American Water Works Company, Inc. Forms New Financing Subsidiary; Standard & Poor's Assigns American Water Capital Corp. An A- Corporate Rating.

Business Editors

VOORHEES, N.J.--(BUSINESS WIRE)--June 26, 2000

American Water Works Company (NYSE:AWK) has announced the formation of a new wholly-owned subsidiary, American Water Capital Corp., a special purpose corporation that will serve as the primary funding vehicle for American Water Works Company and its twenty-five (25) utility subsidiaries.

Earlier this week American Water Capital Corp. was assigned an A- corporate rating by Standard & Poor's (S&P). At the same time, S&P lifted a negative credit watch that had previously been assigned to three of American Water Works Company's operating subsidiaries. The credit outlook for these three subsidiaries is now listed as stable by S&P.

"S&P's A- corporate rating recognizes the strong Support Agreement provided to American Water Capital Corp. by its parent, as well as the diversification of a pool of funding sources provided by our 25 utilities," said Ellen C. Wolf, chief financial officer for American Water Works Company.

American Water Works Company intends to replace multiple bilateral lines of credit currently held by its' subsidiaries and consolidate the financing function at American Water Capital Corp. This consolidation will streamline the financing function, creating cash management efficiencies and a lower cost of capital to the operating subsidiaries.

"By consolidating our utility financing requirements, American Water Capital Corp. will be able to access a broader investor base as well as gain the efficiencies that larger size financings are afforded in the capital markets," added Ms. Wolf.

American Water Works Company is the largest and most geographically diverse investor-owned water utility enterprise based in the United States. The Company provides water, wastewater and other water resource management services to more than 10 million people in 23 states.

This release may contain certain forward looking statements involving known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. These factors include, among others, the following: general economic and business conditions; competition; success of operating initiatives, advertising and promotional efforts; existence of adverse publicity or litigation; changes in business strategy or plans; quality of management; availability, terms and development of capital; business abilities and judgment of personnel; changes in, or the failure to comply with governmental regulations; and Year 2000 issues.