Cove Key Bluescape Holdings LP Announces Changes to Early Warning Report regarding TransAlta Corporation

NEW YORK, March 26, 2019 /PRNewswire/ - Cove Key Bluescape Holdings LP ("Cove Key") announced today that on March 25, 2019, Mangrove Partners Master Fund, Ltd. issued a notice (the "Notice") to TransAlta Corporation (the "Company") pursuant to the Company's Advance Notice By-Law No. 2 submitting nominations for the election of directors (collectively, the "Nominees") to the Board of the Company (the "Board") at the upcoming Annual and Special Meeting of Shareholders of the Company currently scheduled to take place on April 26, 2019 (or any adjournment or postponement thereof) (the "Annual Meeting"). No securities were acquired in connection with the filing of the Early Warning Report filed by Cove Key on the date hereof.

As of the date of hereof, Cove Key has ownership and control of 8,397,333 common shares, representing approximately 2.95% of the issued and outstanding common shares as of the date hereof, calculated on an undiluted basis. As of the date hereof, the Mangrove Cooperating Parties (defined below), the Cove Key Cooperating Parties (defined below) and the Bluescape Cooperating Parties (defined below) (collectively, the "Cooperating Parties") collectively have ownership and control over 28,729,196 common shares, representing approximately 10.1% of the issued and outstanding common shares as of the date hereof, calculated on an undiluted basis.

On March 25, 2019, the Company announced that it had entered into an Investment Agreement with Brookfield BRP Holdings (Canada) Inc. (the "Brookfield Investment Agreement"), a copy of which was subsequently filed on SEDAR on March 25, 2019. Under the terms of the Brookfield Investment Agreement, if two or more persons, who are not among the Company's director nominees recommended in its management proxy circular for election to the Board at the Annual Meeting, are elected as directors of the Board, then the Company will have the right, up to six business days prior to the date that is 30 days after the date of the Annual Meeting, to decline the financing provided for in the Brookfield Investment Agreement and terminate the Brookfield Investment Agreement.

The Cooperating Parties have had insufficient time to fully evaluate the Brookfield Investment Agreement. However, they believe that transactions superior to the Brookfield Investment Agreement may be available to the Company and that it is therefore important to preserve the Company's ability to terminate the Brookfield Investment Agreement in order to explore and potentially pursue such superior transactions. Accordingly, Mangrove Partners Master Fund, Ltd. has submitted the nominations for election to the Board to ensure that it is possible that two or more persons not nominated in the Company's management proxy circular may be eligible for election at the Annual Meeting in accordance with the Company's Advance Notice By-Law. If no shareholder nominations were to be made in accordance with the Advance Notice By-Law, the Company would have no ability to terminate the Brookfield Investment Agreement to pursue a superior transaction that may emerge.

The Advance Notice By-Law provides that shareholders may provide a notice of nomination up to 5:00 p.m. Calgary time, 30 days prior to the date of the Annual Meeting, which means that further nominations may be made up to 5:00 p.m. Calgary time on March 27, 2019. Mangrove Partners and the Cooperating Parties may supplement the Nominees before the nomination deadline with the nomination of additional persons for election to the Board. The Cooperating Parties also reserve the right to withdraw one or more Nominees from time to time or to submit further nominations after March 27, 2019, subject to waiver of the Advance Notice By-Law by the Board.

On March 6, 2019, Mangrove Partners, Bluescape Energy Partners LLC ("Bluescape Energy Partners"), and Cove Key entered into a cooperation agreement (the "Cooperation Agreement") whereby, among other things, they agreed to coordinate and cooperate in certain activities related to their ownership of the common shares of the Company any other voting or equity securities of the Company, any securities convertible into voting or equity securities of the Company, and related derivative contracts. Cove Key may be considered a joint actor of the Mangrove Cooperating Parties, the Cove Key Cooperating Parties and the Bluescape Cooperating Parties. The "Mangrove Cooperating Parties" are the following individuals and entities, each of which may be considered to be a joint actor with Cove Key: (i) The Mangrove Partners Master Fund, Ltd; (ii) Mangrove Partners; and (iii) Nathaniel August. The "Cove Key Cooperating Parties" are the following individuals and entities, each of which may be considered to be a joint actor with Cove Key: (i) Cove Key Fund GP LP; (iii) Cove Key GP LLC; (iv) Cove Key Management LP; (v) Cove Key GP Management LLC; and (vi) Jeff Coviello. The "Bluescape Cooperating Parties" are the following individuals and entities, each of which may be considered to be a joint actor with Cove Key: (i) Bluescape Energy Partners, (ii) Bluescape Cove Key GP LLC; (iii) Bluescape Energy Partners III GP LLC; (iv) Bluescape Resources GP Holdings LLC; (v) Bluescape Resources Company LLC; and (vi) Charles John Wilder, Jr.

Mangrove Partners, Cove Key and Bluscape Energy Partners have not yet determined whether they will solicit proxies for the election of the Nominees.

Depending upon other factors, including overall market conditions, other investment opportunities available to the Cooperating Parties, and the availability of securities of the Company at prices that would make the purchase or sale of such shares desirable, the Cooperating Parties may endeavor (i) to increase or decrease their respective positions in the Company through, among other things, the purchase or sale of securities of the Company on the open market or in private transactions or otherwise on such terms and at such times as the Cooperating Parties may deem advisable and/or (ii) to enter into transactions that increase or hedge their economic exposure to the common shares without affecting their beneficial ownership of common shares.

No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (k) of Item 5 of the Early Warning Report filed by Cove Key on the date hereof except as set forth herein or such as would occur upon or in connection with completion of, or following, any of the actions discussed herein. The Cooperating Parties may take positions regarding or make precatory, conditional or binding proposals with respect to, or with respect to potential changes in, the Company's: operations, management, certificate of incorporation and bylaws, composition of the board of directors of the Company or its committees, ownership, capital or corporate structure, dividend policy, potential acquisitions or sales, businesses or assets, including the sales thereof, strategy and/or plans of the Company as a means of enhancing shareholder value. The Cooperating Parties may change their intention with respect to any and all matters referred to in Item 5 of the Early Warning Report filed by Cove Key on the date hereof. The Cooperating Parties intend to review their investment in the Company on an ongoing basis and may from time to time in the future express their views to and/or meet with management, the board of directors of the Company, other shareholders or third parties, including, potential acquirors, service providers and financing sources, and/or may formulate plans or proposals regarding the Company, its assets or its securities. Such possible plans or proposals may include one or more plans or proposals that relate to or would result in one or more of the changes referred to herein, or any of the matters set forth in subparagraphs (a) - (k) of Item 5 of the Early Warning Report filed by Cove Key on the date hereof.

Cove Key is a Delaware limited partnership whose principal business address is 200 Crescent Court, Suite 1900, Dallas, Texas (United States of America) 75201. The principal business of Cove Key is investments.

The head office of the Company is located at 110 - 12th Avenue S.W., Calgary, Alberta, T2R 0G7.

This press release does not constitute a solicitation of proxies and is being filed in accordance with legal requirements under applicable Canadian securities laws. For further information and to obtain a copy of the early warning report filed by Cove Key under applicable Canadian securities laws in connection with the matters descried herein, please see the Company's profile on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com or please contact:

SOURCE Cove Key Bluescape Holdings LP