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  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, we share the interest 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:        --  Poorly 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.     --  Poisoned 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.     --  Inexperienced, 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.     --  Self-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.     --  Lack 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.     --  Alleged 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.     --  Proposals 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 than Gas Natural can 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 urge you 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:  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.  Investors: Kelly Castledine, APUC - Liberty Utilities, 905-465-4576; Media:  Andrew Siegel / Jennifer Beugelmans, Joele Frank, Wilkinson Brimmer Katcher,  212-355-4449  To view this news release in HTML formatting, please use the following URL:  CO: Algonquin Power & Utilities Corp. ST: Ontario NI: OIL NASDAQ MNA  
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