California Water Files Definitive Proxy Materials and Sends Letter to SJW Group Stockholders

Reiterates Commitment to All-Cash $68.25 Per Share Proposal for SJW

Urges SJW Stockholders to Vote AGAINST the Connecticut Water
Transaction Using the WHITE Proxy Card


SAN JOSE, Calif.–(BUSINESS WIRE)–California Water Service Group (“California Water”) (NYSE:CWT) today
announced that it has filed definitive proxy materials with the U.S.
Securities and Exchange Commission and sent a letter to SJW Group
(“SJW”) (NYSE: SJW) stockholders, along with a WHITE proxy card, in
connection with SJW’s Special Meeting of Stockholders. California Water
urges SJW stockholders to vote AGAINST the proposed merger of SJW and
Connecticut Water (NYSE: CTWS) using the WHITE proxy card.

On April 4, 2018, California Water made a proposal to acquire SJW for
$68.25 per share in cash, which exceeds SJW’s all-time high closing
share price, and represents a 30% premium to SJW’s share price at the
time of California Water’s proposal.

Martin A. Kropelnicki, President and CEO of California Water, said: “We
firmly believe our all-cash proposal, which was summarily rejected by
the SJW Board, delivers superior and immediate value compared to the
transaction with Connecticut Water in which SJW is paying a premium to
Connecticut Water shareholders.1 SJW stockholders deserve the
opportunity to voice their opinion on the future of SJW instead of being
forced to accept an all-stock merger that we believe carries significant
operational risk and is premised on vague and unspecified synergies. By
voting on the WHITE proxy card AGAINST the SJW and Connecticut Water
transaction, SJW stockholders can send a clear message to the San Jose
Water Board that they should immediately engage in discussions with us
regarding our compelling proposal.”

The full text of the letter to SJW stockholders follows:

ATTENTION SAN JOSE WATER GROUP (SJW) STOCKHOLDERS:

VOTE AGAINST SJW’S PROPOSED MERGER WITH
CONNECTICUT WATER AND PROTECT YOUR OPPORTUNITY TO RECEIVE $68.25 PER
SHARE IN CASH

TAKE ACTION TODAY!

May 31, 2018

Dear SJW Group Stockholder,

On April 4, 2018, we at California Water made a private proposal to
acquire SJW for $68.25 per share in cash. This proposal marked the
latest in a series of attempts to work constructively and privately with
SJW’s Board regarding a potential business combination. Like each of our
prior proposals, it was rejected outright by the SJW Board and
management, who refused to even engage with us.

Instead of engaging with California Water, SJW Group’s Board has
embarked on an ill-advised effort to merge with Connecticut Water, a
water utility located over 3,000 miles away from SJW’s California
footprint. Coincidentally, Eric Thornburg, SJW’s CEO, was the CEO of
Connecticut Water for eleven years until he stepped down seven months
ago, and because he has a substantially larger economic interest in
Connecticut Water stock than San Jose Water stock, he is poised to
benefit if the Connecticut Water merger is completed. We believe SJW
stockholders should question if the SJW CEO’s personal financial
interests are more aligned with enriching Connecticut Water shareholders
than acting in the best interest of SJW stockholders.

We firmly believe that the proposed Connecticut Water transaction
carries substantial operational risks, as SJW Group has itself
acknowledged in public filings. And unlike the California Water
proposal, the Connecticut Water transaction will provide no cash
consideration to SJW stockholders: you will simply retain your current
SJW share holdings, while paying Connecticut Water shareholders,
including Mr. Thornburg, an 18% premium.2

We do not believe in the merits of a SJW/Connecticut Water transaction.
Our $68.25 all-cash proposal is specifically conditioned on the
termination of the SJW/Connecticut Water merger agreement.

In the coming weeks, SJW will be holding a special meeting of SJW
stockholders to vote on the Connecticut Water merger. At this special
meeting, you will have an important opportunity to send a clear message
to the SJW Board that they should immediately engage in discussions with
California Water to maximize the value of your investment.

For the reasons set forth below and in the enclosed materials, we
urge you to vote AGAINST using the WHITE proxy card in order to reject
the proposed all-stock merger with Connecticut Water
.

WE BELIEVE CALIFORNIA WATER IS OFFERING YOU SIGNIFICANT AND IMMEDIATE
VALUE THAT CONNECTICUT WATER CANNOT PROMISE

Our $68.25 per share ALL-CASH
proposal:

  • Exceeds SJW’s all-time high closing share price;
  • Represents a 30% premium to SJW’s share price at the time of
    California Water’s April 4, 2018 proposal; and
  • Provides stockholders with cash value immediately upon closing.

In contrast, in the proposed all-stock merger with Connecticut Water,
you are paying a premium to Connecticut Water shareholders at closing.3
Additionally, it asks you to:

  • Bear the substantial execution risk of operating two separate
    businesses located 3,000 miles apart in different regulatory
    environments, with zero
    quantification of anticipated synergies, if any.
  • Hold out for promises of accretion that may never materialize, without
    offering – in our view – any concrete plans on how it will achieve
    this alleged “value.”
  • Trust a CEO that, in our view, is conflicted as to this transaction,
    and still has limited insight into the California regulatory
    environment and rule setting as prescribed by the California Public
    Utilities Commission (CPUC).

WE BELIEVE CALIFORNIA WATER’S PROPOSAL OFFERS A CLEAR PATH TO CLOSING

Our proposal is not subject to any financing contingencies, and we are
confident that we can conduct confirmatory due diligence and reach a
definitive agreement within two weeks if we have the cooperation of the
SJW Board and management.

In a desperate attempt to distract from the significant flaws in their
merger with Connecticut Water, SJW has made various claims about our
regulatory review process, which requires approvals in California and
Texas. The fact is, we have worked collaboratively with the CPUC for
many decades, and believe the unique customer, employee and community
benefits that a California Water-SJW combination provides are
self-evident – particularly given our strong operational track record in
California.

Ultimately, we believe we can obtain all required regulatory approvals
within eight months after submitting the requisite applications.

IN OUR VIEW THERE IS SIGNIFICANT UNCERTAINTY AND RISK IN CLOSING THE
PROPOSED CONNECTICUT WATER MERGER

The SJW/Connecticut Water transaction faces regulatory approval in two
different states – Connecticut and Maine. We believe that regulators in
these states have no formal relationships with SJW given SJW’s lack of
operations in either state and may have concerns over Connecticut
Water’s ownership being transferred to an out-of-state company, which
could delay the receipt of requisite approvals in one or both
jurisdictions well beyond calendar year 2018.

Additionally, the mayor of San Jose believes the CPUC should review the
merger with Connecticut Water and has communicated his views directly
with the CPUC. These appeals to the CPUC are clearly being heard – CPUC
Administrative Law Judge Karl Bemesderfer disclosed at a Public
Participation Hearing on May 30, 2018 that CPUC’s legal division has
decided to review the SJW/Connecticut Water transaction.

Finally, a third party, Eversource Energy, has submitted a proposal to
acquire Connecticut Water and is soliciting proxies from Connecticut
Water shareholders to vote against the SJW/Connecticut Water merger. As
a result of the pressure from Eversource, Connecticut Water announced on
May 31, 2018 an amendment to its merger agreement with SJW that allows
it to conduct a 45-day go shop process, during which Connecticut Water
can actively solicit alternative acquisition proposals from third
parties. Since the SJW/Connecticut Water merger requires the approval of
holders of two-thirds of the outstanding Connecticut Water common
shares, we believe that the Eversource Energy proposal and solicitation,
combined with the go shop period, create a high degree of uncertainty
around the completion of the SJW/Connecticut Water merger.

SJW STOCKHOLDERS

VOTE THE WHITE PROXY CARD TODAY TO STOP SJW MANAGEMENT FROM FORCING
THROUGH A SWEETHEART DEAL AT YOUR EXPENSE

By voting AGAINST using the enclosed WHITE proxy card, you
can prevent a transaction we believe carries significant risks and gives
only vague and unsupported promises of speculative value to SJW
stockholders.

Vote AGAINST the SJW/Connecticut Water proposal. A rejection of
the Connecticut Water merger proposal at the special meeting will send a
clear message to the SJW Board that they should engage immediately in
constructive discussions with California Water regarding our all-cash
proposal.

Sincerely,

Martin A. Kropelnicki
President and Chief Executive Officer

 

If you have any questions or need assistance in voting your
shares, please contact the firm assisting Cal Water in this
solicitation:

 
INNISFREE M&A INCORPORATED
Stockholders May Call Toll Free: (888) 750-5834
Banks and Brokers May Call Collect: (212) 750-5833
 

California Water’s proxy statement, stockholder letter and other
materials related to SJW’s special meeting will be available at www.sjwvalue.com.

About California Water Service Group

California Water Service Group is the parent company of California Water
Service, Washington Water Service, New Mexico Water Service, Hawaii
Water Service, CWS Utility Services, and HWS Utility Services. Together,
these companies provide regulated and non-regulated water service to
approximately 2 million people in more than 100 California, Washington,
New Mexico, and Hawaii communities. California Water Service Group’s
common stock trades on the New York Stock Exchange under the symbol
“CWT.” Additional information is available online at www.calwatergroup.com.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning
established by the Private Securities Litigation Reform Act of 1995
(“Act”). The forward-looking statements are intended to qualify under
provisions of the federal securities laws for “safe harbor” treatment
established by the Act. Forward-looking statements are based on
currently available information, expectations, estimates, assumptions
and projections, and management’s judgment about the Company, the water
utility industry and general economic conditions. Such words as would,
expects, intends, plans, believes, estimates, assumes, anticipates,
projects, predicts, forecasts or variations of such words or similar
expressions are intended to identify forward-looking statements. The
forward-looking statements are not guarantees of future performance.
They are subject to uncertainty and changes in circumstances. Actual
results may vary materially from what is contained in a forward-looking
statement. Factors that may cause a result different than expected or
anticipated include, but are not limited to: the failure to consummate
the proposed transaction with SJW upon the terms set forth in California
Water’s proposal; governmental and regulatory commissions’ decisions;
changes in regulatory commissions’ policies and procedures; the
timeliness of regulatory commissions’ actions concerning rate relief;
changes in environmental compliance and water quality requirements;
electric power interruptions; changes in customer water use patterns and
the effects of conservation; the impact of weather and climate on water
availability, water sales and operating results; civil disturbances or
terrorist threats or acts, or apprehension about the possible future
occurrences of acts of this type; labor relations matters as we
negotiate with the unions; restrictive covenants in or changes to the
credit ratings on our current or future debt that could increase our
financing costs or affect our ability to borrow, make payments on debt
or pay dividends; and, other risks and unforeseen events. When
considering forward-looking statements, you should keep in mind the
cautionary statements included in this paragraph, as well as our annual
10-K, Quarterly 10-Q, and other reports filed from time-to-time with the
Securities and Exchange Commission. California Water assumes no
obligation to provide public updates of forward-looking statements
except to the extent required by law.

Important Additional Information

Today California Water filed a definitive proxy statement with the
Securities and Exchange Commission (the “Definitive Proxy Statement”) to
solicit proxies in opposition to resolutions related to the pending
merger between SJW Group and Connecticut Water Service, Inc. INVESTORS
AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT
AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. All such documents, if filed, would be available
free of charge at the Securities and Exchange Commission’s website (www.sec.gov)
or by directing a request to Innisfree M&A Incorporated at (888)
750-5834 (banks and brokers call collect at (212) 750-5833).

Participants in the Solicitation

California Water, its directors and certain of its officers and
employees may be deemed to be participants in any solicitation of SJW
Group stockholders in connection with the proposed transaction between
California Water and SJW Group. Information about such participants, and
a description of their direct or indirect interests, by security
holdings or otherwise, is included in the Definitive Proxy Statement.

_________________________

1 We note that the matter subject to approval by SJW’s
stockholders is the issuance of additional shares to Connecticut
Water (not the receipt of additional consideration).

2 Based on the relative closing price of SJW and
Connecticut Water shares on the last trading day prior to the
announcement of the proposed Connecticut Water merger.

3 We note that the matter subject to approval by SJW’s
stockholders is the issuance of additional shares to Connecticut
Water (not the receipt of additional consideration).
 

Contacts

Investors:
Thomas Smegal, 408-367-8200
or
Innisfree
M&A Incorporated
Scott Winter, 212-750-7271
or
Media:
Shannon
Dean, 408-367-8243
or
Sard Verbinnen & Co
Meghan
Gavigan/David Isaacs, 415-618-8750