On September 9, 2016, Pennsylvania American Water entered into the
Agreement with the City and Seller whereby Pennsylvania American Water is to acquire substantially all of the wastewater collection and treatment system assets of Seller (the System Assets) for a total purchase price of approximately
$156.0 million, subject to certain adjustments as provided in the Agreement (the System Purchase). Seller currently uses the System Assets to provide wastewater service to approximately 22,000 customers located in the City, the City of
Duquesne, Port Vue Borough and the Borough of Dravosburg, including customers in communities that are parties to certain municipal service agreements as described in the Agreement (collectively, the Service Agreements).
Pennsylvania American Water is seeking to close the System Purchase during the second half of 2017. If the closing does not occur on or before
December 31, 2017 (the Termination Date), either party may terminate the Agreement so long as the terminating party is not in breach of its obligations thereunder. In addition, Pennsylvania American Water has the one-time right,
subject to certain conditions, to extend the Termination Date by up to 90 days if, in its sole discretion, such additional time is necessary to obtain a required governmental approval. The Agreement may also be terminated under specified conditions,
including, without limitation, by Seller on a date that is at least 60 days but no more than 90 days after the date of the Agreement, if Seller notifies Pennsylvania American Water that, in Sellers sole discretion, insufficient progress has
been made with respect to obtaining all written assignments, amendments or new agreements with respect to the Service Agreements.
The
closing of the System Purchase is subject to obtaining required regulatory approvals, including the approval of the Pennsylvania Public Utility Commission, and the receipt of applicable environmental approvals, on terms reasonably acceptable to
Pennsylvania American Water, from the U.S. Environmental Protection Agency and the Pennsylvania Department of Environmental Protection. The closing of the System Purchase is also subject to the compliance of the parties with various interim
affirmative and negative covenants, as well as the satisfaction of various other required and customary conditions to closing.
Cautionary Statement
Concerning Forward-Looking Statements
Certain statements included in this Current Report on Form 8-K are forward-looking statements
within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995. In some cases, these forward-looking statements can be identified by words with prospective
meanings such as intend, plan, estimate, believe, anticipate, expect, predict, project, assume, forecast, outlook,
future, pending, goal, objective, potential, continue, seek to, may, can, will, should and could, or the
negative of such terms or other variations or similar expressions. Forward-looking statements relate to, among other things, the ability to complete the closing of the System Purchase and the anticipated closing date; the ability of the parties to
satisfy closing and other conditions related to the System Purchase; and the ability of the parties to obtain regulatory and other approvals and consents. These forward-looking statements are predictions based on the Companys current
expectations and assumptions regarding future events. They are not guarantees or assurances of any outcomes, performance or achievements, and readers are cautioned not to place undue reliance upon them. The forward-looking statements are
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subject to a number of estimates and assumptions, and known and unknown risks, uncertainties and other factors. Actual results may differ materially from those discussed in the forward-looking
statements included in this Current Report on Form 8-K as a result of the factors discussed in the Companys Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission (the
SEC) on February 25, 2016, and other filings with the SEC, and additional risks and uncertainties, including with respect to (1) obtaining the regulatory and other approvals and consents required to complete the System
Purchase; (2) satisfying other conditions to the closing of the System Purchase; (3) the occurrence of the benefits and synergies expected or predicted to occur as a result of the completion of the System Purchase; (4) unexpected
costs, liabilities or delays associated with the System Purchase or the integration of the System Assets; (5) regulatory, legislative, local or municipal actions affecting the water and wastewater industries, which could adversely affect
Pennsylvania American Water; (6) the ability of Pennsylvania American Water and/or the Company to finance the System Purchase from cash flows from operations and existing sources of liquidity; and (7) other economic, business and other
factors.
These forward-looking statements are qualified by, and should be read together with, the risks and uncertainties set forth above
and the risk factors included in the Companys annual and quarterly reports as filed with the SEC, and readers should refer to such risks, uncertainties and risk factors in evaluating such forward-looking statements. Any forward-looking
statements speak only as of the date of this Current Report on Form 8-K. The Company does not have any obligation or intention to update or revise any forward-looking statement, whether as a result of new information, future events, changed
circumstances or otherwise, except as otherwise required by the federal securities laws. New factors emerge from time to time, and it is not possible for us to predict all such factors. Furthermore, it may not be possible to assess the impact of any
such factor on the Companys or Pennsylvania American Waters business, either viewed independently or together, or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in
any forward-looking statement. The foregoing factors should not be construed as exhaustive.
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