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Battle For Southwest Gas Rages in Court

Battle For Southwest Gas Rages in Court

Oneok Inc. of Tulsa, OK, last week filed to hold Southern Union in contempt for violating an injunction preventing it from attempting to influence a shareholder vote on the merger of Oneok and Southwest Gas Corp.

The focus of Oneok's contempt motion is a Southern Union complaint filed in U.S. District Court in Arizona July 19 alleging Oneok, Southwest and others engaged in a criminal conspiracy to defeat Southern Union's offer to acquire Southwest.

Oneok's motion said the central allegation of the Arizona complaint is the untruth that Oneok paid "thousands of dollars" to a Phoenix law firm to retain a former executive secretary of the Arizona Corporation Commission to act as a secretly paid consultant to Oneok. It further alleges Oneok was engaged in a criminal conspiracy with an Arizona commissioner to commit extortion on Southwest's board.

On July 19, Oneok maintains, the Southern Union complaint was distributed by a public relations firm to a reporter. On July 22, Oneok said, a letter was sent by a Southern Union attorney to the firm, retained by Southwest Gas, in an attempt to intimidate it with legal threats concerning any release of information that might disparage George Lindemann, the chairman of Southern Union, his family and the company.

Oneok's contempt motion also notes that in May of 1999 Lindemann and others with whom he is affiliated, acquired about 500,000 shares of Southwest stock. The shares were held until the record date for the Oneok/Southwest merger. They then were voted against the merger and sold.

Oneok also has filed an amendment to its original complaint against Southern Union claiming abuse of process stating that Southern Union's actions in filing the Arizona complaint were conducted with malice and intent to oppress Oneok. As a result of Southern Union's intentionally wrongful conduct, Southern Union is liable for exemplary damages as a means of punishment and deterrence, Oneok said.

Southern Union gained permission in May to join an existing lawsuit against Southwest Gas in a last-ditch attempt to overtake Oneok as the winner in the race to merge with Southwest (See NGI May 10, 1999).

The lawsuit accuses Southwest Gas' board of directors of refusing to negotiate with Southern Union in good faith. The original lawsuit was filed recently by Southwest shareholders in San Diego County's Superior Court. Southern Union said the original lawsuit accuses the Southwest board of seeking only to protect itself during the merger negotiations.

Joe Fisher, Houston

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