affiliated with Richard Osborne that have been a primary focus of
    regulator concern. Greg Osborne was, in fact, an officer of one or more of
    these entities during the period in which the PUCO determined that
    dealings between these entities and subsidiaries of the company were
  oSelf-admitted dysfunctional board dynamics: We believe that Gas Natural is
    not focused on growth and creating shareholder value, but rather on the
    discord that has plagued senior management and the board. In response to
    public disclosure that Mr. Richard Osborne "verbally assaulted several
    board members and physically assaulted a member of the board and the
    company's outside legal counsel," the board recently acknowledged that its
    "ability to function properly" was impaired. The board's lack of candor
    with respect to this discord makes it impossible to know how long the
    shareholders of the company have been left adrift, but this dysfunction
    does not appear to be a recent development given the multitude of
    challenges now consuming the company.
  oLack of transparency and candor: Gas Natural has on several occasions,
    including with respect to our proposals to acquire the company, failed to
    disclose important information to the company's shareholders in a timely
    manner. The company did not publicly acknowledge our acquisition proposals
    until more than a month after solicitation by the board of shareholder
    support for resolutions that the company has acknowledged would impede a
    sale transaction. The board demonstrated a lack of candor in its delay of
    the filing of information with the SEC regarding physical boardroom
    altercations until after the deadline for shareholders to submit director
    nominations had passed; we note that the only change between the existing
    board of directors and the proposed slate of directors is the replacement
    of Richard Osborne. And now, with the date of the annual shareholders'
    meeting fast approaching, the board has failed to disclose terms of a
    settlement agreement that we understand was apparently reached between the
    company and Richard Osborne in respect of Mr. Osborne's allegations that
    the board had violated its fiduciary duties.
  oAlleged self-dealing by senior management and board members: A
    shareholder filed a lawsuit in December, 2013, accusing director and
    former Chairman and CEO Richard Osborne and director and former CFO Thomas
    J. Smith of "breaches of fiduciary duty and wholesale dereliction of their
    duties." The lawsuit alleges that "knowing that trouble was imminent,
    defendants Richard Osborne… and Thomas J. Smith abused their possession of
    this non-public information by unloading a massive amount of stock less
    than two weeks before the 2013 [PUCO] order was published." Together with
    the findings of the PUCO in such order, we find the pattern of alleged
    self-dealing impossible to ignore. We also believe it is notable that
    these two directors sold most of their holdings for $10.00 per share,
    which is well below the $13.00 per share price of the Liberty Utilities
    proposal that the board now claims is inadequate.
  oProposals to entrench the board and senior management: The board has
    proposed adoption by the shareholders of a resolution increasing – and in
    fact nearly doubling – the number of authorized shares of the company, to
    permit the board to issue shares without further shareholder approval. As
    stated in the proxy materials first made public by the board on May 30,
    2014 (a date which should be noted occurs after the submission of all
    three of our acquisition proposals, and merely three weeks following our
    most recent acquisition proposal):

    "This proposal [to increase the number of authorized shares] is not being
    made in response to any hostile attempts by any third party to obtain
    control of the company but the availability for issuance of additional
    shares of common stock could enable our board to make more difficult or
    discourage an attempt to obtain control of Gas Natural. . . . As a
    result, authorizing additional common shares may adversely impact
    shareholders who desire a change in management and/or the board or to
    participate in a tender offer or other sale transaction involving a change
    in control of Gas Natural."

    We are encouraging shareholders to assess these statements, and the
    motivation of the board, in the context of the company's disclosure, on
    July 21, 2014, that the company had, in fact, received three unsolicited
    proposals for the acquisition of the company from us before the date the
    proxy materials were first made public. We are also encouraging
    shareholders to note the widespread opposition expressed by shareholder
    rights groups to anti-tender offer proposals of this nature on the basis
    of negative impact to shareholder value.

Your refusal to consider a sale of the company in favor of the pursuit of an
undefined and uncertain standalone plan that preserves control of the company
by existing directors and senior management ignores the opportunity to rapidly
rectify the issues noted above through a business combination.

Liberty Utilities' interest in acquiring all of the shares of Gas Natural for
$13.00 per share today represents a premium to Gas Natural's share price at
any time over the last several years and we believe that it delivers far
greater value thanGas Naturalcan reasonably expect to deliver on a
standalone basis.

We are confident that Liberty Utilities' scale of operations and robust access
to capital will allow the customers, regulators and employees of the company
to reap the rewards of participation in a larger, more capable combined
entity. Liberty Utilities is a unique, compelling and obvious partner for Gas
Natural, and would be a willing buyer of all of the outstanding shares of Gas
Natural at $13.00 per share.


We believe that shareholders deserve a board willing to consider all
opportunities to maximize value. As we have stated, our preference is to move
forward with a speedy and friendly transaction. Unfortunately, our attempts to
engage with you and your management team have been met with little more than
cursory dismissals. Your response has been, instead, to propose the adoption
of resolutions that will further entrench the board and senior management and
facilitate continued disregard for the best interests of the company's

In light of your continued refusal to engage in a productive dialogue about
the merits of a transaction to maximize shareholder value, we will be
encouraging all shareholders to consider what you have failed to consider:
Maximize Value For Gas Natural's Shareholders Through A Sale Of The Company.

We intend to interact with the company's other shareholders to encourage them
to urgeyou to commence a sale process. If you fail to take action, we will
ask that shareholders join us in voting against the incumbent board of
directors and the value destructive anti-tender offer resolutions in advance
of the upcoming July 30, 2014 shareholders' meeting.


David Pasieka
President, Liberty Utilities Co.,
A subsidiary of Algonquin Power & Utilities Corp.

The Opinion and Order from the Public Utilities Commission of Ohio that is
referenced in this press release is available at:

About Algonquin Power & Utilities Corp.

Algonquin Power & Utilities owns and operates a diversified $3.7 billion
portfolio of regulated and non-regulated utilities in North America. The
regulated utility business provides water, electricity and natural gas utility
services to over 485,000 customers through a portfolio of regulated
generation, transmission and distribution utility systems. The non-regulated
electric generation subsidiary has invested in renewable energy and thermal
energy facilities representing more than 1,100 MW of installed capacity.
Algonquin Power & Utilities Corp. delivers continuing growth through an
expanding pipeline of renewable power and clean energy projects, organic
growth within its regulated utilities and the pursuit of accretive acquisition
opportunities. Common shares and preferred shares are traded on the Toronto
Stock Exchange under the symbols AQN, AQN.PR.A and AQN.PR.D. Visit Algonquin
Power & Utilities Corp. at and follow us on
Twitter @AQN_Utilities.

SOURCE Algonquin Power & Utilities Corp.

Contact: Investors: Kelly Castledine, APUC - Liberty Utilities, 905-465-4576;
Media: Andrew Siegel / Jennifer Beugelmans, Joele Frank, Wilkinson Brimmer
Katcher, 212-355-4449
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