SAN DIEGO--(BUSINESS WIRE)--July 26, 1999--Western Water Co. (Nasdaq:WWTR) announced today that the company's Board of Directors has declared a dividend distribution of one Preferred Share Purchase Right ("Right") for each outstanding share of Western Water Co. common stock and for each share of Series C and Series D Preferred Stock based on the number of common shares into which each such share of Preferred Stock is convertible.

The dividend distribution to establish the new Rights Plan will be payable to shareholders of record on Aug. 12, 1999.

Subject to limited exceptions, the Rights will be exercisable if a person or group ("Acquiring Person") acquires 20% or more of the company's common stock or announces a tender offer for 20% or more of the common stock. Under certain circumstances, each Right will entitle shareholders to buy one-hundredth of a share of newly created Series E Junior Participating Preferred Stock of the company at an exercise price of $25.00. Until the Rights become exercisable, the Rights will not be represented by separate certificate, and will be part of the common stock certificate. The company will be entitled to redeem the Rights at $.001 per Right at various times, including at any time before a person becomes an Acquiring Person by acquiring 20% or more of the outstanding common stock of the company.

The Rights are intended to enable all Western Water shareholders to realize the long-term value of their investment in the company. They do not prevent a takeover, but should encourage anyone seeking to acquire the company to negotiate with the Board of Directors prior to attempting a takeover. The Rights are designed to assure that all Western Water shareholders receive fair and equal treatment in the event of any proposed takeover of the company and to guard against partial tender offers, open market accumulations and other abusive tactics to gain control of the company without paying all shareholders a control premium.

If a person becomes an Acquiring Person, each Right will entitle its holder to purchase, at the Right's then-current exercise price, a number of common shares of Western Water having a market value at that time of twice the Right's exercise price. Rights held by the Acquiring Person will become void and will not be exercisable to purchase shares at the bargain purchase price.

Further, if the company is acquired under circumstances where not all shareholders are treated alike, then to the extent a Rights holder had not exercised his rights to purchase additional shares of the company, each such holder of a Right will be able to buy shares of the acquiring company with a value equal to two times the exercise price of the right.

The Rights will expire in five years. The Rights distribution is not taxable to shareholders.

Statements contained in this release which are not historical facts are forward looking statements that involve risks and uncertainties that could cause actual results or future events to differ from those contained herein. Factors that could cause actual results or events to differ include the company’s ability to purchase water rights and obtain financing and other factors and considerations detailed in the Company’s Securities and Exchange Commission filings.