American Water Works $120 Million Bond Offering Complements Growth Strategy.

VOORHEES, N.J.--(BUSINESS WIRE)--July 31, 1998--American Water Works Company, Inc. (NYSE:AWK) recently issued $120 million in debentures to institutional investors.

The proceeds from the financing were used to reduce short-term bank loans and take advantage of extremely attractive interest rates available to corporate issues.

The short-term bank loans were incurred as the Company continues its strategy of growing earnings through continued investment in its water utilities and acquisitions of water systems.

"Earnings growth is driven by a two-pronged strategy," said Joseph Hartnett, Treasurer. "The first of which is to reinvest retained earnings and inject additional equity capital into our utility subsidiaries. This provides the foundation for their capital construction programs of over $400 million planned for 1998. The second is to acquire water systems that add value and expand geographic diversity."

Commenting on the transaction, Hartnett, said, "Financing our growth strategy periodically requires additional capital. We decided to tap the debt markets to lock in rates at 30-year lows. Our bonds were placed at very attractive spreads which points to the confidence investors have in our company's strategy and future growth."

Mellon Financial Markets, Inc. was the exclusive agent in handling the placement of the Series D Debentures for the Company. The securities were sold at face value with a coupon rate of 6.26% and an average life of 4.2 years.

American Water Works Company is the largest and most geographically diverse investor-owned water utility business in the U.S. The Company, through its 23 utility subsidiaries, serves more than 7 million people in over 870 communities in 22 states.

    CONTACT: American Water Works
              Thomas G. McKitrick, VP - Investor Relations
              609/346-8200