-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MWNEp1pVYHyJOcFgpk0R9/kqCNK0NjzzWD3sBreyx79ox9VVHS+9TA3irbHt+S9i 2vDXvKg83mZly6z9AILu8g== 0000902664-08-002380.txt : 20080717 0000902664-08-002380.hdr.sgml : 20080717 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 SC 13D/A 1 p08-1160sc13da.txt SOUTHERN UNION COMPANY 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). - ---------------------------- ---------------------------- 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 - ------------- ----------------------------------------------------------------- - ---------------------------- ---------------------------- 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 - ------------- ----------------------------------------------------------------- - ---------------------------- ---------------------------- 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 - ------------- ----------------------------------------------------------------- - ---------------------------- ---------------------------- 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 - ------------- ----------------------------------------------------------------- - ---------------------------- ---------------------------- 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 - ------------- ----------------------------------------------------------------- - ---------------------------- ---------------------------- 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 - ------------- ----------------------------------------------------------------- - ---------------------------- ---------------------------- 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 - ------------- ----------------------------------------------------------------- - ---------------------------- ---------------------------- 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 - ------------- ----------------------------------------------------------------- - ---------------------------- ---------------------------- 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 - ---------------------------- ---------------------------- 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 - ---------------------------- ---------------------------- 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 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 - ---------------------------------------------------- EX-99 2 p08-1160exhibith.txt EXHIBIT H 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. July 16, 2008 Page 2
- ------------------------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------------------------
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.
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
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 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.
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
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. July 16, 2008 Page 4
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
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. 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.
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%
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%
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. EX-99 3 p08-1160pressrelease.txt PRESS RELEASE 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. -----END PRIVACY-ENHANCED MESSAGE-----