Mr. Colin Jackson reports

CANADIAN UTILITIES MAKES EXCHANGE PROPOSAL TO NON-CONTROLLING CLASS B SHARE OWNERS

Canadian Utilities Ltd.'s board of directors has determined to make a proposal to the holders of Class B common shares other than Atco Ltd. and certain of its related parties. Subject to the approval of holders of Class B shares, the transaction will be effected by way of a court-approved plan of arrangement under the Canada Business Corporations Act.

Under the terms of the arrangement, each Class B share held by a Class B share owner other than Atco (non-controlling Class B share owners) will be exchanged for 1.1 Class A non-voting shares of Canadian Utilities.

The Class B shares held by Atco, currently comprising approximately 97.4 per cent of the outstanding Class B shares, will not be exchanged pursuant to the arrangement. As a result, upon completion of the arrangement, Atco will be the sole holder of Class B shares.

Key highlights and rationale for the arrangement

Since Canadian Utilities implemented its dual-class share structure in 1982, the non-controlling Class B share owners' relative ownership of Class B shares has gradually decreased from approximately 49.5 per cent to under 3 per cent as non-controlling Class B share owners have elected to convert their Class B shares into Class A shares on a 1:1 basis in accordance with their terms. The arrangement represents an opportunity to simplify Canadian Utilities' capital structure and reduce its administrative obligations, while offering the following expected benefits for non-controlling Class B share owners:

• Premium to existing conversion rights: The exchange ratio represents an effective premium of 10 per cent relative to the existing conversion right which provides Class B share owners the right to convert their Class B shares into Class A shares at any time at a ratio of 1:1.
• Tax-free exchange: Non-controlling Class B share owners can generally achieve a deferral for Canadian tax purposes of the capital gain that would otherwise have been realized upon a disposition of their Class B shares.
• Continued participation in the growth and income opportunities of Canadian Utilities: Non-controlling Class B share owners will receive Class A shares pursuant to the arrangement and will therefore be able to continue to participate in the benefits of equity ownership in Canadian Utilities, including the right to continue to receive the same dividend per share as is paid in respect of the Class B shares and to participate in the anticipated growth opportunities being pursued by Canadian Utilities as a diversified global energy infrastructure business.
• Enhanced liquidity: The arrangement will provide non-controlling Class B share owners with immediate access to the enhanced liquidity provided through ownership of Class A shares, at a premium represented by the exchange ratio, and without incurring any transaction costs.

Additional information on the arrangement

The arrangement is subject to the approval of: (i) two-thirds of the votes cast by Class B share owners present or represented by proxy at a special meeting of Class B share owners called to consider the arrangement; and (ii) a majority of the votes cast by Class B share owners present or represented by proxy at the meeting, after excluding the votes attached to Class B shares held by Atco and any other Class B share owners whose votes are required to be excluded in determining whether minority approval for the arrangement has been obtained pursuant to applicable Canadian securities laws.

In addition to the required approvals of Class B share owners, closing of the arrangement is also subject to obtaining the approval of the Court of King's Bench of Alberta and the Toronto Stock Exchange, as well as other customary closing conditions.

Further details regarding the arrangement will be contained in a management information circular for the meeting to be sent to holders of Class A shares and Class B shares in connection with the meeting. The circular is expected to be mailed on or about Nov. 22, 2023, and the meeting is expected to be held on or about Dec. 14, 2023.

If all approvals are received and other closing conditions are satisfied in a timely manner, the arrangement is expected to be completed on or about Dec. 15, 2023.

The circular, as well as other filings containing information about the arrangement, will be available for viewing under Canadian Utilities' SEDAR+ profile. All Class B share owners are urged to read the circular once available, as it will contain additional important information concerning the arrangement and how to vote their Class B shares.

Independent oversight and decision-making process

The arrangement is the result of an independent and comprehensive review process. The board of directors of Canadian Utilities delegated to a special committee consisting solely of independent directors of Canadian Utilities the authority to, among other things, negotiate, examine, review and evaluate the merits and risks of the arrangement.

BMO Nesbitt Burns Inc. (BMO Capital Markets), acting as independent financial adviser to the special committee, has provided its opinion to the special committee (subject to certain assumptions, limitations and qualifications contained therein) that the consideration to be received by non-controlling Class B share owners pursuant to the arrangement is fair, from a financial point of view, to non-controlling Class B share owners.

The special committee, having undertaken a thorough review of, and having carefully considered, among other things, the terms of the arrangement and its impact on Canadian Utilities and all relevant stakeholders; information concerning Canadian Utilities, including its share structure; Atco's ownership of Class B shares and resulting voting control of Canadian Utilities; the fairness opinion and other relevant matters, unanimously determined to recommend to the board that it: (i) determine that the arrangement is in the best interests of Canadian Utilities and fair to non-controlling Class B share owners; (ii) approve the arrangement; and (iii) direct that the arrangement be submitted to Class B share owners for approval and recommend that Class B share owners vote for the arrangement.

After considering, among other things, the unanimous recommendation of the special committee and the fairness opinion, the board (with five directors who are not independent abstaining) unanimously: (i) determined that the arrangement is in the best interests of Canadian Utilities and fair to non-controlling Class B share owners; (ii) approved the arrangement; and (iii) directed that the arrangement be submitted to Class B share owners for approval and recommended that Class B share owners vote for the arrangement.

Shareholders who have any questions should contact Kingsdale Advisors by calling 1-888-518-1565 (toll-free in North America) or 647-251-9704 (call and text outside of North America), or by e-mail at contactus@kingsdaleadvisors.com.

Advisers

Blake, Cassels & Graydon LLP is acting as legal adviser to Canadian Utilities. Felesky Flynn LLP is acting as Canadian tax counsel to Canadian Utilities. Stikeman Elliott LLP is acting as legal adviser to the special committee. BMO Capital Markets is acting as financial adviser to the special committee. Canadian Utilities has retained Kingsdale Advisors as its strategic shareholder adviser in connection with the meeting.

About Canadian Utilities Ltd.

Canadian Utilities and its subsidiary and affiliate companies have approximately 8,000 employees and assets of $23-billion. Canadian Utilities, an Atco company, is a diversified global energy infrastructure corporation delivering essential services and innovative business solutions in utilities (electricity and natural gas transmission and distribution, and international operations), energy infrastructure (energy storage, energy generation, industrial water solutions and clean fuels) and retail energy (electricity and natural gas retail sales, and whole-home solutions).

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