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Merger, going private should help Gas Natural grow, CEO says

Gas NaturalInc.'s leadership expects the backing of private equity firm FirstReserve will help the company move beyond past struggles and grow faster thanit possible could have as a publically traded entity.

Shortly after First Reserve announced plans to buy allof the outstanding common stock in Gas Natural on Oct. 10, Gas Natural'sPresident and CEO Gregory Osborne said the deal's 39% premium over the company's52-week high should give shareholders good reason to approve the transaction.

Osborne also expected that the buyer's business model wouldmake Gas Natural's regulators comfortable and that the new company structurewould be a stable one for employees and management. Becoming a private companywould cut down administrative requirements and allow executives to focus moreon growth, Osborne noted.

"Itwill be the status quo, but we'll be private. … Our focus will be growingorganically, as well as inorganically through acquisitions," Osborne saidin an Oct. 10 interview.

Under the terms of the agreement, a energyinfrastructure investment fund plans to buy Gas Natural and merge with anothersubsidiary, allowing Gas Natural to be the surviving entity.

Gas Naturalhas been selling offnoncore assets inrecent years, while focusing on rightingits relationships with its regulators and working on growth in itscore utility businesses. The company weathereda tumultuous timeunder Osborne's predecessor,his father, in which audits and investigations turned up questionableand illicit business practices, including near-non-existent , and .

Amid the turmoil, Gas Natural faced financial as well. HavingFirst Reserve's financial backing will open up new opportunities for thecompany, Osborne said, adding that Gas Natural's access to the buyer's strongposition feels like an "unlimited cashregister to grow in our jurisdictions."

Osbornesaid the company will work to be transparent with its regulators about themerger plans and other issues. The merger is subject to approvals fromutility regulators in Maine, Montana, North Carolina and Ohio. He did not highlight any specificobstacles to regulatory approval.

The deal includes a "go-shop" period until Nov.22, allowing Gas Natural's board to take on alternative merger proposals fromother prospective buyers. Osbornesaid that Gas Natural would be open to taking higher offers, but he noted thatthe company likes that First Reserve has a history of holding its assetslong-term.

"They'renot in it for the short term. They're not just going to flip us," he said.