Southern Union unveils strategic plan, outlook in response to shareholder suggestions

By Lisa Kerner

Charlotte, N.C., March 1 - Southern Union Co., in response to suggestions by its largest shareholder Sandell Asset Management Corp., issued its strategic plan and outlook for 2007.

In addition, Sandell has withdrawn its nomination of a minority slate to the company's board of directors for election at the 2007 annual meeting and dismissed related litigation. Company director Adam M. Lindemann will seek re-election to the Houston gas company's board, according to a company news release.

"We applaud the decision made by Tom Sandell and Sandell Asset Management regarding the upcoming board election," Southern Union vice president Eric D. Herschmann said in the release.

"We appreciate the constructive dialogue we have had with him and his team and look forward to working together toward our shared goal of enhancing value for all Southern Union shareholders."

According to the strategic plan, shareholder value will be increased through some substantial organic growth projects and system enhancements, the formation of a master limited partnership in the third quarter and the preservation of the company's investment-grade credit ratings.

Southern Union is projecting 2007 earnings from continuing operations in the range of $1.60 to $1.70 per fully diluted share. Pro forma EBITDA estimates are $854 million in 2007, $883 million in 2008, and $913 million in 2008.

Sandell noted that Southern Union's plan calls for many of the value-enhancing measures suggested by the investor, including the creation of a master limited partnership.

"We have always believed in the quality of Southern Union's assets and the strength of its cash flow," Sandell senior portfolio manager Tom Sandell said in the release.

"We commend management for acting positively to our concerns and suggestions to enhance value for all shareholders. While we believe Southern Union currently remains undervalued, we are hopeful that the effective and timely execution of this plan will go a long way toward addressing this situation."

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