WILKES-BARRE, Pa., June 7 /PRNewswire/ -- Pennsylvania Enterprises, Inc.
(PEI) (NYSE: PNT) announced today that its Board of Directors has approved a
definitive merger agreement with Southern Union Company (NYSE: SUG), an
international energy company headquartered in Austin, Texas.
PEI's Chairman Ronald W. Simms stated, "This merger is consistent with our
strategy for growth by continuing to add value to our shareowners' investment
while providing superior service to our customers and communities." Simms
added that PEI's Pennsylvania-based operations will become the fourth major
autonomous division of Southern Union, complementing their Texas, Missouri and
Florida operations.
Southern Union has agreed to acquire PEI for approximately $500 million,
including the assumption of debt. The transaction will call for each share of
PEI's approximately 11 million outstanding shares of common stock to be
exchanged for $32 in Southern Union common stock (subject to adjustment for
market fluctuations) and $3 cash. Based on the Friday, June 4, closing price
for Southern Union stock, PEI shareowners will receive 1.4798 shares of
Southern Union stock for each share of PEI common stock they own. The common
stock portion of the transaction is expected to be tax-free to PEI's
shareowners.
According to Thomas F. Karam, President and CEO of PEI, "We are extremely
pleased about this strategic relationship with Southern Union. It strengthens
PEI's ability to attain the critical mass needed to effectively compete in
today's energy markets. This merger will retain PEI's Pennsylvania presence,
with no material change to our operations, since we will operate as an
autonomous division of Southern Union. Under the agreement, all union
contracts will be assumed by Southern Union."
Continuing, Karam noted that, "Our shareowners will have an interest in an
international energy company with a demonstrated track record for growth and
shareowner value." Karam pointed out that Southern Union pays shareowners an
annual 5% common stock dividend, not a cash dividend. However, under Southern
Union's Stock Dividend Sale Plan, shareowners may elect to sell their common
stock dividend commission-free and receive the cash proceeds.
Karam also noted that, "Customers will benefit from the merger. PEI will
be better able to provide competitive energy alternatives to the consumer and
take greater advantage of opportunities in the energy industry."
Commenting on the signing of the definitive agreement, Southern Union
Chairman and CEO George Lindemann stated, "This transaction enables Southern
Union to continue our active strategy for growth and provides geographic
diversity with entry into the East Coast. Especially important is the
electric marketing expertise that PEI's marketing division brings to Southern
Union. PG Energy PowerPlus is an electric marketer that ranks 8th among the
largest suppliers of electricity in Pennsylvania in terms of peak load and has
an electric customer base which has doubled in the past year." Other
non-regulated activities of PEI include the generation of electricity from
methane recovered from landfill gas, the development of a commercial and
industrial park whose tenants will be provided steam generated from PEI's
cogeneration plant, and an expanding propane operation.
Peter Kelley, President of Southern Union, added that in addition to the
non-regulated operations mentioned by Mr. Lindemann, "PEI brings to Southern
Union a solid natural gas customer base and a reputation for safe, reliable
service through PG Energy, its natural gas utility business. This merger
draws together two outstanding energy companies that share common values for
superior customer service."
Closing of the merger is subject to shareowner approval from both
companies, as well as regulatory approval and other customary conditions.
Both companies will provide details of the proposed merger to their
shareowners through the distribution of proxy material which shareowners can
expect within a few months.
Southern Union is a publicly owned international energy company
headquartered in Austin, Texas, that primarily engages in the distribution of
natural gas and is the fifteenth largest distributor in the nation. The
company serves more than 1 million customers through its three natural gas
divisions in Texas, Missouri, Florida, its propane distribution subsidiaries,
and its equity ownership in a natural gas distribution company serving Piedras
Negras, Mexico. Through its subsidiaries, Southern Union also markets natural
gas to end users, operates propane distribution and natural gas pipeline
systems and markets propane gas.
PEI is a holding company with regulated and non-regulated subsidiaries.
The regulated group consists of PG Energy and its subsidiary, Honesdale Gas
Company, which together provide natural gas to more than 153,000 customers in
13 counties in northeastern and central Pennsylvania. The non-regulated group
consists of PEI Power Corp., Theta Land Corp. and PG Energy Services and its
subsidiary, Keystone Pipeline Services, Inc. PG Energy Services markets
energy and energy products in a large area of Pennsylvania under the name
PG Energy PowerPlus.
This press release contains forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934, and each of these
forward-looking statements is subject to factors that could cause actual
results to differ from those in such statements. The Company cautions that
assumptions, projections, expectations, intentions or beliefs about future
events, while expressed in good faith and believed by the Company to have a
reasonable basis, may and often do vary from actual results and the
differences between assumptions, projections, expectations, intentions or
beliefs and actual results can be material. Accordingly, there can be no
assurance that actual results will not differ materially from those expressed
or implied by the forward-looking statements. Factors that could cause actual
results to differ from those contained in forward-looking statements are
discussed in detail in periodic reports filed by the Company and by Southern
Union with the Securities and Exchange Commission which the Company urges
investors to consider.
PEI news releases are available on the Company's web site at
http://www.pnt.com. Selected press releases are available 24 hours a day by
fax by calling 1-800-758-5804 on a touch-tone phone. By using PEI's
identification number 684209 and following the prompted instructions, copies
of press releases will be faxed to you immediately free of charge.
SOURCE Pennsylvania Enterprises, Inc.
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Related links:
http://www.pnt.com
Company News On-Call:
http://www.prnewswire.com/comp/684209.html or fax,
800-758-5804, ext. 684209
CONTACT:
John J. Hambrose of Pennsylvania Enterprises,
570-829-8756
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