WGL Wgl Holdings (delisted)

PROXY STATEMENT

This proxy statement contains information relating to a special meeting of shareholders of WGL Holdings, Inc., which we refer to as “WGL,” the “Company,” “we,” “us” or “our.” The special meeting will be held on [ · ] 2017, at [ · ] local time, at the Company’s corporate headquarters, 101 Constitution Avenue NW, 3rd Floor, Washington, DC 20080. We are furnishing this proxy statement to shareholders of the Company as part of the solicitation of proxies by the Company’s board of directors, which we refer to as the “Board,” for use at the special meeting and at any adjournments or postponements thereof. References to the special meeting in this proxy statement are to such special meeting, as adjourned or postponed. This proxy statement is dated [ · ], 2017 and is first being mailed to our shareholders on or about [ · ], 2017.

SUMMARY TERM SHEET

This summary term sheet highlights selected information in this proxy statement and may not contain all of the information about the merger that is important to you. We have included page references in parentheses to direct you to more complete descriptions of the topics presented in this summary term sheet. You should carefully read this proxy statement in its entirety, including the annexes hereto and the other documents to which we have referred you, for a more complete understanding of the matters being considered at the special meeting. You may obtain, without charge, copies of documents incorporated by reference into this proxy statement by following the instructions under the section of this proxy statement entitled “Where You Can Find Additional Information” beginning on page [ · ].

The Parties (page [ · ])

WGL Holdings, Inc.

WGL was established on November 1, 2000 as a Virginia corporation. Through its wholly-owned subsidiaries, WGL sells and delivers natural gas and provides energy-related products and services to customers primarily in the District of Columbia and the surrounding metropolitan areas in Maryland and Virginia, although WGL’s non-utility segments provide various energy services across the United States. WGL promotes the efficient use of clean natural gas and renewable energy to improve the environment for the benefit of customers, investors, employees, and the communities it serves. WGL owns all of the shares of common stock of Washington Gas Light Company, which we refer to as “Washington Gas.”

WGL’s regulated utility segment consists of Washington Gas and Hampshire and represents approximately 77% of WGL’s total assets. Washington Gas is a regulated public utility that sells and delivers natural gas to retail customers in accordance with tariffs approved by regulatory commissions in the District of Columbia and adjoining areas in Maryland, Virginia and several cities and towns in the northern Shenandoah Valley of Virginia. Washington Gas has been engaged in the natural gas distribution business since its incorporation by an Act of Congress in 1848. Washington Gas has been a Virginia corporation since 1953 and a corporation of the District of Columbia since 1957.

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Hampshire owns full and partial interests in underground natural gas storage facilities, including pipeline delivery facilities located in and around Hampshire County, West Virginia, and operates those facilities to serve Washington Gas, which purchases all of the storage services of Hampshire. Washington Gas includes the cost of these services in the bills sent to its customers. Hampshire operates under a “pass-through” cost of service-based tariff approved by the FERC, and adjusts its billing rates to Washington Gas on a periodic basis to account for changes in its investment in utility plant and associated expenses. Washington Gas is regulated by the District of Columbia PSC, the PSC of MD and the SCC of VA which approve its terms of service and the billing rates that it charges to its customers. Hampshire is regulated by the FERC. The rates charged to utility customers are designed to recover Washington Gas’ operating expenses and natural gas commodity costs and to provide a return on its investment in the net assets used in its firm gas sales and delivery service.

AltaGas Ltd.

AltaGas, which refers to AltaGas Ltd., a Canadian corporation, is a North American diversified energy infrastructure business with a focus on owning and operating assets to provide clean and affordable energy to its customers. AltaGas’ business strategy is underpinned by strong growth in natural gas supply and the growing demand for clean energy. AltaGas has three business segments operated through a number of subsidiaries:

As of December 31, 2016, AltaGas’ enterprise value exceeded Cdn$10.0 billion. With the physical and economic links along the energy value chain, together with its experienced and talented workforce of more than 1,600 people and its efficient, reliable and profitable assets, market knowledge and financial discipline, AltaGas has provided strong, stable and predictable returns to its investors. AltaGas not only focuses on providing safe, reliable and affordable service to its customers, but on maximizing the profitability of its assets, adding services that are complementary to its existing business segments, and growing through the acquisition and development of energy infrastructure.

Merger Sub

Wrangler, Inc., which we refer to as “Merger Sub,” is a Virginia corporation and an indirect wholly-owned subsidiary of AltaGas. It was formed for the purpose of completing the merger through a merger of Merger Sub with and into WGL pursuant to the merger agreement. Merger Sub has not carried on any activities to date, except for activities incidental to its incorporation and activities undertaken in connection with the transactions contemplated by the merger agreement.

The Merger (page [ · ])

The Company, AltaGas and Merger Sub entered into an Agreement and Plan of Merger, which we refer to as the “merger agreement,” on January 25, 2017. A copy of the merger agreement is attached as Annex A to this proxy statement. Under the terms of the merger agreement, subject to the satisfaction or waiver in accordance with the merger agreement of specified conditions, Merger Sub will be merged with and into the Company, which we refer to as the “merger.” The Company will survive the merger as an indirect, wholly-owned subsidiary of AltaGas.

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Upon the consummation of the merger, each share of the Company’s common stock, no par value per share, which we refer to as “Company common stock,” that is issued and outstanding immediately prior to the effective time of the merger, which we refer to as the “effective time,” other than shares owned by AltaGas, Merger Sub, the Company or any of their respective subsidiaries (or held in the Company’s treasury), will be converted into the right to receive $88.25 in cash, without interest, which we refer to as the “merger consideration,” and less any applicable withholding taxes.

Because the merger consideration will be paid in cash, you will receive no equity interest in AltaGas, and after the effective time, you will have no equity interest in the Company and you will no longer have any interest in the Company’s future earnings or growth.

The Special Meeting (page [ ● ])

The special meeting will be held on [●], 2017, at [●] local time, at the Company’s corporate headquarters, 101 Constitution Avenue NW, 3rd Floor, Washington, DC 20080. At the special meeting, you will be asked to, among other things, vote for the approval of the merger agreement and the plan of merger set forth therein, the nonbinding compensation proposal (as described below under “ Questions and Answers About the Special Meeting and the Merger—What proposals will be considered at the special meeting? ”) and, if necessary or appropriate, the adjournment of the special meeting. Please see the section of this proxy statement entitled “ The Special Meeting ” for additional information on the special meeting, including how to vote your shares of Company common stock.

Shareholders Entitled to Vote; Vote Required to Approve the Merger Agreement (page [ ● ])

You may vote at the special meeting if you owned any shares of Company common stock at the close of business on [●], 2017, the record date for the special meeting. As of the close of business on the record date, there were [●] shares of Company common stock outstanding and entitled to vote, held by [●] shareholders of record. You may cast one vote for each share of Company common stock that you held on the record date on each of the proposals presented in this proxy statement. The approval of the merger agreement and the plan of merger set forth therein by the Company’s shareholders requires the affirmative vote of the holders of more than two-thirds of all outstanding shares of Company common stock entitled to vote at the special meeting.

Recommendation of Our Board; Reasons for Recommending the Approval of the Merger Agreement (page [ ● ])

After careful consideration, the Board unanimously adopted the plan of merger set forth in the merger agreement, approved the Company’s execution, delivery and performance of the merger agreement and resolved to recommend that the Company’s shareholders vote to approve the merger agreement and the plan of merger set forth therein. Accordingly, the Board unanimously recommends a vote “FOR” the proposal to approve the merger agreement and the plan of merger set forth therein. The Board also unanimously recommends a vote “FOR” the nonbinding compensation proposal and “FOR” the approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement and the plan of merger set forth therein.

The Board has determined that the entry into the merger agreement is in the best interests of the Company’s shareholders. For a discussion of the material factors that the Board considered in resolving to recommend that the Company’s shareholders vote to approve the merger agreement and the plan of merger set forth therein, please see the section of this proxy statement entitled “ The Merger—Recommendation of Our Board; Reasons for Recommending the Approval of the Merger Agreement ” beginning on page [●].

Opinion of Goldman, Sachs & Co. (page [ ● ] and Annex B)

Goldman, Sachs & Co., which we refer to as “Goldman Sachs,” delivered its opinion to the Board that, as of January 25, 2017 and based upon and subject to the various assumptions and qualifications set forth therein, the $88.25 in cash per share of Company common stock to be paid to the holders (other than AltaGas and its affiliates) of the outstanding shares of Company common stock pursuant to the merger agreement is fair from a financial point of view to such holders.

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The full text of the written opinion of Goldman Sachs, dated January 25, 2017, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B to this proxy statement. Goldman Sachs provided its opinion for the information and assistance of the Board in connection with its consideration of the merger. The Goldman Sachs opinion does not constitute a recommendation as to how any holder of Company common stock should vote with respect to the merger or any other matter. Pursuant to the terms of the engagement letter between the Company and Goldman Sachs, the Company has agreed to pay Goldman Sachs a transaction fee of approximately $18,000,000, $4,500,000 of which became payable to Goldman Sachs upon announcement of the merger and the remainder of which is contingent upon consummation of the merger.

For a description of the opinion that the Board received from Goldman Sachs, see “ The Merger—Opinion of Goldman, Sachs & Co. ” beginning on page [●].

Opinion of Lazard Frères & Co. LLC (page [ ● ] and Annex C)

On January 25, 2017, Lazard Frères & Co. LLC, which we refer to as “Lazard,” rendered its written opinion, consistent with its oral opinion rendered on the same date, to the Board that, as of such date, and based upon and subject to the assumptions, procedures, factors, qualifications and limitations set forth therein, the consideration to be paid to holders of Company common stock, other than excluded holders, in the merger was fair, from a financial point of view, to such holders of Company common stock. In this proxy statement “excluded holders” means the Company, AltaGas and their respective subsidiaries (as defined in the merger agreement).

The full text of Lazard’s written opinion, dated January 25, 2017, which sets forth the assumptions made, procedures followed, factors considered and qualifications and limitations on the review undertaken by Lazard in connection with its opinion, is attached to this proxy statement as Annex C and is incorporated by reference herein in its entirety. The summary of Lazard’s opinion is qualified in its entirety by reference to the full text of the opinion. You are encouraged to read Lazard’s opinion, this section and the summary of Lazard’s opinion below carefully and in their entirety.

Lazard’s engagement and its opinion were for the benefit of the Board (in its capacity as such), and Lazard’s opinion was rendered to the Board in connection with its evaluation of the merger and addressed only the fairness as of the date of the opinion, from a financial point of view, to holders of Company common stock (other than excluded holders) of the consideration to be paid to such holders in the merger. Lazard’s opinion was not intended to, and does not, constitute a recommendation to any shareholder as to how such shareholder should vote or act with respect to the merger or any matter relating thereto.

Pursuant to the terms of the engagement letter between the Company and Lazard, the Company has agreed to pay Lazard a fee of $18 million, of which $4.5 million became payable to Lazard upon the rendering of Lazard’s opinion and the remainder of which is contingent upon the consummation of the merger.

For a description of the opinion that the Board received from Lazard, see “ The Merger—Opinion of Lazard Frères & Co. LLC ” beginning on page [●].

Certain Effects of the Merger (page [ ● ])

Upon the consummation of the merger, Merger Sub will be merged with and into the Company, and the Company will continue to exist following the merger as an indirect, wholly-owned subsidiary of AltaGas.

Following the consummation of the merger, shares of Company common stock will no longer be traded on the New York Stock Exchange, which we refer to as the “NYSE,” or any other public market, and the registration of shares of Company common stock under the Securities Exchange Act of 1934, as amended, which we refer to as the “Exchange Act,” will be terminated.

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Effects on the Company if Merger is Not Completed (page [ ● ])

In the event that the proposal to approve the merger agreement and the plan of merger set forth therein does not receive the required approval from the Company’s shareholders, or if the merger is not completed for any other reason, the Company’s shareholders will not receive any payment for their shares of Company common stock in connection with the merger. Instead, the Company will remain an independent public company and shareholders will continue to own their shares of Company common stock. Under certain circumstances, if the merger agreement is terminated, the Company may be obligated to pay AltaGas a termination fee. If the merger agreement is terminated under certain other circumstances, AltaGas may be obligated to pay the Company a termination fee. Please see the sections of this proxy statement entitled “ The Merger Agreement—Termination Fees ” beginning on page [●].

Treatment of Incentive Equity Awards (page [ ● ])

Pre-Signing Performance Share Awards

Each performance share award granted under the Company’s equity incentive plans prior to execution of the merger agreement and outstanding immediately prior to the effective time, whether or not then vested and exercisable, will, as of the effective time, become fully vested and be canceled in consideration for the right to receive a lump sum cash payment in an amount equal to the product of (i) the merger consideration and (ii) the number of shares of Company common stock subject to such award. With respect to each award that is subject to a relative total shareholder return (“Relative TSR”) performance condition, the number of shares will be equal to the greater of the number of shares subject to such award based on (x) deemed performance at the target level and (y) actual performance as of the effective time (determined without regard to any four-quarter averaging mechanism), and with respect to each award subject to a performance condition other than Relative TSR, the number of shares will be equal to the number of shares subject to such award based on deemed performance at the target level.

Pre-Signing Performance Unit Awards

Each performance unit award granted under the Company’s equity incentive plans prior to execution of the merger agreement and outstanding immediately prior to the effective time, whether or not then vested and exercisable, will, as of the effective time, become fully vested and be canceled in consideration for the right to receive a lump sum cash payment in an amount equal to the product of (i) $1.00 and (ii) the number of performance units represented by such award. With respect to each award that is subject to a Relative TSR performance condition, the number of units will be equal to the greater of the number of units subject to such award based on (x) deemed performance at the target level and (y) actual performance as of the effective time (determined without regard to any four-quarter averaging mechanism), and with respect to each award subject to a performance condition other than Relative TSR, the number of units will be equal to the number of units subject to such award based on deemed performance at the target level.

Post-Signing Performance Share Awards

Each performance share award granted under the Company’s equity incentive plans after execution of the merger agreement and outstanding immediately prior to the effective time will, as of the effective time, be converted into an award equal to a fixed cash amount (an “Adjusted Cash Award”), with such amount equal to the product of (i) the merger consideration and (ii) the number of shares of Company common stock subject to such performance share award. With respect to each award that is subject to a Relative TSR performance condition, the number of shares will be equal to the greater of the number of shares subject to such award based on (x) deemed performance at the target level and (y) actual performance as of the effective time (determined without regard to any four-quarter averaging mechanism), and with respect to each award subject to a performance condition other than Relative TSR, the number of shares will be equal to the number of shares subject to such award based on deemed performance at the target level.

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Post-Signing Performance Unit Awards

Each performance unit award granted under the Company’s equity incentive plans after execution of the merger agreement and outstanding immediately prior to the effective time will, as of the effective time, be converted into an Adjusted Cash Award, with such amount equal to the product of (i) $1.00 and (ii) the number of performance units represented by such performance unit award. With respect to each award that is subject to a Relative TSR performance condition, the number of units will be equal to the greater of the number of units subject to such award based on (x) deemed performance at the target level and (y) actual performance as of the effective time (determined without regard to any four-quarter averaging mechanism), and with respect to each award subject to a performance condition other than Relative TSR, the number of units will be equal to the number of units subject to such award based on deemed performance at the target level.

Accumulated Dividends

As of the effective time, all dividends, if any, accrued but unpaid with respect to the pre-signing performance share awards and performance unit awards shall, by virtue of the merger and without any action on the part of a holder thereof, automatically become fully vested and be paid to such holder.

See “ The Merger Agreement—Treatment of Incentive Equity Awards ” beginning on page [●] for additional information.

Interests of Directors and Executive Officers in the Merger (page [ ● ])

As of March 3, 2017, our directors and executive officers held and are entitled to vote, in the aggregate, 483,920 shares of Company common stock, representing approximately 0.9% of the voting power of the outstanding shares entitled to vote at the special meeting. The merger agreement provides that each holder of shares of Company common stock, including the Company’s directors and executive officers, will be entitled to receive the merger consideration for each share of Company common stock held immediately prior to the effective time.

Additional details of the beneficial ownership of Company common stock of the Company’s directors and executive officers are set out in the section of this proxy statement entitled “ Security Ownership of Certain Beneficial Owners and Management ” beginning on page [●]. In addition to their interests in the merger as shareholders, certain of the Company’s directors and executive officers have interests in the merger that may be different from, or in addition to, the interests of the Company’s shareholders generally. In considering the proposals to be voted on at the special meeting, you should be aware of these interests. The members of the Board were aware of and considered these interests, among other matters, in evaluating and reaching their decision to adopt the plan of merger set forth in the merger agreement and determining that entry into the merger agreement was in the best interests of the Company and its shareholders, and in resolving to recommend that the Company’s shareholders vote to approve the merger agreement and the plan of merger set forth therein.

The Company’s directors and executive officers also have the right to indemnification and insurance coverage following the closing of the merger. For more information, please see the section of this proxy statement entitled “ The Merger—Interests of the Company’s Directors and Executive Officers in the Merger ” beginning on page [●].

Financing of the Merger (page [ ● ])

AltaGas expects that cash to close the merger with the Company of approximately $4.5 billion (including pursuant to any outstanding incentive equity awards under the Company’s benefit plans) will be provided from a combination of: (a) the net proceeds from the Offering and the Concurrent Private Placement (as both terms are defined below); (b) the Bridge Facility (as defined below); (c) the net proceeds from certain planned divestitures of assets of AltaGas; and (d) future senior debt, hybrid security, equity or equity-linked security (including any preferred shares or convertible debentures) financings. AltaGas currently expects to fund approximately Cdn$0.8 billion through hybrid security or preferred share issuances and a further approximately Cdn$2.7 billion through asset divestitures and, if required, the Bridge Facility.

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AltaGas entered into a Commitment Letter dated January 25, 2017, by and among AltaGas, JPMorgan Chase Bank, N.A., The Toronto-Dominion Bank and Royal Bank of Canada in respect of the $4.95 billion bridge facility (the “Bridge Facility”). The Bridge Facility was reduced to a $3.1 billion bridge facility on February 3, 2017 as a result of a mandatory commitment reduction made by AltaGas on the deposit into escrow of the proceeds received from the Offering and the Concurrent Private Placement.

On February 3, 2017, AltaGas closed both: (a) a public offering of subscription receipts for total gross proceeds of approximately Cdn$2.1 billion, which we refer to as the “Offering”; and (b) a private placement of subscription receipts for total gross proceeds of Cdn$392.2 million, which we refer to as the “Concurrent Private Placement.” The subscription receipts entitle the holders thereof to receive, without payment of additional consideration or further action, one common share of AltaGas upon the closing of the merger.

Pursuant to the merger agreement, AltaGas has agreed to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or advisable to consummate the debt financing on or prior to the closing date of the merger on the terms and conditions described in the Bridge Facility, AltaGas has also agreed to use its reasonable best efforts to cause the debt financing sources to fund the debt financing on the closing date of the merger, to the extent the proceeds thereof are required to consummate the transactions contemplated by the merger agreement, and to enforce its rights under the Bridge Facility.

The outstanding debt of the Company and its subsidiaries and the preferred shares of Washington Gas are expected to remain outstanding after the consummation of the merger.

Unless otherwise specified, all dollar amounts are expressed in U.S. dollars.

For more information, please see the section of this proxy entitled “ The Merger—Financing of the Merger ” beginning on page [●].

Conditions to the Merger (page [ ● ])

Each party’s obligation to effect the merger is subject to the satisfaction or waiver (if permissible under applicable law) on or prior to the closing of the merger of the following conditions:

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Each party’s obligation to consummate the merger is also subject to certain additional conditions, including, among other things:

In addition, AltaGas’ and Merger Sub’s obligation to consummate the merger is also subject to the following conditions:

Before the closing and subject to certain exceptions, each of AltaGas and the Company may waive any of the conditions to its obligation to consummate the merger even though one or more of the conditions described above has not been met, except where waiver is not permissible under applicable law.

Dividends (page [ ● ])

The Company has historically paid quarterly cash dividends on Company common stock and the most recent quarterly dividend in the amount of $0.4875 per share was paid on February 1, 2017. On February 1, 2017, the Board declared a cash dividend of $0.51 per share of Company common stock payable on May 1, 2017. Under the terms of the merger agreement, the Company may continue paying its regular quarterly cash dividends (when and if declared by the Board, and not to exceed $0.511875 per share of Company common stock for calendar year 2017 and $0.51699375 per share of Company common stock for calendar year 2018), without the prior written consent of AltaGas, including a “stub” dividend in respect of the quarter in which the merger is consummated.

Regulatory Approvals (page [ ● ])

To complete the merger, the Company and AltaGas must obtain the regulatory approvals and the waiting period under the HSR Act must have expired or been terminated.

The merger agreement generally requires each party to use its reasonable best efforts to cause the transactions contemplated by the merger agreement to be consummated as promptly as reasonably practicable. In addition, the merger agreement requires AltaGas (i) to take any and all steps that may be required by any governmental authority in connection with obtaining any clearances, consents, approvals and waivers under any antitrust laws or other applicable laws (including the regulatory approvals), so as to enable the parties to consummate the transactions contemplated by the merger agreement as promptly as reasonably practicable, including committing to and effecting any remedial actions (as defined in the merger agreement), and (ii) to use its reasonable best efforts to take any and all action to avoid or resolve any proceeding by a governmental authority that seeks or would reasonably be expected to seek, to prevent, materially impede or materially delay the consummation of the transactions contemplated by the merger agreement, subject to certain limitations (as described in “ The Merger Agreement—Efforts to Obtain Regulatory Approvals ”). Notwithstanding the general obligations described in this section, the Company has agreed that AltaGas and its affiliates will not be required to, in connection with obtaining any consent or approval of any governmental authority(including the regulatory approvals) in connection with the merger agreement, the merger or the other transactions contemplated thereby, offer or accept, or agree, commit to agree or consent to,

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any undertaking, term, condition, liability, obligation, commitment, sanction or other measure (including any remedial action), that constitutes a burdensome condition (as defined in “ The Merger Agreement—Efforts to Obtain Regulatory Approvals ”). In addition, the Company has agreed that the Company and its subsidiaries will not, in connection with obtaining any consent or approval of any governmental authority (including the regulatory approvals) in connection with the merger agreement, the merger or the other transactions contemplated thereby, offer to agree to any undertaking, term, condition, liability, obligation, commitment, sanction or other measure (including any remedial action) that would reasonably be expected to be material and adverse to AltaGas’ ability to obtain the regulatory approvals on substantially the terms that AltaGas reasonably expects or accept or agree, commit to agree or consent to, any undertaking, term, condition, liability, obligation, commitment, sanction or other measure (including any remedial action); provided, however, the Company and its subsidiaries must take any remedial action requested by AltaGas if such remedial action is conditioned upon the consummation of the transactions contemplated by the merger agreement, including the merger.

Subject to certain limitations, either party may terminate the merger agreement if the merger is not consummated by January 25, 2018, which we refer to as the “outside date,” which date is subject to an extension of up to 180 days by either the Company or AltaGas if, on January 24, 2018, all conditions to closing have been satisfied other than those that by their nature can be satisfied only at the closing of the merger, which we refer to as the “closing” and those relating to (i) the expiration or termination of the HSR waiting period applicable to the transactions contemplated by the merger agreement, including the merger, and the receipt of the regulatory approvals, (ii) the absence of a burdensome condition, and (iii) the absence of legal restraints preventing consummation of the merger.

No Competing Solicitation by the Company (page [ ● ])

The merger agreement generally restricts the Company’s ability to solicit competing proposals (as defined in “The Merger Agreement — No Competing Solicitation by the Company” ) from (including by furnishing any non-public information about the Company or its subsidiaries to) third parties, or participate in discussions or negotiations with third parties regarding a competing proposal. Under certain circumstances, however, and in compliance with certain obligations contained in the merger agreement, the Company is permitted to engage in negotiations with, and provide such non-public information to, third parties making an unsolicited competing proposal that the Board determines in good faith, after consultation with its outside legal advisors and independent financial advisors, is or could reasonably be expected to lead to a “superior proposal” (as defined in “ The Merger Agreement — No Competing Solicitation by the Company ”) and that failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties under applicable law. Under certain circumstances prior to the approval of the merger agreement by the Company’s shareholders and in compliance with certain obligations contained in the merger agreement, the Board may effect a change of recommendation (as described below under “The Merger Agreement—Changes in the Board’s Recommendation” ) and the Company may terminate the merger agreement in order to enter into a definitive agreement with respect to a superior proposal, upon payment by the Company of a $136,000,000 termination fee to AltaGas.

Termination of the Merger Agreement (page [ ● ])

The merger agreement may be terminated at any time prior to the effective time in the following circumstances:

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Termination Fees (page [ ● ])

If the merger agreement is terminated under certain specified circumstances, the Company will be required to pay AltaGas a termination fee of $136,000,000. If the merger agreement is terminated under certain other specified circumstances, AltaGas will be required to pay the Company a termination fee of (i) $68,000,000 or $182,000,000, depending on the specific circumstances, in the event the merger agreement is terminated due to the failure to obtain a regulatory approval, the imposition of a Restraint relating to a regulatory approval or the imposition of a burdensome condition, subject to certain conditions, or (ii) $205,000,000, in the event the merger agreement is terminated in circumstances in which a Financing Failure has occurred, subject to certain conditions. For more information, see the section of this proxy entitled “ The Merger Agreement—Termination Fees ” beginning on page [●].

No Appraisal Rights (page [ ● ])

Company shareholders will not have appraisal rights under the Virginia Stock Corporation Act, which we refer to as the “VSCA,” with respect to the merger.

Market Price of Our Common Stock (page [ ● ])

Shares of Company common stock are quoted on the NYSE under the trading symbol “WGL.” The closing sale price of our common stock on January 24, 2017, which was the last trading day before the announcement of the merger agreement, was $78.96 per share.

Material U.S. Federal Income Tax Consequences (page [ ● ])

The receipt of cash pursuant to the merger will be a taxable transaction to U.S. holders of Company common stock (as defined in “ The Merger—Material U.S. Federal Income Tax Consequences of the Merger ”) for U.S. federal income tax purposes and may also be a taxable transaction under applicable state, local or non-U.S. income or other tax laws. Generally, if you are a U.S. holder, you will recognize a taxable gain or loss equal to the difference, if any, between the amount of cash you receive pursuant to the merger (including any cash required to be withheld for tax purposes) and your adjusted tax basis in the shares of Company common stock exchanged pursuant to the merger. If you are a non-U.S. holder (defined in “ The Merger—Material U.S. Federal Income Tax Consequences of the Merger ”), the receipt of cash pursuant to the merger will generally not be a taxable transaction to you for U.S. federal income tax purposes unless certain exceptions apply. A non-U.S. holder may be subject to backup withholding with respect to cash payments made pursuant to the merger unless such holder certifies that it is not a U.S. person or otherwise establishes an exemption.

You should read the section of this proxy statement entitled “ The Merger—Material U.S. Federal Income Tax Consequences of the Merger ” beginning on page [●] for a more complete discussion of the material U.S. federal income tax consequences of the merger. The tax consequences of the merger to you will depend on the facts of your own situation. You should consult your tax advisor for a full understanding of the U.S. federal tax consequences of the merger to you, as well as the tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.

Additional Information (page [ ● ])

You can find more information about the Company in the periodic reports and other information we file with the SEC. The information is available at the SEC’s public reference facilities and at the website maintained by the SEC at www.sec.gov . See “ Where You Can Find Additional Information ” beginning on page [●].

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers are intended to briefly address some commonly asked questions regarding the special meeting and the merger. These questions and answers may not address all the questions that may be important to you as a shareholder. You should read the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement, and the documents referred to or incorporated by reference in this proxy statement. You may obtain information incorporated by reference in this proxy without charge by following the instructions under “Where You Can Find Additional Information” beginning on page [ ● ].

This proxy statement contains important information about the merger and the special meeting, and you should read it carefully and in its entirety. A proxy is a legal designation of another person to vote your shares on your behalf. The enclosed voting materials allow you to vote your shares without attending the special meeting in person. For more information on how to vote your shares, please see the section entitled “ The Special Meeting ” beginning on page [●].

The exchange of shares of Company common stock for cash pursuant to the merger will be a taxable transaction to U.S. holders of Company common stock (as defined in “ The Merger—Material U.S. Federal Income Tax Consequences of the Merger ”) for U.S. federal income tax purposes and may also be a taxable transaction under applicable state, local or non-U.S. income or other tax laws. Generally, if you are a U.S. holder, you will recognize a taxable gain or loss equal to the difference, if any, between the amount of cash you receive pursuant to the merger (including any cash required to be withheld for tax purposes) and your adjusted tax basis in the shares of Company common stock exchanged pursuant to the merger. If you are a non-U.S. holder (as defined in “ The Merger—Material U.S. Federal Income Tax Consequences of the Merger ”), the receipt of cash pursuant to the merger will generally not be a taxable transaction to you for U.S. federal income tax purposes unless certain exceptions apply. A non-U.S. holder may be subject to backup withholding with respect to cash payments made pursuant to the merger unless such holder certifies that it is not a U.S. person or otherwise establishes an exemption. Please see the section of this proxy statement entitled “ The Merger—Material U.S. Federal Income Tax Consequences of the Merger ” beginning on page [●] for a more detailed description of the U.S. federal income tax consequences of the merger. You should consult your own tax advisor for a full understanding of the federal, state, local and non-U.S. tax consequences of the merger to you.

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Admission to the special meeting will be limited to persons who are listed on the Company’s records as shareholders as of the record date, or who bring documentation to the meeting that demonstrates their beneficial ownership of the Company common stock through a broker. Therefore, if you plan to attend the meeting, please note that you will need to present government-issued identification showing your name and photograph (i.e., a driver’s license or passport), and, if you are an institutional investor, evidence showing your representative capacity for such entity, in each case to be verified against our shareholder list as of the record date for the meeting. In addition, if your shares are held in the name of a broker, you will need a “legal proxy” from such entity or a recent brokerage statement or letter from such entity reflecting your stock ownership as of the record date for the meeting.

If your shares are registered directly in your name with the Company’s transfer agent, Computershare, you are considered the shareholder of record with respect to those shares. As the shareholder of record, you have the right to submit a proxy card directly to the Company, to submit proxies electronically or by telephone or to vote in person at the special meeting. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of shares held in “street name” and these proxy materials are being forwarded to you by your broker, bank or nominee who is considered the shareholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank or nominee on how to vote and are also invited to attend the special meeting. However, since you are not the shareholder of record, you may not vote these shares in person at the special meeting unless you request, complete and deliver a legal proxy from your broker, bank or nominee. Unless you submit voting instructions by one of these means, your shares will not be voted, which will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement and the plan of merger set forth therein.

For purposes of this proxy statement, we refer to the broker, bank, trust, custodian, fiduciary or other nominee of a shareholder as a “broker.”

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The approval of the nonbinding compensation proposal requires an affirmative “FOR” vote of a majority of the votes cast. Abstentions and, if applicable, broker non-votes (if any) are not counted as votes “FOR” or “AGAINST” this proposal; therefore, they will have no effect on the outcome of the vote on this proposal. The vote on the nonbinding compensation proposal is a vote separate and apart from the vote to approve the merger agreement and the plan of merger set forth therein. Accordingly, you may vote to approve the merger agreement and the plan of merger set forth therein and vote not to approve the compensation proposal and vice versa. Because the vote is advisory in nature only, it will not be binding on the Company or the Board.

The approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement and the plan of merger set forth therein, requires an affirmative “FOR” vote of a majority of the votes cast. Abstentions and, if applicable, broker non-votes (if any) are not counted as votes “FOR” or “AGAINST” this proposal; therefore, they will have no effect on the outcome of the vote on this proposal.

For a discussion of the factors that the Board considered in resolving to recommend that the Company’s shareholders vote to approve the merger agreement and the plan of merger set forth therein, please see the section of this proxy statement entitled “ The Merger—Recommendation of Our Board; Reasons for Recommending the Approval of the Merger Agreement ” beginning on page [●]. In addition, in considering the recommendation of the Board with respect to the merger agreement and the plan of merger set forth therein, you should be aware that some of the Company’s directors and executive officers have interests in the merger that may be different from, or in addition to, the interests of the Company’s shareholders generally. Please see the section of this proxy statement entitled “ The Merger—Interests of the Company’s Directors and Executive Officers in the Merger ” beginning on page [●].

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Vote on the Internet : If you have internet access, you may submit your proxy following the instructions provided in the notice, or if you requested printed proxy materials, by following the instructions provided with your proxy materials and on your proxy card or voting instruction card. On the internet voting site, you can confirm that your instructions have been properly recorded.

Vote by Telephone : You can also vote by telephone by following the instructions provided on the internet voting site, or if you requested printed proxy materials, by following the instructions provided with your proxy materials and on your proxy card or voting instruction card.

Vote by Mail: If you elected to receive printed proxy materials by mail, you may choose to vote by mail by marking your proxy card or voting instruction card, dating and signing it, and returning it to Broadridge in the postage-paid envelope provided. If the envelope is missing, please mail your completed proxy card or voting instruction card to WGL Holdings, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Please allow sufficient time for mailing if you decide to vote by mail.

Voting at the Special Meeting : The method or timing of your vote will not limit your right to vote at the special meeting if you attend the special meeting and vote in person. However, if your shares are held in the name of a broker, you must obtain a legal proxy, executed in your favor, from the holder of record to be able to vote at the special meeting. You should allow yourself enough time prior to the special meeting to obtain this proxy from the holder of record.

If you are a shareholder with shares of Company common stock registered in your name, you may vote in person at the special meeting or by submitting a proxy for the special meeting via the internet, by telephone or by completing, signing, dating and mailing the enclosed proxy card in the envelope provided. For more detailed instructions on how to vote using one of these methods, please see the section of this proxy statement entitled “ The Special Meeting—Voting Procedures ” beginning on page [●].

If you are a shareholder of record and you submit a proxy card or voting instructions but do not direct how to vote on each item, the persons named as proxies will vote in favor of the proposal to approve the merger agreement and the plan of merger set forth therein, the nonbinding compensation proposal and the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement and the plan of merger set forth therein.

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However, if your shares are held in “street name” through a broker, you must contact your broker to determine how to revoke your proxy.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

To the extent any statements made in this proxy statement contain information that is not historical, these statements are forward-looking statements and are subject to uncertainties and risks. These forward-looking statements relate to, among other things, the expected timing of the completion of the transaction. Forward-looking statements often include words such as “anticipate,” “assume,” “believe,” “can,” “could,” “estimate,” “expect,” “forecast,” “future,” “goal,” “indicate,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “proposed,” “seek,” “should,” “target,” “would” or similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Although certain of these statements set out herein are indicated above, all of the statements in this document that contain forward-looking statements are qualified by these cautionary statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward looking statements. Actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include risks and uncertainties relating to: the ability to obtain the requisite approval of the Company’s shareholders; the risk that AltaGas or the Company may be unable to obtain governmental and regulatory

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approvals required for the merger, or that required governmental and regulatory approvals may delay the merger or result in the imposition of conditions that could cause the parties to abandon the merger; the risk that a condition to closing of the merger may not be satisfied; the timing to consummate the proposed merger; disruption from the merger making it more difficult to maintain relationships with customers, employees or suppliers; the diversion of management time on merger-related issues; the effect of changes in governmental regulations; and other risk factors relating to the Company’s business, as detailed from time to time in the Company’s reports filed with the SEC. There can be no assurance that the merger will in fact be consummated.

Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found in the body of this proxy statement, as well as under Item 1.A in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016 and Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2016. The Company cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on forward-looking statements to make decisions with respect to the Company, investors and shareholders should carefully consider the foregoing factors and other uncertainties and potential events. All subsequent written and oral forward-looking statements concerning the transaction or other matters attributable to the Company or any other person acting on its behalf are expressly qualified in their entirety by the cautionary statements referenced above.

There also may be other factors that we do not anticipate or that we do not recognize are material that could cause results to differ materially from expectations. Forward-looking statements speak only as of the date they are made. The Company expressly disclaims any obligation to update or revise any forward-looking statement, whether as a result of future events, new information or otherwise, except as required by law.

THE PARTIES

WGL Holdings, Inc.

WGL was established on November 1, 2000 as a Virginia corporation. Through its wholly-owned subsidiaries, WGL sells and delivers natural gas and provides energy-related products and services to customers primarily in the District of Columbia and the surrounding metropolitan areas in Maryland and Virginia, although WGL’s non-utility segments provide various energy services across the United States. WGL promotes the efficient use of clean natural gas and renewable energy to improve the environment for the benefit of customers, investors, employees, and the communities it serves. WGL owns all of the shares of common stock of Washington Gas Light Company, which we refer to as “Washington Gas,” Washington Gas Resources Corporation, Hampshire Gas Company, which we refer to as “Hampshire,” and Crab Run Gas Company. Washington Gas Resources Corporation owns four unregulated subsidiaries that include WGL Energy Services, Inc., WGL Energy Systems, Inc., WGL Midstream, Inc. and WGSW, Inc.

WGL’s regulated utility segment consists of Washington Gas and Hampshire and represents approximately 77% of WGL’s total assets. Washington Gas is a regulated public utility that sells and delivers natural gas to retail customers in accordance with tariffs approved by regulatory commissions in the District of Columbia and adjoining areas in Maryland, Virginia and several cities and towns in the northern Shenandoah Valley of Virginia. Washington Gas has been engaged in the natural gas distribution business since its incorporation by an Act of Congress in 1848. Washington Gas has been a Virginia corporation since 1953 and a corporation of the District of Columbia since 1957. Hampshire owns full and partial interests in underground natural gas storage facilities, including pipeline delivery facilities located in and around Hampshire County, West Virginia, and operates those facilities to serve Washington Gas, which purchases all of the storage services of Hampshire. Washington Gas includes the cost of these services in the bills sent to its customers. Hampshire operates under a “pass-through” cost of service-based tariff approved by the FERC, and adjusts its billing rates to Washington Gas on a periodic basis to account for changes in its investment in utility plant and associated expenses. Washington Gas is regulated by the District of Columbia PSC, the PSC of MD and the SCC of VA which approve its terms of service and the billing rates that it charges to its customers. Hampshire is regulated by the FERC. The rates charged to utility customers are designed to recover Washington Gas’ operating expenses and natural gas commodity costs and to provide a return on its investment in the net assets used in its firm gas sales and delivery service.

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WGL’s corporate headquarters is located at 101 Constitution Avenue NW, 3rd Floor, Washington, DC 20080, its telephone number is (703) 750-2000 and its internet address is www.wglholdings.com .

The information provided on our website is not part of this proxy statement, and therefore is not incorporated herein by reference.

Certain documents that have been or will be filed by the Company with the SEC are incorporated by reference into this proxy statement. See “Where You Can Find Additional Information” beginning on page [●].

AltaGas Ltd.

AltaGas is a North American diversified energy infrastructure business with a focus on owning and operating assets to provide clean and affordable energy to its customers. AltaGas’ business strategy is underpinned by strong growth in natural gas supply and the growing demand for clean energy. AltaGas has three business segments operated through a number of subsidiaries:

As of December 31, 2016, AltaGas’ enterprise value exceeded Cdn$10.0 billion. With the physical and economic links along the energy value chain, together with its experienced and talented workforce of more than 1,600 people and its efficient, reliable and profitable assets, market knowledge and financial discipline, AltaGas has provided strong, stable and predictable returns to its investors. AltaGas not only focuses on providing safe, reliable and affordable service to its customers, but on maximizing the profitability of its assets, adding services that are complementary to its existing business segments, and growing through the acquisition and development of energy infrastructure.

The address of AltaGas’ headquarters is 1700, 355–4 Avenue SW, Calgary, Alberta T2P 0J1, its telephone number is (403) 691-7575 and its internet address is www.altagas.ca.

The information provided on AltaGas’ website is not part of this proxy statement, and therefore is not incorporated herein by reference.

Merger Sub

Merger Sub is a Virginia corporation and an indirect wholly-owned subsidiary of AltaGas. It was formed for the purpose of completing the merger through a merger of Merger Sub with and into WGL pursuant to the merger agreement. Merger Sub has not carried on any activities to date, except for activities incidental to its incorporation and activities undertaken in connection with the transactions contemplated by the merger agreement.

THE SPECIAL MEETING

We are furnishing this proxy statement to the Company’s shareholders as part of the solicitation of proxies by the Board for use at the special meeting.

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Date, Time and Place

The special meeting will be held on [●], 2017, at [●] a.m. local time, at the Company’s corporate headquarters, 101 Constitution Avenue NW, 3rd Floor, Washington, DC 20080.

Admission to the special meeting will be limited to persons who are listed on the Company’s records as shareholders as of the record date, or who bring documentation to the meeting that demonstrates their beneficial ownership of the Company common stock through a broker. Therefore, if you plan to attend the meeting, please note that you will need to present government-issued identification showing your name and photograph (i.e., a driver’s license or passport), and, if you are an institutional investor, evidence showing your representative capacity for such entity, in each case to be verified against our shareholder list as of the record date for the meeting. In addition, if your shares are held in the name of a broker, you will need a “legal proxy” from such entity or a recent brokerage statement or letter from such entity reflecting your stock ownership as of the record date for the meeting.

Purpose of the Special Meeting

The special meeting is being held for the following purposes:

A copy of the merger agreement is attached as Annex A to this proxy statement.

Recommendation of the Board

The Board carefully reviewed and considered the terms and conditions of the merger agreement, the merger and the other transactions contemplated by the merger agreement. The Board unanimously (i) resolved to recommend that the Company’s shareholders approve the merger agreement and the plan of merger set forth therein, (ii) determined that the entry into the merger agreement is in the best interests of the Company and its shareholders, (iii) adopted the plan of merger set forth in the merger agreement and approved the Company’s execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated by the merger agreement, and (iv) directed that the merger agreement be submitted to a vote at a meeting of the shareholders of the Company to consider the approval of the merger agreement and the plan of merger set forth therein. Accordingly, the Board unanimously recommends a vote “FOR” the proposal to approve the merger agreement and the plan of merger set forth therein. For a discussion of the material factors that the Board considered in resolving to recommend that the Company’s shareholders vote to approve the merger agreement and the plan of merger set forth therein, please see the section of this proxy statement entitled “ The Merger—Recommendation of Our Board; Reasons for Recommending the Approval of the Merger Agreement ”.

The Board also unanimously recommends a vote “FOR” the nonbinding compensation proposal and “FOR” the approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement and the plan of merger set forth therein.

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Record Date and Shareholders Entitled to Vote

Only holders of record of shares of Company common stock as of the close of business on [●], 2017, the record date for the special meeting, are entitled to vote the shares of Company common stock they held on the record date at the special meeting. As of the close of business on the record date, there were [●] shares of Company common stock outstanding and entitled to vote, held by [●] shareholders of record. Each shareholder is entitled to one vote for each share of Company common stock held by such shareholder on the record date on each of the proposals presented in this proxy statement.

Quorum

The Company’s Bylaws provide that the presence, in person or by proxy, of holders of record of a majority of shares of Company common stock entitled to vote at the special meeting constitutes a quorum for the transaction of business. Abstentions and withheld votes will be counted for purposes of determining the presence of a quorum. If you vote online or by telephone or submit a properly executed proxy card or voting instruction form as described in the section entitled “ The Special Meeting—Voting Procedures ” below, then your shares will be considered part of the quorum.

A “broker non-vote” occurs on a matter when a broker is not permitted to vote on that particular matter without instructions from you, you do not give such instructions and the broker indicates on its proxy card, or otherwise notifies us, that it does not have authority to vote its shares on that matter. You must follow instructions from your broker to authorize it to vote with respect to the proposal to approve the merger agreement and the plan of merger set forth therein, the nonbinding compensation proposal or the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement and the plan of merger set forth therein.

In the event that a quorum is not present at the special meeting, or if there are insufficient votes to approve the merger agreement and the plan of merger set forth therein at the time of the special meeting, we expect that the special meeting will be adjourned or postponed to solicit additional proxies.

Vote Required

Approval of the Merger Agreement

The approval of the merger agreement and the plan of merger set forth therein requires an affirmative “FOR” vote of the holders of more than two-thirds of the outstanding shares of Company common stock entitled to vote on the proposal. Under the merger agreement, the receipt of such required vote is a condition to the consummation of the merger. Abstentions, withheld votes and broker non-votes (if any) will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement and the plan of merger set forth therein.

Approval of the Nonbinding Compensation Proposal

The approval of the nonbinding compensation proposal requires an affirmative “FOR” vote of a majority of the votes cast. Abstentions and broker non-votes (if any) are not counted as votes “FOR” or “AGAINST” this proposal; therefore, they will have no effect on the outcome of the vote on this proposal. The vote on the nonbinding compensation proposal is a vote separate and apart from the vote to approve the merger agreement and the plan of merger set forth therein. Accordingly, you may vote to approve the merger agreement and the plan of merger set forth therein and vote not to approve the compensation proposal and vice versa. Because the vote is advisory in nature only, it will not be binding on the Company or the Board.

Approval of the Adjournment of the Special Meeting

The approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement and the plan of merger set forth therein, requires an affirmative “FOR” vote of a majority of the votes cast. Abstentions and, if applicable, broker non-votes (if any) are not counted as votes “FOR” or “AGAINST” this proposal; therefore, they will have no effect on the outcome of the vote on this proposal.

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Voting Procedures

Whether or not you plan to attend the special meeting and regardless of the number of shares you own, your careful consideration of, and vote on, the proposal to approve the merger agreement and the plan of merger set forth therein is important and we encourage you to vote promptly.

If you are a shareholder of record or own your shares through one of the Company’s 401(k) Plans, you can vote using any one of the following methods:

If you own your shares through a broker, you will vote in accordance with the instructions provided by such broker, which may include the following:

Telephone and online voting are available 24 hours a day. If you are the record holder of your shares or your shares are held in “street name,” then telephone and online voting will be accessible until 11:59 p.m. Eastern Time on [●], 2017.

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Shareholders of the Company who hold their shares in “street name” by a broker should refer to the proxy card or other information forwarded by their broker for instructions on how to vote their shares. Under the Company’s 401(k) Plans, the plan trustee will vote your plan shares in accordance with the directions you indicate by voting online or by telephone or on the proxy card.

If you have any questions or need assistance voting your shares, please contact D.F. King toll-free at (888) 887-1266 (banks and brokers may call (212) 269-5550).

How Proxies Are Voted; Proxies Without Voting Instructions

If you complete and submit your proxy card or voting instructions, the persons named as proxies will follow your instructions.

Shareholders of Record – If you are a shareholder of record and your proxy is properly submitted (whether online, by telephone or by mail) and not properly revoked, but you do not give voting instructions for a proposal, the persons named as proxies will vote in favor of the proposal to approve the merger agreement and the plan of merger set forth therein, the nonbinding compensation proposal and the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement and the plan of merger set forth therein.

401(k) Plan Shares – If you hold your shares through one of the Company’s 401(k) Plans and your proxy is properly submitted (whether online, by telephone or by mail) and not properly revoked, but you do not provide voting instructions to the plan trustee, then your shares will be voted in accordance with directions given to the plan trustee by the Company, or if no such directions are given, your shares will be voted by the plan trustee in the same proportion as the 401(k) Plan shares that were properly voted.

Beneficial Owners – If you hold your shares in street name and properly submit a proxy (whether online, by telephone or by mail) with no voting instructions, your broker may not vote your shares on the proposals to approve the merger agreement and the plan of merger set forth therein, the nonbinding compensation proposal and the proposal to adjourn the special meeting, because under NYSE rules, such persons who hold shares for customers in “street name” have the authority to vote in their discretion only on “routine” matters. On non-routine matters, your broker holding your shares in “street name” may only vote in accordance with your instructions. The approval of the merger agreement and the plan of merger set forth therein, the nonbinding compensation proposal and the proposal to adjourn the special meeting if necessary or appropriate, are considered non-routine matters. As a result, if you are a beneficial owner and you do not provide your broker with voting instructions, your shares of common stock will not be voted, which is referred to as a “broker non-vote.”

Revocation of Proxies

If you are a shareholder of record, your proxy can be revoked in several ways:

However, if your shares are held in “street name” through a broker, you must contact your broker to determine how to revoke your proxy.

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Voting in Person

If you plan to attend the special meeting and vote in person, you will be given a ballot at the special meeting. Please note that admission to the special meeting is limited to the Company’s shareholders or their representatives.

Admission to the special meeting will be limited to persons who are listed on the Company’s records as shareholders as of the record date, or who bring documentation to the meeting that demonstrates their beneficial ownership of the Company common stock through a broker. For holders of record of Company common stock, upon your arrival at the meeting location, you will need to present identification to be admitted to the meeting. If you are a shareholder who is an individual, you will need to present government-issued identification showing your name and photograph ( i.e. , a driver’s license or passport), or, if you are representing an institutional investor, you will need to present government-issued photo identification and professional evidence showing your representative capacity for such entity. In each case, we will verify such documentation with our record date shareholder list. We reserve the right to limit the number of representatives who may attend the special meeting. Cameras and electronic recording devices are not permitted at the special meeting.

For shareholders holding shares in “street name,” in addition to providing identification as outlined for record holders above, you will need a “legal proxy” from your broker or a recent brokerage statement or letter from your broker reflecting your stock ownership as of the record date. Otherwise, you will not be permitted to attend the special meeting. If your shares are held in the name of a broker, you must obtain and bring to the special meeting a “legal proxy” issued in your name from the broker to be able to vote at the special meeting.

No Appraisal Rights

In accordance with Section 13.1-730 of the VSCA, no appraisal rights shall be available to Company shareholders with respect to the merger.

Solicitation of Proxies

The Company will pay the costs of soliciting proxies from its shareholders. In addition to this mailing, proxies may be solicited by directors, officers or employees of the Company in person, by telephone or electronic transmission. None of the directors, officers or employees will be directly compensated for such services. The Company has retained D.F. King to assist in the distribution and solicitation of proxies. The Company will pay D.F. King a fee of approximately $25,000 for these services.

The extent to which these proxy soliciting efforts will be undertaken depends entirely upon how promptly proxies are submitted. You should submit your proxy without delay by mail, by telephone or online. The Company also reimburses brokers, nominees, fiduciaries or other custodians for their expenses in sending these materials to you and getting your voting instructions.

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Adjournments and Postponements

Although it is not currently expected, the special meeting may be adjourned, recessed or postponed for the purpose of soliciting additional proxies. If a quorum is present in person or represented by proxy, an adjournment of the special meeting may be made from time to time by the affirmative vote of the holders of a majority of the voting shares represented at the special meeting without further notice other than by announcement at the meeting.

Voting by Company Directors and Executive Officers

The Company’s directors and executive officers have informed us that they intend, as of the date hereof, to vote all of their shares of Company common stock in favor of the matters before our shareholders as described in this proxy statement. Details of the beneficial ownership of Company common stock of the Company’s directors and executive officers are set out in the section of this proxy statement entitled “ Security Ownership of Certain Beneficial Owners and Management ” beginning on page [●]. Certain of the Company’s directors and executive officers have interests in the merger that may be different from, or in addition to, the interests of the Company’s shareholders generally. For more information, please see the section of this proxy statement entitled “ The Merger—Interests of the Company’s Directors and Executive Officers in the Merger ” beginning on page [●].

Assistance

If you have any questions or need assistance voting your shares, please contact D.F. King toll-free at (888) 887-1266 (banks and brokers may call (212) 269-5550).

THE MERGER

Overview

The Company is seeking the approval by its shareholders of the merger agreement the Company entered into on January 25, 2017 with AltaGas and Merger Sub and the plan of merger set forth therein. Under the terms of the merger agreement, subject to the satisfaction or waiver in accordance with the merger agreement of specified conditions, Merger Sub will be merged with and into the Company, with the Company surviving the merger as an indirect, wholly-owned subsidiary of AltaGas. The Board unanimously (i) resolved to recommend that the Company’s shareholders approve the merger agreement and the plan of merger set forth therein, (ii) determined that the entry into the merger agreement is in the best interests of the Company and its shareholders, (iii) adopted the plan of merger set forth in the merger agreement and approved the Company’s execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated by the merger agreement, and (iv) directed that the merger agreement be submitted to a vote at a meeting of the shareholders of the Company to consider the approval of the merger agreement and the plan of merger set forth therein.

Upon the consummation of the merger, each share of Company common stock issued and outstanding immediately prior to the effective time, other than shares owned by the Company, AltaGas, Merger Sub or any of their respective subsidiaries (or held in the Company’s treasury), will be converted into the right to receive $88.25 in cash, without interest and less any applicable withholding taxes.

Background of the Merger

The Board and the Company’s executive management team (“Executive Management”) regularly review and evaluate the Company’s strategic plan as part of their ongoing efforts to provide long-term value to the Company’s shareholders, taking into account economic, competitive, regulatory and other conditions, as well as historical and projected industry trends and developments. As part of this review, the Board and Executive Management also consider and evaluate options and alternatives designed to enhance shareholder value, including, from time to time, potential strategic transactions. In connection with these reviews, the Board also engages in discussions from time to time with various investment banks with knowledge and expertise of the Company’s industry (including Goldman Sachs and Lazard) about industry developments, including the considerable merger and acquisition (“M&A”) activity that had occurred in the Company’s industry over the past several years. On December 17, 2014, the Company executed an engagement

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letter with Lazard to assist the Company with ongoing corporate preparedness planning, valuation and various strategic matters, and thereafter Lazard periodically advised the Board on such matters. In addition, on April 6, 2016, the Company executed an engagement letter with Goldman Sachs to assist the Company in connection with potential acquisition proposals it may receive and other potential activism preparedness matters.

As a result of these activities by the Board, the Board believed it was generally aware of the opportunities for strategic transactions involving natural gas local distribution companies generally and the Company in particular.

On July 13, 2016, a representative of another company in the energy sector contacted Lazard and expressed interest in exploring a potential transaction with the Company. Following discussions with Mr. Terry D. McCallister, Chairman and Chief Executive Officer of the Company (“Mr. McCallister”), Lazard contacted the representative of such energy sector company to convey that the Company was not engaged in a sale process and expressed the Company’s intention to execute on its strategic plan.

On September 8, 2016, a representative of J.P. Morgan Securities LLC, financial advisor to AltaGas (“J.P. Morgan”), contacted Mr. McCallister and informed him that AltaGas was interested in exploring a potential strategic transaction with the Company. Mr. McCallister informed the representative of J.P. Morgan that the Company was not engaged in a sale process and expressed the Company’s intention to execute on its strategic plan.

On September 21, 2016, a representative of an investment banking firm contacted Mr. McCallister and Mr. Gautam Chandra, Senior Vice President of the Company (“Mr. Chandra”), and informed them that one of its clients, another company in the energy sector, which we refer to as “Party A”, had interest in a potential strategic transaction with the Company and would likely contact Mr. McCallister in the coming weeks. Mr. McCallister informed the representative of the investment banking firm that the Company was not engaged in a sale process and expressed the Company’s intention to execute on its strategic plan.

On September 26, 2016, Mr. David Harris, Chief Executive Officer of AltaGas (“Mr. Harris”), contacted Mr. McCallister and conveyed AltaGas’ interest in pursuing a potential strategic acquisition of the Company, in either an all-cash transaction or a transaction with a mix of cash and stock consideration, but no indicative price terms were communicated. Mr. McCallister informed Mr. Harris that the Company was not engaged in a sale process, but noted that he would convey AltaGas’ interest to the Board at its next meeting.

On September 27, 2016, the Board held a regularly scheduled meeting. During the meeting, Mr. McCallister updated the Board on recent M&A activity in the industry, as well as the recent expressions of interest received by the Company regarding a potential strategic transaction, including from AltaGas. After discussion of the relative risks and benefits of doing so, the Board authorized Mr. McCallister to engage in preliminary discussions with AltaGas and other companies that may subsequently express interest regarding a potential strategic transaction with the Company, and report back to the Board as developments warranted.

On October 2, 2016, the chief executive officer of Party A contacted Mr. McCallister and expressed Party A’s interest in a potential merger-of-equals stock transaction between Party A and the Company, and indicated that Party A expected to subsequently send a written proposal to Mr. McCallister for the Board’s consideration. Mr. McCallister indicated that the Company was not engaged in a sale process and was instead focused on executing the Company’s strategic plan, but that the Company was always willing to listen to potential opportunities to enhance shareholder value.

On October 5, 2016, a representative of Goldman Sachs notified Mr. McCallister that Goldman Sachs had been contacted by a senior executive of another company in the energy sector, which we refer to as “Party B”, who had expressed interest in setting up a meeting with Mr. McCallister to discuss a potential strategic transaction with the Company. Mr. McCallister agreed to have a preliminary meeting with the senior executive of Party B and subsequently, as directed by Mr. McCallister, a representative of Goldman Sachs set up the meeting.

On October 11, 2016, Mr. McCallister had a meeting with a senior executive of Party B. At the meeting, the representative of Party B expressed interest in a potential strategic transaction with the Company. Mr. McCallister informed the representative of Party B that the Company was not engaged in a sale process and was instead focused on executing the Company’s strategic plan, but that the Company was always willing to listen to potential opportunities to enhance shareholder value.

On October 13, 2016, in response to an information request made by the senior executive of Party B, Mr. McCallister sent certain publicly available information about the Company to the senior executive of Party B.

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On October 14, 2016, Mr. McCallister and Mr. Chandra had dinner with Mr. Harris, along with the chief financial officer of AltaGas and the chairman of the board of directors of AltaGas, to informally discuss their respective companies. During the dinner, Mr. McCallister indicated that the Company was not “for sale” nor was the Company running a sale process and was instead focused on executing the Company’s strategic plan, but that the Company was always willing to listen to potential opportunities to enhance shareholder value. Mr. McCallister also noted that, if the Company were to consider any potential strategic transaction, maximizing value for shareholders and ensuring a high-level of transaction closing certainty, including certainty related to obtaining any necessary regulatory approvals, would be of paramount importance to the Board. At the conclusion of the dinner, Mr. Harris indicated that the AltaGas board of directors was scheduled to meet over the succeeding few days and planned to further discuss its interest in a potential strategic transaction with the Company, and that he expected to follow up with Mr. McCallister shortly thereafter.

On November 1, 2016, Mr. Harris contacted Mr. McCallister and informed him that AltaGas expected to deliver an indication of interest for a strategic transaction by November 21, 2016.

During the period from November 1, 2016 through November 8, 2016, Messrs. McCallister and Chandra sent certain publicly available information to senior executives of AltaGas in response to information requests they had made.

On November 2, 2016, the Company received a written indication of interest from Party A, which proposed a merger-of-equals between the two companies. The indication of interest proposed a transaction pursuant to which shareholders of the Company would receive consideration consisting entirely of shares of Party A stock, or, as an alternative, a transaction pursuant to which shareholders of the Company would receive consideration consisting primarily of shares of Party A stock, with some cash consideration. The proposed merger consideration described in the proposals implied little to no premium to the then current trading price of the Company common stock.

On November 4, 2016, Mr. McCallister contacted the chief executive officer of Party A and communicated that the proposal sent by Party A on November 2, 2016 did not offer sufficient shareholder value to warrant discussing with the Board. Mr. McCallister again informed the chief executive officer of Party A that the Company was not engaged in a sale process, and was instead focused on executing the Company’s strategic plan, but noted that if the Board were to consider a potential strategic transaction, the proposal would need to offer compelling shareholder value.

On November 9, 2016, the Company received a written indication of interest from Party B. The indication of interest proposed several potential strategic combination alternatives, including an all-cash transaction and a transaction with a mix of stock and cash consideration, and contemplated a 20% to 30% premium to the then current trading price of the Company common stock.

On November 14, 2016, Messrs. McCallister and Chandra had a discussion with the chief executive officer and several other senior executives of Party A, during which the representatives of Party A conveyed a change to the proposed merger consideration that was more favorable to the Company’s shareholders than the merger consideration described in Party A’s November 2, 2016 indication of interest. The modified merger consideration implied an approximately 10% premium to the then current trading price of the Company common stock.

On November 15, 2016, following several discussions with Kirkland & Ellis LLP (“K&E”) regarding its M&A experience and practice, the Company engaged K&E as legal counsel to advise the Company in connection with a potential strategic transaction.

Also on November 15, 2016, the Board held a special meeting that was attended by certain members of Executive Management and representatives of Lazard and K&E. At this meeting, representatives of Lazard presented to the Board an overview of the Company’s strategic and market position, a preliminary financial analysis of the Company on a standalone basis (which preliminary financial analysis was based on the Company’s November 2016 management plan as provided to Lazard by Executive Management), and provided a utility sector update (including an overview and update on recent M&A activity, as well as the current M&A environment in the sector). Lazard also provided an overview of the potential strategic alternatives that might reasonably be available to the Company, and a review of potential counterparties to a potential strategic transaction. The Board discussed with representatives of Lazard and members of Executive Management various strategic alternatives available to the Company (and the benefits and risks of each such alternative), including remaining as a standalone public company and continuing to execute on its strategic plan, growth through one or more acquisitions and a sale to a third party. K&E discussed with the Board its fiduciary duties and certain legal

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considerations in connection with its consideration of strategic alternatives, including a possible sale of the Company, and discussed with the Board that it was not obligated to pursue a sale of the Company. K&E also discussed with the Board various other transaction process considerations if the Board were to consider a possible sale of the Company, including the importance of maintaining confidentiality, and provided an overview of the typical features of a public company merger agreement.

In the context of such advice, the Board proceeded to discuss the unsolicited indications of interest that had been received to date, which consisted of the written indications of interest from Party A and Party B and the oral expression of interest from AltaGas, and discussed whether pursuing a potential strategic transaction with one of these parties or another party was in the best interests of the Company’s shareholders. The Board also discussed the relative advantages and disadvantages of the various strategic alternatives then available to the Company, including declining to pursue any transaction, engaging in discussions with one or more of the parties that had submitted an indication of interest and proactively seeking out additional potential interested parties in a transaction. Following such discussion, the Board determined that pursuing the merger-of-equals transaction proposed by Party A was not in the best interests of the Company’s shareholders. Among the factors considered by the Board in making such determination were the low premium to the then current trading price of the Company common stock implied by Party A’s proposal and the fact that the consideration to be received by the Company’s shareholders in such a transaction, which would consist wholly or primarily of shares of Party A’s stock, would expose the Company’s shareholders to the risks and uncertainties of Party A’s business and the combination of the two businesses, compared to an all-cash transaction that would provide certainty of value and liquidity to the Company’s shareholders. The Board further determined that the Company should engage in further discussions with Party B and AltaGas about a potential merger transaction involving all-cash consideration. In addition, the Board authorized Mr. McCallister to instruct Goldman Sachs to contact no more than four additional companies, which companies were identified in consultation with Goldman Sachs, Lazard and members of Executive Management, based on their respective industry knowledge, as being those companies most likely to be interested in and capable (from a financial and regulatory perspective) of executing a potential all-cash strategic transaction with the Company, to gauge each such company’s interest in a potential strategic transaction with the Company and to obtain indications of the Company’s potential valuation. However, the Board emphasized that it was not prepared to pursue an auction strategy at such time and, in determining to limit the number of potential additional parties contacted, the Board considered, among other factors, that contacting a greater number of parties could exacerbate the potential risk of leaks, which could be damaging to the Company, and the risk that Party B and AltaGas could be unwilling to continue discussions with the Company if it were to engage in a broader sales process.

On November 18, 2016, Mr. McCallister contacted the chief executive officer of Party A and, as previously directed by the Board, indicated that the Board did not wish to pursue the merger-of-equals transaction that had been proposed by Party A.

Also on November 18, 2016, Mr. McCallister and Mr. Harris met in person in Washington, D.C. At the meeting, Mr. Harris delivered a written indication of interest from AltaGas, which proposed an all-cash transaction with a per share offer price of between $88-$92.50, and requested a period of exclusivity during which AltaGas would finalize its due diligence and the Company would exclusively negotiate the terms of a definitive merger agreement with AltaGas. The written indication of interest also noted AltaGas’ history of positive and constructive relationships in each of its regulatory jurisdictions, and highlighted the strong social fit between the two companies, noting that both companies shared a culture of excellence with respect to service, reliability and safety for their respective customers.

Following the Board meeting on November 15, 2016, per the directions of the Board at such meeting, a representative of Goldman Sachs contacted the chief executive officer or other senior officer of three of the companies that previously had been identified in consultation with Goldman Sachs, Lazard and members of Executive Management, based on their respective industry knowledge, as being those most likely to be interested in and capable (from a financial and regulatory perspective) of executing a potential all-cash strategic transaction with the Company. These potential counterparties, which we refer to as “Party C”, “Party D” and “Party E,” were contacted between November 19, 2016 and November 21, 2016 and were asked to provide a verbal indication of their interest in the Company and, if interested, an indicative per share value of the Company on the basis of publicly available information by December 5, 2016. In addition, on November 19, 2016, a representative of Goldman Sachs contacted a senior officer of Party B and asked that Party B provide any updates to its previous proposal by December 5, 2016.

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On November 21, 2016, the chief executive officer of Party D’s natural gas distribution business contacted Mr. McCallister with some additional questions regarding the Company’s business, which Mr. McCallister addressed based solely on publicly available information.

On November 25, 2016, the Company entered into a one-way non-disclosure agreement with AltaGas containing a standstill provision. Following execution of the non-disclosure agreement, Goldman Sachs sent representatives of J.P. Morgan the Company’s strategic plan that had been prepared by Executive Management.

On November 28, 2016, J.P. Morgan sent Goldman Sachs and Lazard a list of due diligence requests, to which the Company commenced efforts to respond.

On November 29, 2016, Bloomberg published an article entitled “ WGL Said to Weigh Sale After Interest From Spain’s Iberdrola ”, which reported that the Company had held preliminary talks with Iberdrola S.A. about a potential strategic transaction, and was weighing options, including a sale transaction. The article also reported that the Company was working with financial advisers on such matters. Immediately subsequent to the publication of such article, the Company common stock experienced heavy trading volume and an approximately nine percent increase in its share price, compared to the closing share price of the Company common stock on November 28, 2016.

Also on November 29, 2016, Party C informed a representative of Goldman Sachs that they would not be submitting an indication of interest due to regulatory approval considerations.

Over the course of the week following the publication of the Bloomberg article, representatives of two companies contacted Mr. McCallister and a representative of one additional company contacted Mr. Chandra to convey their general interest in a possible transaction with the Company.

On December 1, 2016 and December 2, 2016, a senior officer of Party B separately contacted Mr. McCallister and representatives of both Goldman Sachs and Lazard, respectively, affirming Party B’s continued interest in a potential strategic transaction with the Company and communicating its intent to provide an updated proposal by December 5, 2016.

On December 2, 2016, Goldman Sachs provided J.P. Morgan with an updated version of the Company’s strategic plan, which included the prospective financial information that is summarized below in “— Prospective Financial Information ”. The updated version of the strategic plan reflected updates made to the November 2016 version of the plan to reflect the most current information available to the Company and management’s most current estimate of the anticipated future standalone financial projections of the Company based on such information.

On December 5, 2016, Party D contacted Mr. McCallister and indicated that they would not be submitting an indication of interest, citing that they did not believe they could offer a meaningful premium to the then current trading price of the Company common stock, and indicating their belief that such a proposal would not be attractive to the Board. Also on December 5, 2016, Party E contacted Goldman Sachs and indicated they would not be submitting an indication of interest, citing concerns about the potential business compatibility between the two companies, as well as regulatory approval considerations.

Also on December 5, 2016, Vinson & Elkins LLP (“V&E”), legal counsel to AltaGas, provided to K&E a summary of proposed terms of a merger agreement between their respective clients.

On December 6, 2016, a senior officer of Party B verbally communicated to representatives of Goldman Sachs and Lazard an indicative offer of approximately $80 per share. However, no updated written proposal was presented by Party B.

On December 7, 2016, the Board held a special meeting that was attended by certain members of Executive Management and representatives of K&E, Goldman Sachs and Lazard. Mr. McCallister, Goldman Sachs and Lazard updated the Board on the developments since the November 15, 2016 Board meeting, including the receipt of the written indication of interest from AltaGas;

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the further communications with Party B; and that Goldman Sachs had contacted three additional companies (Party C, Party D and Party E) and all three had declined to submit an indication of interest, explaining the reasons cited by each. In addition, Mr. McCallister noted that following the publication of the Bloomberg article on November 29, 2016, representatives of two additional companies had contacted him and a representative of one additional company contacted Mr. Chandra to express general interest in a possible transaction with the Company. The Board and Executive Management also discussed the recent updates made to the Company’s strategic plan, which were intended to reflect the most current information available to the Company and management’s most current estimate of the anticipated future standalone financial projections of the Company based on such information.

Following such overview of recent developments, a representative from Lazard presented an industry update. In addition, representatives of Goldman Sachs and Lazard presented their respective preliminary financial analyses of the Company using the Company’s strategic plan (in the case of Lazard, updated to reflect changes to its analyses since the November 15, 2016 Board meeting). Representatives from Goldman Sachs and Lazard then summarized the key terms of the proposals received from each of Party B and AltaGas, including the proposed summary of terms provided by V&E on December 5, 2016, and provided an overview of the proposed financing that AltaGas was planning to arrange for a potential transaction.

A representative from K&E then summarized and discussed with the Board certain key potential merger agreement terms that would need to be negotiated in connection with a potential transaction, including provisions relating to transaction closing certainty and the allocation of regulatory and financing risk.

The representatives from Goldman Sachs and Lazard then discussed with the Board the principal process alternatives currently available to the Company if it determined to proceed with a potential transaction and the relative benefits and risks thereof, including a “one-step” process which would involve negotiating with AltaGas on an exclusive or non-exclusive basis and a “two-step” process with AltaGas and either a limited group or a broader set of other potential parties, including Party B.

Following such discussion, the representative from K&E again summarized the Board’s fiduciary duties and related legal considerations. The Board, Executive Management and the Company’s advisors then discussed various open issues and considerations and the Board determined that, if the Company were able to get comfortable through negotiations and reverse due diligence that AltaGas was highly likely to close a potential transaction, that the price and other terms of the AltaGas proposal appeared to be favorable both in absolute terms and as compared to the existing and potential proposals of other potential transaction partners. Following further discussion of the relative advantages and disadvantages related to the various process alternatives, the Board decided to proceed further with AltaGas, but not to grant them exclusivity at such time. The Board also authorized Mr. McCallister to inform Party B that its current proposal did not offer compelling shareholder value and that the Company was not prepared to enter into discussions with Party B about a potential strategic transaction at such time. In reaching its determination, the Board considered a number of factors, including the significant premium that the AltaGas proposal represented over the Company’s recent and historical share price, including as compared to recent industry transactions, and as compared to Party B’s proposal; the significant incremental value that would be received by the Company’s shareholders in a transaction with AltaGas based on the indicative price range relative to the preliminary financial analyses of the Company on a standalone basis using the Company’s strategic plan that had been performed by Goldman Sachs and Lazard; the fact that the proposed all-cash consideration would provide certainty of value and liquidity to the Company’s shareholders; the likelihood that broadening the process to contact other potential counterparties would not result in timely offers from other bidders at indicative prices above those being proposed by AltaGas, in light of the feedback received from Party C, Party D and Party E (who were viewed as the parties most likely to be interested in and capable (from a financial and regulatory perspective) of executing a potential strategic transaction with the Company) and the fact that, following the Bloomberg article, there was considerable market awareness that the Company was potentially considering a strategic transaction which had not led to further substantive indications of interest; and the potential adverse consequences that pursuing a broader sales process could have on the willingness of AltaGas to continue discussions with the Company in light of the fact that AltaGas had requested exclusivity in its indication of interest.

Also on December 7, 2016, following the Board meeting, Messrs. McCallister and Harris had a telephone conversation regarding AltaGas’ proposal during which Mr. McCallister emphasized the importance of AltaGas refining their price range. Mr. Harris

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conveyed that AltaGas was not prepared to give a precise number on price at such time, and that arriving at any final price would ultimately be possible only after performing detailed due diligence on the Company and its strategic plan.

Also on December 7, 2016, following the Board meeting, Mr. McCallister contacted a senior officer of Party B to inform him that the Board did not view Party B’s current proposal as offering compelling shareholder value and therefore the Company was not prepared to enter into discussions with Party B about a potential strategic transaction at such time.

On December 9, 2016, V&E sent K&E an initial draft of a merger agreement.

On December 11, 2016, representatives of Goldman Sachs, Lazard and the Company communicated certain key merger agreement issues to AltaGas and J.P. Morgan in response to the summary of proposed terms of the merger agreement that V&E had provided on December 5, 2016, including issues related to the allocation of regulatory and financing risk. Also on December 11, 2016, Mr. McCallister received a call from Mr. Harris in which he informed Mr. McCallister that AltaGas would be giving a more specific price proposal and had met with the rating agencies regarding their proposed financing for a potential transaction.

On December 12, 2016, the Company entered into a new engagement letter with Goldman Sachs for purposes of advice on a potential sale transaction involving the Company.

Also on December 12, 2016, in an email to the entire Board, Mr. McCallister notified the Board that Mr. McCallister and Mr. Michael D. Barnes, the Company’s Lead Director (“Mr. Barnes”), with the input of Ms. Linda Gooden, a member of the Board, had determined that the Executive Committee of the Board, which was comprised of Mr. McCallister, Mr. Barnes, Mr. George P. Clancy, Jr. and Mr. James F. Lafond, joined by Ms. Nancy C. Floyd, a member of the Board (“Ms. Floyd”), due to her expertise in relevant matters, would meet from time to time between meetings of the full Board to facilitate the negotiation and consideration of a potential strategic transaction, reporting back to the full Board regarding key developments.

On December 14, 2016, V&E sent K&E a revised draft merger agreement.

On December 15, 2016, the Company entered into an amendment and supplement to the Lazard engagement letter that was originally executed on December 17, 2014 to specifically engage Lazard for services related to a potential sale transaction involving the Company.

Also on December 15, 2016, Messrs. McCallister and Harris had a telephone conversation during which Mr. Harris discussed AltaGas’ desire to proceed with the form of merger agreement prepared by V&E and related logistical and timing matters.

On December 19, 2016, Mr. McCallister and Mr. Harris had a telephone conversation during which Mr. Harris provided further information about AltaGas’ financing plans and the rating agency feedback received with respect thereto, and communicated that AltaGas was narrowing its indicative price range to $90-$91.50 per share. Mr. McCallister and Mr. Harris also discussed the allocation of regulatory risk, which Mr. McCallister again conveyed was a key focus of the Board, specifically noting the Company’s expectation that AltaGas would be required to pay a regulatory termination fee in the event the transaction were not consummated due to a failure to obtain a required regulatory approval. Later that same day, AltaGas provided a letter to the Company that memorialized the revised price range of $90-$91.50 per share.

On December 20, 2016, the Executive Committee of the Board, joined by Ms. Floyd, held a special meeting at which certain members of Executive Management and representatives of K&E, Goldman Sachs and Lazard were in attendance. Mr. McCallister informed the other committee members that since the Board meeting on December 7, 2016, members of Executive Management and representatives of K&E, Goldman Sachs and Lazard had engaged with AltaGas regarding certain key open items in connection with a potential transaction. Mr. McCallister also updated the committee members about his call with Mr. Harris the day before, and the receipt of the letter from AltaGas narrowing its indicative price range to $90-$91.50 per share.

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Following such overview, representatives of Goldman Sachs and Lazard provided the Executive Committee with a stock trading update and an anticipated timeline of remaining process steps to reach agreement on a potential transaction, as well as an update on AltaGas’ financing plan and credit rating process. A representative of K&E then provided an update on the merger agreement negotiations, highlighting certain key open issues and the market context of common ranges of outcomes for such issues. Members of Executive Management and the Company’s advisors proceeded to discuss these matters with and respond to the questions of the Executive Committee. Following such discussion, the Executive Committee determined that the Company should continue to proceed with negotiations with AltaGas to resolve the open issues as efficiently as possible.

On December 21, 2016, in order to further facilitate information sharing by AltaGas to the Company, the Company and AltaGas entered into an amended and restated non-disclosure agreement that converted the one-way confidentiality agreement entered into on November 25, 2016 into a mutual confidentiality agreement.

Also on December 21, 2016, an in-person meeting was held at K&E’s Washington, D.C. office, at which members of Executive Management and members of the AltaGas management team and representatives of their respective financial advisors were present. At such meeting, members of the Company’s Executive Management gave a comprehensive management presentation to AltaGas. Following such presentation, members of Executive Management and members of the AltaGas management team and certain of their respective advisors had a discussion about regulatory filings matters relating to the transaction.

Beginning on December 22, 2016, the Company made available to AltaGas and its advisors certain non-public information about the Company via an electronic data room. In addition, beginning on December 29, 2016, and continuing over the course of the next few weeks, various conference calls were held between the Company and AltaGas to facilitate AltaGas’ due diligence efforts.

On December 26, 2016, K&E sent a revised draft of the merger agreement to V&E. That same day, Messrs. McCallister and Harris had a telephone conversation during which Mr. Harris requested consent to bring two potential equity financing sources for AltaGas into the discussions. Additionally, during the call, Mr. Harris conveyed a modified price range of $90.50-$92 per share, and Mr. McCallister and Mr. Harris discussed the proposed transaction timeline.

On December 28, 2016, Ms. Leslie Thornton, Senior Vice President, General Counsel and Corporate Secretary of the Company, sent an email to Mr. Brad Grant, Vice President and General Counsel of AltaGas, providing the Company’s consent to allow AltaGas to contact the two potential equity financing sources (as had been requested by Mr. Harris to Mr. McCallister on December 26, 2016).

On December 29, 2016, Messrs. McCallister and Harris had a telephone conversation during which Mr. McCallister reconfirmed the Company’s consent to allow AltaGas to contact the two potential equity financing sources, and Mr. McCallister and Mr. Harris again discussed the proposed transaction timeline.

On January 2, 2017, the Executive Committee of the Board, joined by Ms. Floyd, held a special telephonic meeting at which certain members of Executive Management and a representative of K&E were in attendance. Mr. McCallister provided an update on developments since the last meeting of the Executive Committee on December 20, 2016. Following the overview of developments, Mr. McCallister and members of Executive Management discussed the Company’s anticipated capital requirements during the period between the signing of the merger agreement and the closing of the proposed transaction, and possible financing options (and the risks and benefits associated with each), including the possibility of a preferred equity issuance to AltaGas in connection with the proposed transaction. In addition, the Executive Committee, members of Executive Management, and K&E discussed various open points in the merger agreement, including related to the allocation of financing and regulatory risk, and negotiating strategies and potential resolutions for those open points.

On January 3, 2017, representatives of Goldman Sachs and Lazard submitted to AltaGas (through J.P. Morgan) a list of reverse due diligence questions primarily related to AltaGas’ regulatory history, as well as its plans related to transaction financing, employee retention and overall transition planning matters.

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On January 4, 2017, V&E sent a revised draft of the merger agreement to K&E, and following K&E’s review of the revised draft and conversations with members of Executive Management and the Company’s financial advisors, K&E engaged in negotiations regarding the merger agreement with V&E on January 5, 2017.

On January 5, 2017, Mr. McCallister and Mr. Harris had a telephone conversation to discuss the status of the transaction and the proposed timeline to sign and publicly announce a transaction.

On January 6, 2017, the Board held a special meeting that was attended by members of Executive Management and representatives of K&E, Goldman Sachs and Lazard. Mr. McCallister provided the Board with a summary of key developments since the Board meeting on December 20, 2016 and provided an outline of the ongoing and upcoming workstreams. A representative of K&E updated the Board on the progress of the merger agreement negotiations including the key remaining open items, the parties’ respective positions with respect to those items and some market context for typical ranges of outcomes for those items, and also reviewed with the Board the key provisions in the merger agreement related to AltaGas’ regulatory approval and financing obligations and the related remedies available to the Company in various termination scenarios. Representatives of Goldman Sachs and Lazard thereafter provided an updated trading review and financial analysis for the Company and an update on AltaGas’ financing plans, including their proposed bridge financing and the implications of their proposed inclusion of two potential equity financing sources. Members of Executive Management updated the Board on both AltaGas’ due diligence process and provided an update on the regulatory approval strategy. Following such updates, Mr. McCallister expressed the importance of compelling AltaGas to complete its remaining due diligence quickly, and for the parties to determine whether they could successfully complete any remaining merger agreement negotiations to get to a transaction signing in short order, noting that the considerable time and resources the Company was devoting to the pursuit of a potential transaction could begin to have an adverse effect on the Company’s business if it were to continue for an extended period of time. Following a discussion of various strategic considerations and potential negotiating approaches, the Board determined that it was appropriate for Mr. McCallister to communicate to AltaGas the necessity of finalizing all remaining due diligence and completing negotiations of all transaction documentation quickly, and that if AltaGas was not able to do so, the Company was prepared to terminate further discussions with AltaGas and instead continue to execute on its strategic plan, which Mr. McCallister communicated to Mr. Harris later that same day, following the Board meeting.

Also on January 6, 2017, members of the AltaGas management team held a conference call with members of Executive Management, during which they provided responses to the reverse due diligence questions that had been submitted to AltaGas on January 3, 2017.

On January 8, 2017, K&E sent a further revised draft of the merger agreement to V&E, and a series of teleconferences between K&E and V&E to negotiate the merger agreement began on January 10, 2017 and continued over the ensuing several days.

On January 10, 2017, Messrs. McCallister and Harris had a dinner meeting in the Washington, D.C. area, at which they discussed the overall status and timing of the transaction, including the status of the merger agreement and certain terms of the transaction. At the dinner, Mr. McCallister again reiterated the importance of AltaGas completing its remaining due diligence and the parties completing negotiations of the transaction documentation quickly.

On January 12, 2017, the Company’s financial advisors sent to J.P. Morgan a term sheet prepared by K&E in consultation with Executive Management, Goldman Sachs and Lazard, relating to a subscription agreement, pursuant to which AltaGas would be obligated in certain circumstances to purchase preferred stock of the Company as a means of providing financing to the Company between the signing of the merger agreement and the closing of the transaction.

On January 12, 2017, in response to certain published reports that AltaGas was considering a significant potential strategic acquisition, which led to a significant increase in the trading volume and a decline in the trading price of AltaGas’ publicly-listed common shares, the Toronto Stock Exchange halted trading on AltaGas’ common shares. In response, AltaGas issued a public statement that it was in discussions with an unnamed third-party about a potential acquisition. Certain press outlets, including the Wall Street Journal and Bloomberg, specifically identified the Company as the target of AltaGas’ interest.

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On January 13, 2017, Messrs. McCallister and Harris had a telephone call during which Mr. Harris reported the results of the AltaGas board of directors meeting earlier that day, specifically noting that the press leak had led to some negative investor and analyst reactions and the resulting drop in the AltaGas share price had created considerable concern for the AltaGas board of directors. Mr. Harris communicated that AltaGas had scheduled another meeting of its board of directors for January 16, 2017, at which it would further discuss the transaction in light of such reactions and determine its willingness to continue to proceed towards a potential transaction with the Company.

On January 17, 2017, Mr. Harris communicated to Mr. McCallister that, following the AltaGas board meeting the day before, AltaGas was still prepared to move forward with a potential transaction at a price of $88 per share (citing certain concerns regarding credit rating agency adjustments to the Company’s funds from operations forecasts identified during due diligence), and with no obligation for AltaGas to pay a regulatory termination fee in the event the transaction were not consummated due to a failure to obtain a required regulatory approval, provided AltaGas had complied with its contractual obligations to try to obtain such approval. Mr. Harris also proposed January 24, 2017 as the date for signing the merger agreement. Mr. McCallister communicated to Mr. Harris that such terms were unacceptable to the Company.

Also on January 17, 2017, the Board held a telephonic special meeting that was attended by certain members of Executive Management and representatives of K&E, Goldman Sachs and Lazard. Members of Executive Management updated the Board on AltaGas’ completion of due diligence, the status of regulatory matters and the development of a communications plan surrounding the potential transaction. Mr. McCallister updated the Board on the January 12, 2017 leak of the potential transaction, the progress of the merger agreement negotiations, the satisfactory results of the reverse due diligence that had been conducted on AltaGas (including its history of positive relationships with its regulators, a shared cultural commitment to customer service, reliability and safety issues and its commitment to preserving a strong employee base in order to maintain such culture, all of which the Board anticipated would be favorably received by the applicable regulatory authorities), and his recent conversations with Mr. Harris, including the fact that AltaGas had reduced its price to $88 per share and had expressed its unwillingness to pay a regulatory termination fee if it had complied with its obligations under the merger agreement to obtain the required regulatory approvals. The representative of K&E also provided a summary of the status of merger agreement negotiations and the remaining open items. The Board and the members of Executive Management and advisor representatives in attendance discussed these developments and various strategic considerations, including AltaGas’ change in price and the reasons cited therefor, the likelihood of reaching agreement on the remaining open merger agreement terms, the potential range of outcomes on those points, and the relative advantages and disadvantages of various negotiating strategies with respect to the unresolved price and merger agreement points. Following such discussion, the Board authorized Mr. McCallister and the advisors to continue to negotiate the open terms with AltaGas and its advisors.

Also, later on January 17, 2017, V&E sent a revised draft of the merger agreement to K&E. The revised draft included an agreement by AltaGas to pay a regulatory termination fee to the Company in the event the transaction were not consummated due to a failure to obtain a required regulatory approval, even if AltaGas had complied with its contractual obligations to try to obtain such approval, but the fee in such instance would be lower than if AltaGas had breached its contractual obligations to try to obtain such approval.

On January 18, 2017, V&E sent to K&E a revised term sheet relating to the subscription agreement. Also on January 18th, and over the next several days, K&E and V&E continued to engage in negotiations regarding the merger agreement and related transaction documentation. In addition, on that same day, the Company provided additional materials to AltaGas regarding the Company’s funds from operations projections, which had previously been cited by AltaGas as the basis for its reduction in the proposed offer price.

On January 19, 2017, Messrs. McCallister and Harris had a telephone conversation, during which they discussed the status of the draft merger agreement and key remaining open points, including regulatory and financing risk allocation matters. Mr. Harris again reiterated the price of $88 per share, which he described as AltaGas’ best and final offer, and indicated that a summary of AltaGas’ final proposal would follow. Following such discussion, and at the direction of Mr. McCallister, the Company’s financial advisors sent an email to J.P. Morgan identifying certain key points that the Company expected to be addressed in AltaGas’ final proposal.

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On January 20, 2017, Mr. McCallister received an email from Mr. Harris with an updated proposal from AltaGas, which re-affirmed the $88 price per share (identifying several key drivers for the price reduction from the previously communicated price range of $90.50-$92 per share, including the funds from operations issue previously identified, higher retention and change of control costs than it had anticipated, rabbi trust funding needs, risk adjustments to the Company’s growth estimates, and potential financial impacts related to certain environmental risks), and included a summary of AltaGas’ position on certain key open merger agreement items, including the size of the termination fees, remedies for financing failures, certain employee benefit matters and certain interim operating covenant matters.

Later on January 20, 2017, Mr. McCallister and Mr. Harris had a conversation regarding the updated proposal delivered by AltaGas earlier that day, during which they reached agreement in principle on all of the remaining open transaction terms, other than price and the size of AltaGas’ termination fee payment to the Company in certain circumstances.

On the morning of January 21, 2017, Mr. McCallister and Mr. Harris had a further conversation about the proposal submitted by AltaGas on January 20, 2017. During the call, Mr. Harris communicated that AltaGas would agree to increase the price to $88.25 per share, which he characterized as AltaGas’ best and final offer, and also agreed to increase the size of AltaGas’ termination fee payment to the Company in certain circumstances.

Later on January 21, 2017, the Board held a telephonic special meeting at which members of Executive Management and representatives of K&E, Goldman Sachs and Lazard were in attendance. Mr. McCallister provided an update on the developments since the January 17th Board meeting, including the continuation of negotiations with AltaGas, and informed the Board that the parties had reached agreement on the major open transaction terms subject to final Board approval. Mr. McCallister specifically noted that after having conveyed a best and final offer price of $88 per share, AltaGas had agreed to increase its proposed price to $88.25 per share. In addition, Mr. McCallister noted that, after initially communicating an unwillingness to do so, AltaGas had agreed to pay a regulatory termination fee in the event the transaction were not consummated due to a failure to obtain a required regulatory approval, even if AltaGas had complied with its contractual obligations to try to obtain such approval, but the fee in such instance would be lower than if AltaGas had breached its contractual obligations to try to obtain such approval. Mr. McCallister also highlighted several other changes in the contractual terms that AltaGas had agreed to during the course of negotiations over the prior several days. A representative from K&E again reviewed with the Board their fiduciary duties and certain legal considerations in connection with evaluating a potential sale transaction and highlighted certain key terms of the merger agreement (including provisions related to financing and regulatory risk, the Company’s remedies in various circumstances, and the “fiduciary out” provision to permit the Board to consider unsolicited proposals received following the execution of the merger agreement). Representatives of Goldman Sachs and Lazard then provided an overview of the final proposed price and the premium and implied transaction multiples compared to other recent utility sector sale transactions. Following further discussions among the Board, Executive Management and the advisors about next steps, the Board directed Executive Management and the Company’s advisors to proceed with finalizing all transaction documentation prior to the Board’s next meeting scheduled for January 25, 2017, at which the Board would formally consider approval of the transaction, the merger agreement and related matters.

On January 22, 2017, K&E sent a revised draft merger agreement to V&E. From January 22, 2017 to January 25, 2017, representatives of K&E and V&E engaged in a series of negotiations on the remaining open issues in the transaction documents, throughout which K&E and V&E continued to exchange further drafts of such documents. Following such negotiations and exchange of revised drafts, on the morning of January 25, 2017, K&E and V&E confirmed their clients’ mutual understanding that the transaction documents were each in substantially final form, subject to the final approval of each of their respective client’s board of directors.

On January 25, 2017, the Board held a special meeting that was attended by members of Executive Management as well as representatives of K&E, Goldman Sachs and Lazard. All directors were present at the meeting in person or by telephone. At such meeting, Mr. McCallister updated the Board on the developments since the Board meeting on January 21, 2017, and reported that all of the transaction documentation had been fully negotiated and put into execution form, pending the Board’s approval. Representatives of Lazard reviewed Lazard’s financial analysis of AltaGas’ offer, as summarized below under “ —Opinion of Lazard Frères & Co. LLC ” At the request of the Board, a representative of Lazard then rendered Lazard’s oral fairness opinion to the Board, which opinion

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was subsequently confirmed in writing, that, as of January 25, 2017, and based upon and subject to the assumptions, procedures, factors, qualifications and limitations set forth therein, the consideration to be paid to holders of Company common stock, other than the Company, AltaGas and their respective subsidiaries, in the merger was fair, from a financial point of view, to such holders of Company common stock. The full text of Lazard’s written opinion, dated January 25, 2017, which sets forth the assumptions made, procedures followed, factors considered and qualifications and limitations on the review undertaken by Lazard in connection with its opinion, is attached to this proxy statement as Annex C. Following the delivery of Lazard’s opinion, representatives of Goldman Sachs reviewed Goldman Sachs’ financial analysis of AltaGas’ offer, as summarized below under “ —Opinion of Goldman, Sachs & Co. ” At the request of the Board, a representative of Goldman Sachs then rendered Goldman Sachs’ oral fairness opinion to the Board, which opinion was subsequently confirmed in writing, that, as of January 25, 2017, and based upon and subject to the various assumptions and qualifications set forth therein, the $88.25 in cash per share of Company common stock to be paid to the holders (other than AltaGas and its affiliates) of the outstanding shares of Company common stock pursuant to the merger agreement was fair from a financial point of view to such holders. The full text of the opinion of Goldman Sachs, dated January 25, 2017, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached to this proxy statement as Annex B.

A representative of K&E again reviewed with the Board their fiduciary duties and certain legal considerations in connection with evaluating a potential sale transaction. In addition, K&E reviewed with the Board the principal terms of the merger agreement, including the interim operating covenants (which members of the Executive Management also addressed), the “fiduciary out” provision to permit the Board to consider unsolicited proposals received following the execution of the merger agreement, the provisions related to the parties’ respective regulatory and financing obligations, and related remedies provisions, and the closing conditions. Representatives of K&E also summarized various employee compensation and benefits matters addressed in the merger agreement, as well as the key terms of the subscription agreement.

Representatives of Goldman Sachs and Lazard also summarized AltaGas’ financing plans, including the bridge financing it had arranged in connection with the transaction, and Executive Management also provided an update on the regulatory approval strategy, including the anticipated timeline to procure the necessary regulatory approvals in connection with the transaction.

Following this discussion, the Board unanimously (i) determined that entry into the merger agreement is in the best interests of the Company and its shareholders, (ii) adopted the plan of merger set forth in the merger agreement and approved the Company’s execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated by the merger agreement, (iii) resolved to recommend that the Company’s shareholders approve the merger agreement and the plan of merger set forth therein, (iv) directed that the merger agreement be submitted to a vote at a meeting of the Company’s shareholders to consider the approval of the merger agreement and the plan of merger set forth therein, and (v) approved the subscription agreement and the Company’s execution, delivery and performance of the subscription agreement and the consummation of the transactions therein.

On the afternoon of January 25, 2017, following the Board meeting, the Company and AltaGas executed the merger agreement and the subscription agreement. Following the execution of such documentation, the Company and AltaGas each issued press releases announcing the parties’ entry into the transaction.

Recommendation of Our Board; Reasons for Recommending the Approval of the Merger Agreement

On January 25, 2017, the Board convened a meeting at which it unanimously (i) resolved to recommend that the Company’s shareholders approve the merger agreement and the plan of merger set forth therein, (ii) determined that the entry into the merger agreement is in the best interests of the Company and its shareholders, (iii) adopted the plan of merger set forth in the merger agreement and approved the Company’s execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated by the merger agreement, and (iv) directed that the merger agreement be submitted to a vote at a meeting of the shareholders of the Company to consider the approval of the merger agreement and the plan of merger set forth therein. In evaluating the merger agreement and the transactions contemplated thereby, including the merger, the Board consulted with the Company’s senior management and legal and financial advisors, and considered and evaluated a range of factors that it believed

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supported its decision to enter into the merger agreement and its recommendation that the shareholders of the Company approve the merger agreement and the plan of merger set forth therein, including, but not limited to, the following factors:

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In the course of its deliberations, the Board also considered a variety of risks, uncertainties and other countervailing factors related to entering into the merger agreement and the transactions contemplated thereby, including the merger, including:

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The Board conducted an overall analysis of the reasons and factors described above and determined in its business judgment that, in the aggregate, the potential benefits of the transactions contemplated by the merger agreement, including the merger, to the shareholders of the Company outweighed the risks and potential negative consequences of the transactions.

The foregoing discussion of certain reasons and factors considered by the Board is intended to be illustrative, and is not exhaustive, but includes the material reasons and factors considered by the Board in reaching its conclusions and recommendation in relation to the merger agreement and the transactions contemplated thereby, including the merger. In view of the wide variety of reasons and factors considered by the Board in connection with its evaluation of the proposed merger and the complexity of these matters, the Board did not consider it practical, and did not attempt, to quantify, rank or otherwise assign relative weights to the specific reasons or factors it considered in reaching its determination and did not undertake to make any specific determination as to whether any particular reason or factor, or any aspect thereof, was favorable or unfavorable to the ultimate determination of the Board. Rather, the Board made its recommendation based on the totality of information presented to it and the investigation conducted by it. In addition, individual members of the Board may have given different weights to different factors or may have had different reasons or factors for their ultimate determination.

It should be noted that this explanation of the reasoning of the Board and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in the section entitled “ Cautionary Statement Regarding Forward-Looking Statements ” beginning on page [●] of this proxy statement.

The Board unanimously recommends that the shareholders of the Company vote “FOR” approval of the merger agreement and the plan of merger set forth therein.