The delayed acquisition of Panhandle Pipeline Co. from CMS Energy will be wrapped up before June 30 and will immediately add value, Pennsylvania-based Southern Union Co. said on Wednesday in announcing double-digit earnings growth in the first quarter. Southern Union said its net income, including income from discontinued operations, was $63.9 million, or $1.14/diluted share, compared with $43.7 million, or 78 cents/share for the same period last year. On a continuing operations basis, first-quarter earnings were up 19% to $46.2 million, or 83 cents/share.

In play during the quarter were the following: the sale of its Texas operations for a one-time after-tax gain of $17.6 million, or 32 cents/share; the purchase of CMS’ Panhandle Pipeline Co., which is still awaiting U.S. Justice Department approval on anti-trust issues; and an after-tax gain (on its nine-month, ended March 31, 2003 results) of $13.8 million, or 25 cents/share, on the settlement of claims against Oneok Inc. and Southwest Gas Corp. related to Southern Union’s failed acquisition attempt of Southwest.

The latest quarter’s results “continue to speak clearly to the strong and stable performance of our regulated businesses,” said Thomas Karam, Southern Union’s president, who stressed the that company looks forward to integrating the Panhandle Pipeline operations into its regulated and conservative risk businesses. During a conference call with financial analysts, Karam seemed sensitive to the issue of the Panhandle acquisition not coming together as quickly as he had wanted.

“We are very far along in the approval process,” he said, noting that Massachusetts and Missouri regulators had approved the purchase. “The final required clearance is anti-trust, and the parties have been working collectively and productively and tirelessly to address issues that have been raised in that regard. We remain very confident we will close this transaction prior to June 30.”

While he expressed “disappointment” in the delays, Karam said the “silver-lining”is that the added time will allow the two companies to fine tune the integration process and be able to produce added value from the merger more quickly after it is final.

Southern Union has natural gas distribution operations in four states, Missouri, Pennsylvania, Rhode Island and Massachusetts, serving about one million customers.

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