Citizens Utilities Sells Water and Wastewater Businesses to American Water Works for $835 Million.

STAMFORD, Conn.--(BUSINESS WIRE)--Oct. 18, 1999--

Citizens Utilities (NYSE:CZN, CZNPr) announced today that it has agreed to sell its water and wastewater operations, Citizens Water Resources, to American Water Works Inc. (NYSE:AWK) for an aggregate purchase price of $835 million consisting of $745 million in cash and $90 million of assumed debt. The transaction is expected to close in mid-year 2000 following regulatory approvals.

Citizens Water Resources is the first of Citizens' Public Services businesses to be sold. Sales of Citizens' gas and electric businesses are expected to be completed by year-end. The proceeds from the divestitures will be used to permanently fund Citizens' announced acquisitions of nearly 800,000 telephone access lines.

Citizens Water Resources serves 305,000 customers, representing a population of about one million, in six states: Arizona, California, Illinois, Indiana, Ohio and Pennsylvania.

For the twelve months ended June 30, 1999 and excluding the operating results for Electric Lightwave, Citizens Water Resources contributed 8 percent of Citizens' earnings before interest, taxes, depreciation and amortization and 11 percent of Citizens' operating income.

"This transaction affirms our confidence in the substantial value of our Public Services businesses," said Leonard Tow, Citizens' chairman and chief executive officer. "Based on the level of interest expressed by prospective purchasers of our gas and electric operations, we are confident that there will be a very spirited competition for these properties."

Morgan Stanley Dean Witter serves as financial advisor for the disposition of Citizens' Public Services businesses.

Citizens Utilities provides telecommunications services and public services including gas distribution, electric distribution, water distribution and wastewater treatment services to approximately 1.9 million customers in 22 states. Citizens also owns 83% of Electric Lightwave, Inc. (Nasdaq:ELIX), a facilities-based, integrated communications provider that offers a broad range of services to telecommunications-intensive businesses throughout the United States. More information about Citizens can be found at www.czn.net.

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