S&P: Southern Union outlook stable

Standard & Poor's said it affirmed its BBB- corporate credit rating on Southern Union Co. and subsidiary Panhandle Eastern Pipe Line LP and revised the outlook to stable from negative.

The rating action follows the company's announcement that it reached an agreement with activist shareholder Sandell Asset Management Corp. that will avoid a proxy contest at the 2009 shareholders meeting. S&P said the settlement largely removes its concerns that Sandell could implement strategies detrimental to bondholders.

The ratings are supported by the company's strong business profile, organic growth projects and good geographic and asset diversity, the agency said.

Some commodity risk in Southern Union's gathering and processing segment and an aggressive financial profile with financial metrics that are somewhat weak for the rating partially offset these strengths, in S&P's view.

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