Recommends Pursuing Plan of Action in Response to Acquisition Proposal and Under-Valued Stock NEW YORK, July 22 /PRNewswire/ -- Seneca Capital today sent the following letter to the Special Committee of the Board of Directors of TransAlta Corporation (TSX: TA; NYSE: TAC), urging them to immediately review alternatives to maximize shareholder value, including but not limited to an auction for sale of the company, a strategic partnership or a restructuring of the company's long-term power contracts, to unlock the company's substantial unrealized value for all shareholders. Seneca also urges the Board to pursue better alignment of the company's management compensation with its North American peers. The letter in part states: Dear Special Committee: Following the July 21, 2008 public proposal by LS Power Equity Partners and Global Infrastructure Partners to acquire the company for Cdn $39/share, we are writing as a substantial shareholder of the company to urge you to begin an immediate and expedited review of strategic alternatives available to the company to maximize value for all shareholders. We envision that such alternatives may include but are not limited to an auction for sale of the company, a strategic partnership or a restructuring of the company's long-term power contracts. We believe that the July 21st proposal and the continued disconnect between the company's share price and intrinsic value, clearly demonstrate that the status quo is not a viable option. Over the past several years, Seneca has monitored closely the activities of TransAlta and its peers and we have been a holder of the company's shares for a substantial period of time. Based upon our investment experience, particularly within the energy sector, we believe that a gap currently exists between the fundamental value of TransAlta's assets and its stock price. In our opinion, the stock market does not properly account for the fact that over 40% of the company's generation output is currently committed under long-term contracts in Alberta at prices (estimated to be $30/mwh) that are substantially below market price (estimated to be $80/mwh). As those contracts roll off, the future cash flows of the company could be expected to increase dramatically. We also believe the market does not appreciate the current cash generating capability of the business due to a mismatch between earnings and recurring free cash flow per share. Following on the impetus of the LS Power/Global Infrastructure proposal, the Special Committee should -- consistent with the Board's fiduciary duties to shareholders -- act immediately to review alternatives to maximize shareholder value and unlock the company's substantial unrealized value for all of the company's shareholders. As part of its strategic review, the Special Committee should engage a globally recognized independent financial advisor with the mandate to explore a range of strategic alternatives and then act expeditiously to execute the optimal strategic path. We also urge the Board to immediately pursue better aligning the company's management compensation with the interests of shareholders by employing a compensation scheme that is more comparable to those of the company's North American independent power producer peers, including but not limited to the addition of stock option grants. We believe it is crucial for shareholders, particularly at a time such as this, that management be appropriately and adequately incented to create shareholder value. About Seneca Capital Seneca Capital is an investment fund headquartered in New York. The fund, founded in 1996, maintains a broad array of value-focused investments across industries, geographies and capital structures. Seneca maintains a team of professionals that focus primarily on energy and commodity related industries. Seneca has a successful track record making concentrated, longer-term investments in companies such as TransAlta. DATASOURCE: Seneca Capital CONTACT: Allyson Morris of The Abernathy MacGregor Group for Seneca Capital, +1-212-371-5999

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