Southwest Gas threw the latest stone in the battle surroundingits proposed merger with Oneok Inc. earlier this week, refusing togo along with a request from Carl Kunasek, the Arizona CorporationCommission (ACC) chairman, to allow rival suitor Southern Union(SU) to intervene in the ACC proceedings involving the merger.

In a letter to Kunasek, Michael O. Maffie, CEO of Southwest Gas,characterized SU as “a rejected suitor engaged in a scorched earthcampaign to undo this business deal at virtually any cost…. It isunreasonable and unwarranted to allow SU to use the Commission’sproceedings to accomplish what it has failed to do in three courts,through legitimate business proceedings in the marketplace and inSouthwest’s Board room.” Southern Union has been enjoined by afederal court in Oklahoma from intervening in the mergerproceedings.

In a related letter to the Commission, Jennings, Strouss &Salmon, P.L.C., Southwest Gas’ legal counsel, said Southwest Gaswas unable to consent for several reasons, including its legalobligations to its shareholders and Oneok; court orders restrictingSouthwest Gas’ ability to agree to the request, and SouthernUnion’s conduct in connection with this matter.

While Southwest denied all the claims made by SU, others have notbeen so sure. At the heart of SU’s claims is its belief that Oneok,Southwest, and Jim Irvin, an ACC commissioner, conspired together toprevent SU from taking its merger proposal directly to Southwest’sshareholders. Although many of its legal attempts to voice this theoryhave been defeated, SU has met with success in Arizona as its claimshave prompted an investigation by the FBI, the U.S. Attorney’s Officeand the Maricopa County (AZ) Attorney’s Office and have successfullystalled the ACC’s approval of the merger (See Daily GPI, Aug. 23).

Despite SU’s success, Southwest said it continues to have anopen and cooperative relationship with the ACC. In Maffie’s letter,he urged that, “to the extent that (Southern Union) truly has anyevidence of any misconduct (on the part of Southwest Gas), it berequired to provide it immediately to all interested parties.”

If necessary, the commission could propound written questions toSouthern Union, as it did to Oneok. If Southern Union complies,”the Commission will have additional information that it mayconsider… without delay. If Southern Union does not comply withyour request for specific facts it will be obvious that it hasnone. The commission will then be able to proceed to examine themerits of the merger in as timely a manner as possible.”

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