Sandell urges Southern Union to sell, prepared to replace company's board or directors

By Lisa Kerner

Charlotte, N.C., July 17 - Southern Union Co. shareholder Sandell Asset Management Corp. urged the company to immediately sell, citing Southern Union's failure to achieve the goals set forth in its 2007 strategic plan.

In a letter to Southern Union chairman and chief executive officer George Lindemann, the 9.9% shareholder said it is in the process of identifying candidates to replace some or all of the company's existing board members.

The letter was included in a schedule 13D filed with the Securities and Exchange Commission.

Sandell noted that it previously withdrew a slate of nominees after the company set forth its 2007 strategic plan.

Goals identified in the Houston gas company's strategic plan included forming a master limited partnership by the end of the third quarter of 2007 and an increased focus on return of capital to shareholders, Sandell said in a news release.

According to Sandell's letter, Southern Union's poor stock performance is the result of the company's lack of action.

"We have been holders of Southern Union for over three years now and took management at their word that they would take action to enhance shareholder value," CEO Tom Sandell stated in the release. "Our patience has not been rewarded and we, along with other shareholders have witnessed a consistent record of underperformance and complacency toward shareholder value."

Sandell believes Southern Union stock should be worth at least $32.00 per share and likely greater than $40.00 per share "in the hands of a qualified, appropriately motivated team dedicated to driving value."

Southern Union (NYSE: SUG) closed at $25.13 on July 16.

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