0000902664-08-002380.txt : 20080717
<SEC-HEADER>0000902664-08-002380.hdr.sgml : 20080717
<ACCEPTANCE-DATETIME>20080717084637
ACCESSION NUMBER: 0000902664-08-002380
CONFORMED SUBMISSION TYPE: SC 13D/A
PUBLIC DOCUMENT COUNT: 3
FILED AS OF DATE: 20080717
DATE AS OF CHANGE: 20080717
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: SOUTHERN UNION CO
CENTRAL INDEX KEY: 0000203248
STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION [4922]
IRS NUMBER: 750571592
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-20968
FILM NUMBER: 08956050
BUSINESS ADDRESS:
STREET 1: 5444 WESTHEIMER RD
CITY: HOUSTON
STATE: TX
ZIP: 77056-5306
BUSINESS PHONE: (713) 989-2000
MAIL ADDRESS:
STREET 1: 5444 WESTHEIMER RD
CITY: HOUSTON
STATE: TX
ZIP: 77056-5306
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: SANDELL ASSET MANAGEMENT CORP
CENTRAL INDEX KEY: 0001140474
IRS NUMBER: 000000000
STATE OF INCORPORATION: E9
FILING VALUES:
FORM TYPE: SC 13D/A
BUSINESS ADDRESS:
STREET 1: 40 WEST 57TH STREET
STREET 2: 26TH FLOOR
CITY: NEW YORK
STATE: NY
ZIP: 10019
BUSINESS PHONE: 2126035700
MAIL ADDRESS:
STREET 1: 40 WEST 57TH STREET
STREET 2: 26TH FLOOR
CITY: NEW YORK
STATE: NY
ZIP: 10019
</SEC-HEADER>
<DOCUMENT>
<TYPE>SC 13D/A
<SEQUENCE>1
<FILENAME>p08-1160sc13da.txt
<DESCRIPTION>SOUTHERN UNION COMPANY
<TEXT>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
Under the Securities Exchange Act of 1934
(Amendment No. 6)*
Southern Union Company
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
844030106
- --------------------------------------------------------------------------------
(CUSIP Number)
Sandell Asset Management Corp.
40 West 57th Street
26th Floor
New York, NY 10019
Attention: Richard Gashler, General Counsel
212-603-5700
With a Copy to:
Marc Weingarten, Esq.
David Rosewater, Esq.
Schulte Roth & Zabel LLP
919 Third Avenue
New York, NY 10019
212-756-2000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
July 17, 2008
------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 12 Pages)
- --------------------
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page. The information required on the
remainder of this cover page shall not be deemed to be "filed" for the purpose
of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall be subject to
all other provisions of the Act (however, see the Notes).
<PAGE>
- ---------------------------- ----------------------------
CUSIP No. 844030106 SCHEDULE 13D/A Page 2 of 12 Pages
- ---------------------------- ----------------------------
- ------------- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
Castlerigg Master Investments Ltd.
- ------------- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X| (b) |_|
- ------------- -----------------------------------------------------------------
3 SEC USE ONLY
- ------------- -----------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- ------------- -----------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- ------------- -----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
- ------------- -----------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
----------- -----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED 11,271,414
----------- -----------------------------------------------------
BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
----------- -----------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
11,271,414
WITH
- ------------- ----------- -----------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,271,414
- ------------- -----------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES |_|
- ------------- -----------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
9.09%
- ------------- -----------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- ------------- -----------------------------------------------------------------
<PAGE>
- ---------------------------- ----------------------------
CUSIP No. 844030106 SCHEDULE 13D/A Page 3 of 12 Pages
- ---------------------------- ----------------------------
- ------------- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
Sandell Asset Management Corp.
- ------------- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X| (b) |_|
- ------------- -----------------------------------------------------------------
3 SEC USE ONLY
- ------------- -----------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ------------- -----------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- ------------- -----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
- ------------- -----------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
----------- -----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED 12,250,714
----------- -----------------------------------------------------
BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
----------- -----------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
12,250,714
WITH
- ------------- ----------- -----------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,250,714
- ------------- -----------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES |_|
- ------------- -----------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
9.88%
- ------------- -----------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- ------------- -----------------------------------------------------------------
<PAGE>
- ---------------------------- ----------------------------
CUSIP No. 844030106 SCHEDULE 13D/A Page 4 of 12 Pages
- ---------------------------- ----------------------------
- ------------- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
Castlerigg International Limited
- ------------- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X| (b) |_|
- ------------- -----------------------------------------------------------------
3 SEC USE ONLY
- ------------- -----------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ------------- -----------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- ------------- -----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
- ------------- -----------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
----------- -----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED 11,271,414
----------- -----------------------------------------------------
BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
----------- -----------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
11,271,414
WITH
- ------------- ----------- -----------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,271,414
- ------------- -----------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES |_|
- ------------- -----------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
9.09%
- ------------- -----------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- ------------- -----------------------------------------------------------------
<PAGE>
- ---------------------------- ----------------------------
CUSIP No. 844030106 SCHEDULE 13D/A Page 5 of 12 Pages
- ---------------------------- ----------------------------
- ------------- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
Castlerigg International Holdings Limited
- ------------- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X| (b) |_|
- ------------- -----------------------------------------------------------------
3 SEC USE ONLY
- ------------- -----------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ------------- -----------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- ------------- -----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
- ------------- -----------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
----------- -----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED 11,271,414
----------- -----------------------------------------------------
BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
----------- -----------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
11,271,414
WITH
- ------------- ----------- -----------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,271,414
- ------------- -----------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES |_|
- ------------- -----------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
9.09%
- ------------- -----------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- ------------- -----------------------------------------------------------------
<PAGE>
- ---------------------------- ----------------------------
CUSIP No. 844030106 SCHEDULE 13D/A Page 6 of 12 Pages
- ---------------------------- ----------------------------
- ------------- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
Castlerigg Global Select Fund Limited
- ------------- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X| (b) |_|
- ------------- -----------------------------------------------------------------
3 SEC USE ONLY
- ------------- -----------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ------------- -----------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- ------------- -----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
- ------------- -----------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
----------- -----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED 979,300
----------- -----------------------------------------------------
BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
----------- -----------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
979,300
WITH
- ------------- ----------- -----------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
979,300
- ------------- -----------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES |_|
- ------------- -----------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
0.8%
- ------------- -----------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- ------------- -----------------------------------------------------------------
<PAGE>
- ---------------------------- ----------------------------
CUSIP No. 844030106 SCHEDULE 13D/A Page 7 of 12 Pages
- ---------------------------- ----------------------------
- ------------- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
CGS, Ltd.
- ------------- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X| (b) |_|
- ------------- -----------------------------------------------------------------
3 SEC USE ONLY
- ------------- -----------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- ------------- -----------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- ------------- -----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
- ------------- -----------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
----------- -----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED 979,300
----------- -----------------------------------------------------
BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
----------- -----------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
979,300
WITH
- ------------- ----------- -----------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
979,300
- ------------- -----------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES |_|
- ------------- -----------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
0.8%
- ------------- -----------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- ------------- -----------------------------------------------------------------
<PAGE>
- ---------------------------- ----------------------------
CUSIP No. 844030106 SCHEDULE 13D/A Page 8 of 12 Pages
- ---------------------------- ----------------------------
- ------------- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
Castlerigg GS Holdings, Ltd.
- ------------- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X| (b) |_|
- ------------- -----------------------------------------------------------------
3 SEC USE ONLY
- ------------- -----------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ------------- -----------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- ------------- -----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
- ------------- -----------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
----------- -----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED 979,300
----------- -----------------------------------------------------
BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
----------- -----------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
979,300
WITH
- ------------- ----------- -----------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
979,300
- ------------- -----------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES |_|
- ------------- -----------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
0.8%
- ------------- -----------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- ------------- -----------------------------------------------------------------
<PAGE>
- ---------------------------- ----------------------------
CUSIP No. 844030106 SCHEDULE 13D/A Page 9 of 12 Pages
- ---------------------------- ----------------------------
- ------------- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
Thomas E. Sandell
- ------------- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X| (b) |_|
- ------------- -----------------------------------------------------------------
3 SEC USE ONLY
- ------------- -----------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- ------------- -----------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- ------------- -----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Sweden
- ------------- -----------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
----------- -----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED 12,250,714
----------- -----------------------------------------------------
BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
----------- -----------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
12,250,714
WITH
- ------------- ----------- -----------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,250,714
- ------------- -----------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES |_|
- ------------- -----------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
9.88%
- ------------- -----------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- ------------- -----------------------------------------------------------------
<PAGE>
- ---------------------------- ----------------------------
CUSIP No. 844030106 SCHEDULE 13D/A Page 10 of 12 Pages
- ---------------------------- ----------------------------
This Amendment No.6 is filed with respect to the shares of the common stock, par
value $1.00 per share (the "Common Stock"), of Southern Union Company, a
Delaware corporation (the "Issuer"), beneficially owned by the Reporting Persons
(as defined below) as of July 16, 2008 and amends and supplements the Schedule
13D, as heretofore amended (the "Schedule 13D"). Except as set forth herein, the
Schedule 13D is unmodified.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 3 of the Schedule 13D is amended and restated in the entirety as follows:
Funds for the purchase of the shares of Common Stock reported herein to be held
by Castlerigg Master Investments and CGS were derived from their respective
general working capital and margin account borrowings made in the ordinary
course of business. A total of approximately $356,162,684 (including
commissions) was paid to acquire the shares of Common Stock reported herein.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 of the Schedule 13D is hereby amended by the addition of the following
immediately preceding the penultimate paragraph thereof:
On July 17, 2008, SAMC sent a letter to George Lindemann, Chairman and
CEO of the Issuer (the "July 2008 Letter"). The July 2008 Letter expressed
serious concern regarding management's and the Board of Director's failure to
achieve the goals of the Issuer's 2007 strategic plan, which was the basis for
SAMC agreeing to withdraw its nominees for the Company's Board of Directors at
the 2006 annual meeting of stockholders. Furthermore, the July 2008 Letter
identifies this lack of action by the Issuer as the driver of its continued poor
stock price performance on both an absolute and relative basis. SAMC now
believes that the best alternative for shareholders is an immediate sale of the
Issuer. In the event that the Company continues to underperform and management
and the board do not take material action to deliver value to the shareholders,
SAMC may seek to replace some or all of the existing board members with a new
slate of highly qualified candidates and has begun the process of identifying
these candidates. The foregoing description of the July 2008 Letter is a summary
only and is qualified in its entirety by reference to the July 2008 Letter,
which is attached hereto as Exhibit H. A copy of a related press release issued
on July 17, 2008, announcing sending of the July 2008 Letter to the Issuer, is
attached hereto as Exhibit I, and is similarly incorporated herein by reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Item 5 of the Schedule 13D is amended and restated in the entirety as follows:
(a) Each of Castlerigg Master Investments, SAMC, Castlerigg International,
Castlerigg Holdings and Sandell may be deemed to beneficially own the 11,271,414
shares of Common Stock held by Castlerigg Master Investments, representing
approximately 9.09% of the outstanding shares of Common Stock. Each of CGS,
CGSH, Castlerigg Global Select, SAMC and Sandell may be deemed to beneficially
own the 979,300 shares of Common Stock held by CGS, representing approximately
0.8% of the outstanding shares of Common Stock. The Reporting Persons may be
deemed to be a "group," which "group" may be deemed to beneficially own an
aggregate of 12,250,714 shares of Common Stock, representing approximately 9.88%
of the outstanding shares of Common Stock. The percentages used herein are based
upon the 124,003,265 shares of Common Stock reported to be outstanding as of May
2, 2008 by the Issuer in its quarterly report on Form 10-Q for the period ended
March 31, 2008, filed with the Securities and Exchange Commission on May 9,
2008.
(b) None of the Reporting Persons has sole power to vote or direct the
vote or sole power to dispose or direct the disposition of shares of Common
Stock. Each of Castlerigg Master Investments, SAMC, Castlerigg International,
Castlerigg Holdings and Sandell has shared power to vote or direct the vote and
shared power to dispose or direct the disposition of the 11,271,414 shares of
Common Stock held by Castlerigg Master Investments. Each of CGS, CGSH,
Castlerigg Global Select, SAMC and Sandell has shared power to vote or direct
<PAGE>
- ---------------------------- ----------------------------
CUSIP No. 844030106 SCHEDULE 13D/A Page 11 of 12 Pages
- ---------------------------- ----------------------------
the vote and shared power to dispose or direct the disposition of the 979,300
shares of Common Stock held by CGS.
(c) Information concerning transactions in the shares of Common Stock
that were effected by the Reporting Persons during the past sixty days is set
forth on Appendix I.
(d) No person other than Castlerigg Master Investments, SAMC, Castlerigg
International, Castlerigg Holdings and Sandell is known to have the right to
receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, the shares of Common Stock held by Castlerigg Master
Investments. No person other than CGS, CGSH, Castlerigg Global Select, SAMC and
Sandell is known to have the right to receive or the power to direct the receipt
of dividends from, or the proceeds from the sale of, the shares of Common Stock
held by CGS.
(e) Not Applicable.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Item 7 of the Schedule 13D is hereby amended and supplemented as follows:
APPENDIX I: Transactions Effected During the Past Sixty Days
EXHIBIT H: Letter from certain of the Reporting Persons to George
Lindemann, Chairman and Chief Executive Officer of Southern
Union Company, dated July 16, 2008
EXHIBIT I: Press Release, dated July 17, 2008
<PAGE>
- ---------------------------- ----------------------------
CUSIP No. 844030106 SCHEDULE 13D/A Page 12 of 12 Pages
- ---------------------------- ----------------------------
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: July 17, 2008
CASTLERIGG MASTER INVESTMENTS LTD.
By: Sandell Asset Management Corp.,
its Investment Manager
By: /s/ Thomas E. Sandell
---------------------
Thomas E. Sandell, Chief Executive Officer
SANDELL ASSET MANAGEMENT CORP.
By: /s/ Thomas E. Sandell
---------------------
Thomas E. Sandell, Chief Executive Officer
CASTLERIGG INTERNATIONAL LIMITED
By: Sandell Asset Management Corp.,
its Investment Manager
By: /s/ Thomas E. Sandell
---------------------
Thomas E. Sandell, Chief Executive Officer
CASTLERIGG INTERNATIONAL HOLDINGS LIMITED
By: Sandell Asset Management Corp.,
its Investment Manager
By: /s/ Thomas E. Sandell
---------------------
Thomas E. Sandell, Chief Executive Officer
CASTLERIGG GLOBAL SELECT FUND LIMITED
By: Sandell Asset Management Corp.,
its Investment Manager
By: /s/ Thomas E. Sandell
---------------------
Thomas E. Sandell, Chief Executive Officer
CGS, LTD.
By: Sandell Asset Management Corp.,
its Investment Manager
By: /s/ Thomas E. Sandell
---------------------
Thomas E. Sandell, Chief Executive Officer
CASTLERIGG GS HOLDINGS, LTD.
By: Sandell Asset Management Corp.,
its Investment Manager
By: /s/ Thomas E. Sandell
---------------------
Thomas E. Sandell, Chief Executive Officer
/s/ Thomas E. Sandell
---------------------
Thomas E. Sandell
<PAGE>
APPENDIX I
TRANSACTIONS EFFECTED DURING THE PAST SIXTY DAYS
(All regular market transactions were effected on the New York Stock Exchange)
- ----------------------------------------------------
Amount of
Date of Person securities Price per
transaction effecting Bought/ (Sold) share or
transaction unit
- ----------------------------------------------------
05/27/08 CMI 250,000 26.42
- ----------------------------------------------------
05/28/08 CMI 150,000 26.43
- ----------------------------------------------------
05/30/08 CMI 100,000 26.41
- ----------------------------------------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>p08-1160exhibith.txt
<DESCRIPTION>EXHIBIT H
<TEXT>
EXHIBIT H
SANDELL ASSET MANAGEMENT
-------------------------
CASTLERIGG INVESTMENTS
July 16, 2008
Southern Union Company
5444 Westheimer Road
Houston, TX 77056
Attn: George Lindemann, Chairman and Chief Executive Officer
Dear George:
As you are well aware by now, Sandell Asset Management ("Sandell") has been a
shareholder of Southern Union Company ("Southern Union", "SUG" or the "Company")
for over three years and we remain your largest single shareholder. We purchased
the shares because we believed the value of the Company's assets were well in
excess of its stock price, and subsequently were even convinced that management
was dedicated to realizing that value. We also believed that you, Mr. Lindemann,
would be willing to sell the Company if you could not deliver that value in a
reasonable timeframe. The record now clearly shows that our patience was
misplaced. During the past few years shareholders have witnessed the following:
1. Continued and consistent underperformance in SUG's share price relative to
its peers. In fact, we have recently seen this performance gap widen even
further
2. A consistent exodus of management talent replaced with less qualified
internal candidates
3. Generous compensation for the most senior executives not tied to operating
performance or share price
4. Broken promises to investors and analysts that have dramatically eroded
management's credibility
5. An inability to communicate and execute a concrete plan for value
enhancement
We believe the poor and declining share price performance is a clear sign that
the market has utterly lost confidence in the Company's leadership.
In 2006, we initiated a proxy contest to elect director candidates in an effort
to improve the Board's qualifications, add new perspectives, and foster a new
urgency to drive shareholder value. We agreed to withdraw those nominees in view
of the stated intentions in your February 2007 Strategic Plan to engage in
several value enhancement initiatives including the creation of an MLP and the
opportunistic return of capital to shareholders. Thus far, none of those goals
have been met in substance, and we strongly question your level of actual
commitment to them in the first place.
<PAGE>
July 16, 2008
Page 2
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Total Shareholders Return
2005 2006 2007 2008 YTD 2005-Current
-------------------------------------------------------------------
Spectra Energy Corp NA NA (3.6%) 7.7% NA
El Paso Corp 18.6% 27.1% 14.0% 14.0% 153.6%
ONEOK Inc. (2.8%) 67.8% 6.9% 8.0% 151.9%
Williams Cos Inc. 44.0% 14.4% 38.7% 2.2% 289.7%
Equitable Resources Inc 24.1% 16.5% 29.9% 20.9% 230.4%
Sempra Energy 25.6% 28.1% 12.7% (8.5%) 108.2%
National Fuel Gas Co 14.3% 27.7% 24.5% 24.5% 173.6%
-------------------------------------------------------------------
Average 20.6% 30.3% 17.6% 9.8% 184.6%
Southern Union Co 3.5% 20.1% 6.6% (12.5%) 58.6%
Note: As of 7/11/08
- -------------------------------------------------------------------------------------------------
</TABLE>
With regards to the MLP, you indicated that you intended to complete an IPO by
the end of the third quarter of 2007. It has been 498 days since the withdrawal
of our nominees and we have yet to even see an S-1 filing. Notwithstanding the
disruptions in the capital markets recently, there were ample opportunities for
SUG to complete an offering prior to the current market slowdown had the Company
moved with real urgency and commitment. In fact, even as recently as this past
May when the tightening of the capital markets was already well underway,
Anadarko Petroleum successfully priced a midstream MLP IPO at a yield of 7.3% -
the very same transaction that SUG's new Chief Operating Officer, Eric
Herschmann, cited on the last earnings call.
In the table below, you will note that several companies were able to announce,
file and successfully price MLPs since you announced your Strategic Plan.
History shows that companies dedicated to creating shareholder value find ways
to do so regardless of market conditions.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DAYS FROM INITIAL ANNOUNCEMENT
INITIAL -----------------------------------------------------------------------------------------------------------------
ANN. 0 30 60 90 120 180 210 240 270 300 330 360 390 420 450 480 510 540 570 600
APC 10/15/2007 Filed S-1 Pricing
PXD 4/23/2007 Filed S-1 Delay Pricing
EAC 1/17/2007 Filed S-1 Pricing
WMZ 7/20/2007 Filed S-1 Pricing
EPB 2/21/2007 Filed S-1 Pricing
SUG 2/28/2007 Postponed Storage Ann. Midstream Postpones Midstream
</TABLE>
The Company's track record of capital return is only slightly better. Since you
announced your Strategic Plan, SUG has not repurchased a single share of stock,
despite the trading price recently hitting a low not seen since January 2005. We
acknowledge that SUG did raise the quarterly dividend by close to 50% - however,
this exaggerated increase was off a miniscule base of 10 cents per share.
Further testament to the market's lack of confidence in SUG, is the stock's
discounted multiple and gap to its NAV. The price discount to a pro forma MLP
valuation is particularly striking and a strong sign that both investors and
sell-side analysts do not believe that the Company's board and/or management
will follow through on an MLP. It raises significant concerns about
<PAGE>
July 16, 2008
Page 3
complacency around value creation when such compelling opportunities are
available. We dispute your frequently offered excuse that an MLP does not create
value due to tax leakage, as it is well known that there are numerous structures
available that mitigate tax leakage and defer tax payments. We do not subscribe
to any theory that SUG is in such a unique position to justify holding
MLP-eligible assets in a fully taxable form while virtually every other
midstream and/or pipeline company has moved aggressively to sell or convert
these assets into MLPs to the benefit of shareholders.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
TEV MLP Sub(s) Name Recent Dropdowns
-------- ---------- ------------------------------ ---------------------------------------
ONEOK INC OKE $10,138 OKS ONEOK PARTNERS LP Apr. 06 - $3bn
WILLIAMS COS INC WMB $27,794 WPZ WILLIAMS PARTNERS LP Aug. 05 - $124mm IPO, $317 mm asset
Jun. 06 - $360mm
Nov. 06 - $1.2bn
Jun. 07 - $78mm
Dec. 07 - $750mm
WMZ WILLIAMS PIPELINE PARTNERS L Jan. 08 - $358mm IPO for $718mm asset
DUKE ENERGY CORP DUK $33,610 DPM DCP MIDSTREAM PARTNERS LP Nov. 06 - $77mm
Jul. 07 - $271mm
Aug. 07 - $166mm ($635mm total)
SPECTRA ENERGY CORP SE $27,090 SEP SPECTRA ENERGY PARTNERS LP Jul. 07 - $230mm IPO for $550mm asset
Dec. 07 - $107mm
EL PASO CORP EP $27,231 EPB EL PASO PIPELINE PARTNERS LP Nov. 07 - $537mm IPO for $962mm asset
</TABLE>
At this point, we do not have any faith that management or the board of
directors harbor any real intention of moving forward actively with an MLP or
other value enhancing restructuring alternatives. Even if our continued
insistence does result in a meager MLP IPO of the former Sid Richardson assets,
we have no confidence that you will move aggressively to drop the remaining
assets into the MLP over a reasonable timeframe. While virtually all of the
Company's assets qualify for the MLP structure, only a real and disciplined
commitment to follow through on the conversion process will maximize value.
Unfortunately, we have no indication that such commitment exists at SUG. In
fact, on the last earnings call, you suggested that SUG might even be interested
in PURCHASING more midstream assets. We are shocked that you would even consider
acquisitions given SUG's weak stock currency and the existing limitations your
current debt load puts on the Company's strategic options. Further, you would
likely be bidding against existing MLPs that have stronger currency, virtually
assuring that you would be overpaying for the assets. For these reasons, among
others, we strongly oppose any acquisitions.
<PAGE>
July 16, 2008
Page 4
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Firm Name Analyst Rating Target Commentary
- -------------------------------- -------------------------- ---------------- ------- -----------------------------------------------
Wachovia Capital Markets LLC SAMUEL BROTHWELL market perform $27.50 "... we are revising our valuation range down
to reflect: 1) the MLP delay, and--more
importantly--2) to reflect a lower level
of confidence that this management team
will act to optimize shareholder value
in a timely fashion. Part of the reason
to own SUG was that CEO George Lindermann
is seen as a value / deal guy. But at his
insistence, the MLP was kept at bay until
it withered on the vine. SUG is a public
company, not a family business, management's
lack of urgency is disturbing, and we can't
just keep on waiting, waiting for the world
to change."
BMO Capital Markets-US CARL L KIRST outperform $35.00 "... at some point in the furture ... value
will get recognized via either MLP creation,
future stock buyback, asset optimization, or
even an outright sale for the right price."
RBC Capital Markets LASAN JOHONG sector perform $29.00 "While we do not believe this is the optimal
strategy [for SUG to form a new MLP], and
would have preferred SUG sell to another MLP
and focus its strategy on its core LNG,
transportation and distribution business,
we do believe the formation of an MLP could
create shareholder value."
Banc of America ELVIRA SCOTTO neutral $30.00 "Management has acknowledged recent incremental
market liquidity ... Becoming more constructive
on the shares ... However, with the midstream
MLP shelved for the time being, we do not see
any near-term catalyst to drive the shares
meaningfully higher from current levels."
Citigroup FAISEL KHAN buy $37.00 "Our NAV analysis results in a value of $36.83
per share ... [but] we also attribute no MLP
valuation uplift to SUG"
JPMorgan XIN LIU/GLENN MULLIN overweight "Longer term, we continue to believe an MLP
makes sense as part of the company's stragegy."
Calyon Securities (USA) Inc GORDON HOWALD buy $41.00 "We constantly hear criticism from investors
about Southern Union's preceived lack of
shareholder focus, particularly management
access."
Stifel Nicolaus SELMAN AKYOL buy $32.00 "We do not expect that the company will move
forward with a G&P MLP at this time"
Lehman Brothers RICHARD GROSS overwt/neutral $33.00
</TABLE>
Since management has yet to offer, much less enact, a substantive value creation
plan, WE BELIEVE THAT THE ONLY VIABLE OPTION FOR VALUE CREATION IS A SALE OF THE
COMPANY.
Despite the poor performance of the equity markets, we are confident there would
be significant interest in a transaction and note that the share prices of
virtually all of SUG's competitors (and possible acquirers) are up materially
this year on both relative and absolute bases. We were told that SUG had
received offers for the Company during the last two years but walked away from a
potential deal over 50 cents (or less) on the proposed stock purchase price.
<PAGE>
July 16, 2008
Page 5
Strongly supportive of the potential sale price is the value that can be
realized through a proactive execution of an MLP conversion. On this basis we
believe SUG is worth between $32-$42 per share depending on the sequence of
particular assets contributed, the prevailing market environment and the level
of tax mitigation. This valuation is well supported by sell-side research which
often have a wide variance between SUG's target price in the status quo, and the
Company's materially higher MLP or sum-of-the-parts valuations. We believe this
gap represents a material "credibility discount" for SUG's management as the
Company's operating assets have significantly greater strategic value. As such,
we believe that an acquirer would be willing to pay between $35-$40 for SUG and
still generate attractive returns from cutting costs and dropping assets into
its own MLP.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Sum of the Parts Valuation Sum of the Parts Sale
- -------------------------- ----------------------
2008E Value 2008E Value
EBITDA Multiple per Shr EBITDA Multiple per Shr
------ --------- -------- ------ --------- --------
Transportation & Storage $593 8.7x $41.41 Transportation & Storage $593 9.5x $45.39
Gathering & Processing $189 8.5x $12.91 Gathering & Processing $189 9.0x $13.67
Gas Distribution $111 8.0x $7.16 Gas Distribution $111 8.0x $7.16
Corporate $2 7.0x $0.12 Corporate $2 7.0x $0.12
- ------------------------------------------------------- --------------------------------------------------------
Total TEV $895 8.5x $61.60 Total TEV $895 9.2x $66.35
Net Debt $28.93 Net Debt $28.93
- ------------------------------------------------------ --------------------------------------------------------
Equity Value $32.68 Equity Value $37.42
- ------------------------------------------------------- --------------------------------------------------------
Upside % 28.2% Upside % 46.8%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Summary MLP Valuation
---------------------
TEV Per Shr
-------- ---------
Full Midstream & Pipeline/LNG MLP
---------------------------------
NPV of IPO Proceeds & Dropdown Proceeds $2,287 $18.42
Value of GP Distributions $2,143 $17.26
Value of Subordinated LP Distributions $3,468 $27.93
Legacy Assets Value $905 $7.29
----------------------------------------------------------------
Total TEV $8,803 $70.90
Net Debt ($3,592) ($28.93)
----------------------------------------------------------------
Equity Value $5,211 $41.97
----------------------------------------------------------------
Upside % 64.7%
</TABLE>
<PAGE>
July 16, 2008
Page 6
The market has no more patience with management's poor performance, outsized
compensation and complacency towards value creation. This belief is clearly
supported by the dismal share price performance and the Company's discounted
public valuation. We believe the option that creates the most value for
shareholders at this point is an immediate sale of the Company. On this basis,
we strongly recommend that the Company retain a financial advisor. However, if
SUG were to remain independent, there would need to be a significant
restructuring of the Company which would include the following at a minimum:
1. Separation of the Chairman and CEO roles, and recruitment of an
experienced energy CEO. This candidate would then evaluate and fill out
other senior executive roles where appropriate
2. A detailed plan and public commitment to converting all of the
Transportation/Storage and Gathering & Processing assets into one or even
separate MLPs
3. Commitment to a minimum level of capital return to shareholders
4. Replacement of a majority of the existing board with truly qualified
candidates who have relevant experience and no ties to management
In conclusion, the market has clearly shown that our decision to not seek
representation on the board two years ago in reliance upon your hollow
commitment was a mistake. Ample time has elapsed and opportunities squandered by
the Company, and we no longer have the appetite for false promises and delaying
tactics offered in the hope that we will go away. While there is still some time
before the next opportunity to nominate candidates in December, we have begun
the process of searching for qualified candidates because we believe that
nothing will meaningfully change in the next several months.
Yours truly,
Thomas Sandell
Chief Executive Officer
Sandell Asset Management Corp.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>p08-1160pressrelease.txt
<DESCRIPTION>PRESS RELEASE
<TEXT>
EXHIBIT I
FOR IMMEDIATE RELEASE PRESS RELEASE
SANDELL SENDS A LETTER TO SOUTHERN UNION CHAIRMAN AND CEO GEORGE LINDEMANN
EXPRESSING CONCERN OVER POOR SHARE PRICE PERFORMANCE AND FAILURE TO COMPLETE
GOALS OF 2007 STRATEGIC PLAN
SANDELL SEEKS IMMEDIATE SALE OF THE COMPANY
SANDELL HAS BEGUN PROCESS OF IDENTIFYING CANDIDATES FOR SOUTHERN UNION BOARD
OF DIRECTORS
NEW YORK, JULY 17, 2008 -Sandell Asset Management Corp. ("Sandell"), the largest
individual shareholder of Southern Union Company ("SUG" or the "Company") with
ownership of 9.9% of shares outstanding, sent a letter to George Lindemann,
Chairman and CEO of SUG. This letter, which was also filed with the SEC today,
expressed serious concern regarding management's and the Board of Directors'
failure to achieve the goals of its 2007 strategic plan, which was the basis for
Sandell agreeing to withdraw its nominees for the Company's Board of Directors
at the 2006 annual meeting of stockholders. Furthermore, the letter identifies
this lack of action by the company as the driver of its continued poor stock
performance on both an absolute and relative basis. That plan specifically
stated goals of forming an MLP by the end of the third quarter of 2007 and an
increased focus on return of capital to shareholders. Sandell believes there was
ample time before the recent disruption in the capital markets to achieve both
of these goals and credits the failure with a lack of conviction in management
and at the board level. Sandell now believes that SUG's best alternative is an
immediate sale of the Company given likely interest from several strategic
buyers and robust fundamental environments in the Company's end markets. In the
event that the Company continues to underperform and management and the Board do
not take material action to deliver value to the shareholders, Sandell may seek
to replace some or all of the existing board members with a new slate of highly
qualified candidates. Sandell has recently begun the process of identifying
these candidates.
Tom Sandell, the CEO of Sandell stated "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. Our patience has not been rewarded and we,
along with other shareholders, have witnessed a consistent record of
underperformance and complacency toward shareholder value. Our research
indicates that these shares should be worth at least $32 per share and likely
greater than $40 per share in the hands of a qualified, appropriately motivated
team dedicated to driving value. We believe that our fellow shareholders share
our frustration and we will continue to seek whatever changes are necessary to
realize full value for this impressive collection of assets. "
For further information, contact:
Mr. Tom Sandell
Chief Executive Officer
Sandell Asset Management Corp.
(212) 603-5700
Sandell Asset Management Corp. is a multi-billion dollar global investment
management firm, founded by Thomas E. Sandell, which focuses on global corporate
events and restructurings throughout North America, Continental Europe, the
United Kingdom, Latin America and the Asia-Pacific theatres. Sandell frequently
will take an "active involvement" in facilitating financial or organization
improvements accruing to the benefit of investors.
</TEXT>
</DOCUMENT>
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