SAN DIEGO--(BUSINESS WIRE)--Oct. 2, 1998--Western Water Co. (NASDAQ:WWTR) confirmed the completion of the previously announced water rights lease / water sale transactions with the City of Inglewood, Calif.

Under the transactions, Inglewood will buy 5950 acre feet of water from Western Water Co. in each of the next five years. At the same time, Inglewood leased its rights to pump water from the West Basin, the groundwater aquifer that underlies the City, to Western Water Company for the same five-year period. Western Water Company made a one-time, up-front lease payment to Inglewood in the amount of $3.6 million.

Western Water Co. announced today that the transaction with Inglewood has been financed with a loan arranged by Union Bank of California. Under the loan, a wholly-owned subsidiary of Western Water Co. pledged proceeds of water sales under the agreement with Inglewood as primary security for repayment.

Ronald I. Simon, Western Water Co. chief financial officer, commented on the importance of arranging this loan: "By financing this transaction with Union Bank, we established a method of financing such transactions which we plan to use in the future. Further, the loan demonstrates the strength of the credit underlying such a long-term water sale agreement with a municipal water agency."

"Closing this transaction and this loan demonstrates our ability to build volume in our water wholesaling business while developing a far more efficient capital structure," said Michael George, president and chief executive officer. "Over time, we expect to use asset and contract financing, as appropriate, to expand our business."

Western Water Co. is a leading water resource company in the wholesale, non-regulated water market in the Western United States. Its principal activities include the acquisition, development and marketing of water supplies in key market areas throughout the semi-arid southwestern part of the United States.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Western Water Co.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the company's Annual Report or Form 10-K for the most recently ended fiscal year.