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O’Melveny Represents SteelRiver, Peoples on Acquisition of Delta Natural Gas

February 22, 2017

FOR IMMEDIATE RELEASE

NEW YORKFebruary 21, 2017—O’Melveny represented SteelRiver Infrastructure Fund North America LP and affiliate PNG Companies LLC in its definitive merger agreement with Delta Natural Gas. Under the terms of the agreement, Delta will become a wholly owned subsidiary of PNG Companies LLC, the parent company of Peoples Natural Gas. The transaction is subject to Kentucky Public Service Commission and Delta shareholder approval and other customary closing conditions and is expected to close by the end of 2017.

The O’Melveny team was led by partners Richard Shutran and Chris Del Rosso and counsel Hugh Hilliard, with associates Rebecca Cottrell, Nidhi Geevarghese, and Nicole Goldman.

About O’Melveny
O’Melveny’s clients shape markets, set precedents, and break boundaries. They are stalwarts and innovators, the names you trust and the next big thing. And for more than a century, O’Melveny has been right beside them, kicking down walls and putting up defenses to help our clients achieve their most important goals. With approximately 700 lawyers in 15 offices worldwide guided by the principles of excellence, leadership, and citizenship, we uphold a tradition of treating our clients’ challenges and opportunities as our own. What do you want to achieve? For the answers, please visit www.omm.com.

Contact:
Emily Lattal
O’Melveny & Myers LLP
212.326.2285
elattal@omm.com


The following release was issued by Peoples Natural Gas and Delta Natural Gas:

Delta Natural Gas Enters Agreement to Be Acquired by Peoples Gas

February 21, 2017

WINCHESTER, Ky.--(BUSINESS WIRE)--Delta Natural Gas (NASDAQ:DGAS) (Delta) today announced that it has entered into a definitive agreement to merge with an affiliate of Peoples Natural Gas (Peoples). Delta is headquartered in Winchester, Kentucky, and serves approximately 36,000 customers in central and southeastern Kentucky. Peoples, headquartered in Pittsburgh, PA, serves approximately 700,000 customers in Pennsylvania, West Virginia and Kentucky. Peoples is controlled by SteelRiver Infrastructure Fund North America LP (SteelRiver). 

Under the terms of the transaction, Delta shareholders will receive $30.50 in cash per Delta share, which represents a premium of 17% to Delta’s closing share price on February 17, 2017, the last trading day prior to the announcement of the agreement. Prior to closing, the transaction is expected to have no impact on Delta’s dividend. Delta shareholders will continue to receive dividends at an annualized rate of $0.83 per share until closing, subject to the authorization of Delta’s board of directors. 

Following the close of the transaction, Delta will be a wholly-owned subsidiary of PNG Companies LLC, the parent of Peoples, and will continue to be regulated by the Kentucky Public Service Commission. PNG Companies made commitments to Delta customers and employees as part of the agreement. Existing employees are planned to continue with Delta after the merger. Peoples plans to increase Delta’s investments in infrastructure improvement projects and grow the Delta business over time. Delta’s strong customer service will continue and Delta’s customers’ rates will not be affected by the transaction. In addition, following the close of the transaction, one member of Delta’s board of directors will be an independent representative of Delta’s constituents’ interests. 

“Peoples, like Delta, is a highly regarded natural gas distribution company and it shares Delta’s values, particularly our commitment to customer service and creating a great place for our employees to work. That is why I am pleased to announce this merger agreement, which is beneficial to all parties involved,” said Glenn Jennings, Chairman of the Board, President and CEO of Delta Natural Gas. “Our Board of Directors has considered the opportunity carefully and believes merging with Peoples is in the best interests of Delta’s shareholders, customers, employees and the communities we serve.”
Peoples has been providing natural gas service in western Pennsylvania for more than 130 years. In the last five years, PNG Companies purchased the T.W. Phillips Gas & Oil Company and Equitable Gas to become the largest natural gas distribution company in Pennsylvania. These purchases also provided Peoples with service territories in West Virginia and Kentucky. 

“Peoples started serving customers in 10 eastern Kentucky counties in late 2013,” said Morgan O’Brien, President and CEO of Peoples. “We quickly learned that Kentucky is a good place to do business and there are strong growth opportunities in this region. One of Peoples’ key values is tied directly to the success of the communities it serves. We have committed to increasing investments in infrastructure modernization. We will implement Peoples’ state of the art technology solutions for the customers of Delta and support community based organizations and initiatives throughout central and eastern Kentucky. We are also excited to add the employees of Delta to our family of valued employees. Our goals with these investments are driven by Peoples’ mission to make our customers lives better.” 

Chris Kinney, CEO of SteelRiver Infrastructure Fund North America, commented, “The acquisitions of Peoples, Peoples TWP and Equitable Gas have led to increased capital investment in those regions to upgrade the existing infrastructure and the creation of more jobs. With the addition of Delta Natural Gas, SteelRiver adds to its commitment to that region to own and operate safe and reliable utility service with a long-term investment horizon under the leadership of Morgan O’Brien.” 

Tudor, Pickering, Holt & Co. is serving as exclusive financial advisor to Delta, and Stoll Keenon Ogden PLLC is Delta’s legal advisor. O'Melveny & Myers LLP is acting as legal advisor for Peoples and SteelRiver. 

The transaction is subject to customary closing conditions, including the approval of Delta shareholders, the approval of the Kentucky Public Service Commission and the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The transaction is expected to close by the end of 2017. 

About Delta Natural Gas:
Delta serves 36,000 customers with facilities located in 23 counties in central and southeastern Kentucky. Delta’s mission to provide premier natural gas services while having a positive impact on customers, employees and shareholders guides the company’s efforts. For more information about Delta, visit www.deltagas.com. 

About Peoples:
Peoples is the largest natural gas distribution company in Pennsylvania. It provides reliable and low cost natural gas service to approximately 700,000 homes and businesses in Western Pennsylvania, West Virginia and Kentucky. The company’s mission is to improve the lives of its customers and to help build long-term economic growth for the region. For more information about Peoples, visit www.peoples-gas.com. 

Contacts
Delta Natural Gas
Greg Coker, +1 270-223-8343
gcoker@deltagas.com
or
Peoples Natural Gas
Barry Kukovich, 412-430-3187
Barry.d.kukovich@peoples-gas.com