American States Water Company Confirms Submission of a Proposal to Merge With Dominguez Services Corporation.

SAN DIMAS, Calif.--(BUSINESS WIRE)--March 16, 1999--American States Water Company (NYSE:AWR) today confirmed that it has submitted a proposal to acquire all of the outstanding common stock of Dominguez Services Corporation (Nasdaq:DOMZ) in a stock-for-stock merger. Under the proposal, each share of Dominguez stock would be converted into the right to receive a number of American States shares intended to give Dominguez shareholders $32.50 of value for each of their shares. The proposal includes a "collar" under which the maximum conversion ratio is 1.35 American States shares for each Dominguez share, and the minimum conversion ratio is 1.11.

American States has been advised that the Dominguez Board of Directors has determined that the American States proposal is a "superior proposal" under the terms of a previous agreement between Dominguez and California Water Service Group (NYSE:CWT). That agreement mandates a notification period before Dominguez can terminate it and enter into a new agreement with respect to a superior proposal.

The proposal states that the merger will be accounted for as a pooling of interests and will be tax-free to shareholders of both companies. The merger, which is subject to Hart-Scott-Rodino clearance, shareholder approvals, state regulatory approvals and other customary conditions, would be expected to close in early 2000.

This proposal represents a premium of 25% for Dominguez's shareholders based on the closing prices of Dominguez and American States on March 11, 1999 and represents a value of approximately $49.2 million for the stock portion of the transaction. American States would also assume approximately $10.5 million of Dominguez's net long-term debt.

Commenting on the proposal, American States' President and Chief Executive Officer Floyd E. Wicks stated, "A combination of American States and Dominguez is truly a "win-win" for all of our combined customers, employees and shareholders and underscores our efforts to increase long-term shareholder value by making acquisitions that complement one of American States' strategies to grow within its three California regions. The two organizations have always been very closely aligned. Our operating systems are contiguous, and 75% of American States' customer base and its corporate headquarters are located within a 40 mile radius of Dominguez's headquarters. Dominguez customers throughout the state will benefit from the American States 24-hour Customer Care Center and lower cost capital structure. Dominguez's employees, who will be offered positions with comparable compensation following the merger because of our need for trained, experienced personnel, will benefit from the greater opportunities available within a larger organization. And finally, Dominguez shareholders will benefit from the merger in three ways: first, from a 61% increase in their current dividend income; second, through improved stock market liquidity because of our NYSE listing; and third, from the numerous growth opportunities our two organizations share in both the regulated and non-regulated arenas."

American States' Chief Financial Officer McClellan "Bud" Harris, III, added, "Because of the tremendous synergy between the two organizations, we expect a merger along the lines of our proposal to generate significant cost savings, estimated to be at least $2 million. We believe that cost savings in operations, administration, maintenance and purchased water will make the merger accretive within twelve months." Mr. Harris also said, however, that "We do not yet have an agreement with Dominguez and will not be certain our proposal has been accepted until one is signed."

To the extent the statements in this release concerning anticipated cost savings and accretive effects are considered "forward-looking" statements, they are intended to qualify for the "safe harbor" from liability established by the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those anticipated, because of such factors as: ongoing utility restructuring, including actions by federal, state and local governmental agencies; future economic conditions, including changes in customer demand; future weather patterns; unanticipated difficulties with integration of the two companies; legislative, regulatory and other circumstances affecting anticipated revenues and costs; and abilities of other companies to remain year 2000 ready.

American States Water Company is a holding company which, through its principal subsidiary, Southern California Water Company, provides water service to 1 out of 30 Californians located within 75 communities throughout 10 counties in Northern, Coastal and Southern California. The Company also distributes electricity to approximately 20,000 customers in the Big Bear recreational area of Southern California.

Long Beach, California-based Dominguez is the holding company for water utilities, the largest of which is Dominguez Water Co., serving more than 120,000 people in the south Bay area of Los Angeles County. Dominguez also owns and operates water systems in the Kern River Valley in Kern County, California, in the Antelope Valley in northern Los Angeles County and the recently acquired Redwood Valley area of Lake and Sonoma Counties in Northern California.