EPCOR Companies Acquire American Water Entities and Complete US Private Placement

Following receipt of approval from each of the Arizona Corporation Commission and New Mexico Public Regulation Commission, EPCOR Water (USA) Inc. (“EWUS”), a wholly owned, indirect subsidiary of EPCOR Utilities Inc. (“EUI”), a reporting issuer in Canada, acquired all of the issued and outstanding shares of Arizona-American Water Company and New Mexico-American Water Company Inc. from American Water Works Company, Inc. (NYSE: AWK) for an aggregate purchase price of US$470 million, subject to certain adjustments, in cash. The transaction closed on January 31, 2012.

The acquisition concludes the transaction contemplated by the January 23, 2011, Stock Purchase Agreement between EWUS and American Water. Between January, 2011, and January, 2012, the parties proceeded through the public utility approval process in each of Arizona and New Mexico. During this time, they also obtained Hart-Scott-Rodino approval and engaged in an extensive business transition and integration process.

To provide partial funding to EWUS for the purchase price of the acquisition, EUI completed a US$250 million private placement of senior notes on December 15, 2011. The senior notes were issued with 10- and 30-year terms. The 10-year senior notes have an aggregate principal amount of US$138 million that mature in December 2021 with a coupon rate of 3.74 per cent. The 30-year notes have an aggregate principal amount of US$112 million that mature in December 2041 with a coupon rate of 5.00 per cent.

EUI and its subsidiaries build, own and operate electrical transmission and distribution networks, water and wastewater treatment facilities and infrastructure in Canada. EIU is headquartered in Edmonton, Alberta.

EWUS and its subsidiaries build, own and operate water and wastewater treatment facilities and infrastructure in the Southwest United States. EWUS is headquarterd in Phoenix, Arizona.

American Water Works Company, Inc. is the largest publicly traded US water and wastewater utility company. The company provides drinking water, wastewater treatment and other related services in over 30 states as well as in parts of Canada. American Water Works Company is headquartered in Voorhees, New Jersey.

With respect to the acquisition, EWUS was represented by EUI's Senior In-House Counsel Dana Bissoondatt and Adam Sanderman (M&A, corporate/commercial) and Director, American Water Integration, Suzanne Polkosnik (regulatory and corporate governance). EWUS was also represented in the United States by Fennemore Craig P.C. with a team that included Sarah Strunk, C.W. Ross, McKenzie Brown (M&A, corporate/commercial); Patrick Black and Jay Shapiro (regulatory). American Water Works Company, Inc. was represented by its Deputy General Counsel, Jordan Mersky and by Reed Smith LLP with a team that included Brian Miner and Courtney Murray.

With respect to the US private placement, EUI was represented by Dana Bissoondatt. EUI was also represented in Canada by Macleod Dixon LLP (now Norton Rose Canada LLP) with a team that included Howard MacKichan, Danielle Maksimow (banking); Don Tse, Peter Allegretto (securities) and Darren Hueppelsheuser (tax) and, in the United States, by K&L Gates LLP with a team that included Eric Freedman and Kristy Harlan (capital markets); Kurt Decko (Investment Company Act) and Karrie Johnson Diaz (ERISA). The note purchasers were represented by Chapman and Cutler LLP with a team that included Neil Mann and Amy Olshansky. HSBC Securities (USA) Inc. and TD Securities (USA) LLC jointly led the private placement.