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                                   Directors  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 company.  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.   LIBERTY UTILITIES IS A PROVEN OWNER OF REGULATED UTILITY ASSETS WITH STRONG GROWTH AND RETURNS  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.  MULTIPLE ATTEMPTS TO PRIVATELY NEGOTIATE A TRANSACTION WITH GAS NATURAL HAVE BEEN SUMMARILY REJECTED  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 $12.35.  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 A SALE OF GAS NATURAL IS IN THE BEST INTEREST OF SHAREHOLDERS, CUSTOMERS, REGULATORS AND EMPLOYEES  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     inappropriate.    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.  GAS NATURAL SHAREHOLDERS DESERVE A BOARD AND MANAGEMENT TEAM COMMITTED TO ENHANCING VALUE FOR SHAREHOLDERS  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 shareholders.   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.  Sincerely,  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: http://dis.puc.state.oh.us/TiffToPDf/A1001001A13K14B00651E38055.pdf.  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 www.AlgonquinPowerandUtilities.com and follow us on Twitter @AQN_Utilities.  SOURCE Algonquin Power & Utilities Corp.  Website: http://www.algonquinpower.com 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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