Employees, nonprofits praise the chosen suitor of LV’s Southwest Gas

David Strow

Friday, May 28, 1999 | 11:37 a.m.

If Southern Union Co. has any local allies in its fight to take over Southwest Gas Corp. of Las Vegas, it wasn't apparent Thursday night.

About 150 people, virtually all of them employees of Southwest Gas, attended the Public Utilities Commission's Las Vegas consumer hearing on the proposed merger between Southwest and ONEOK Inc. of Tulsa, Okla.

Those attending spent as much time praising Southwest's community involvement as they did bashing Southern Union, which is attempting to derail the ONEOK bid with a hostile takeover bid for Southwest.

Southwest's employees, assured by management that ONEOK has no plan to lay them off, threw their support behind ONEOK.

"Morale in Southwest Gas has not changed since (the merger announcement), since Southwest has kept us well-informed," said Southwest employee Cathie Matthias. "ONEOK will protect the financial security of Southwest employees."

ONEOK has offered to pay $30 a share, or $1.8 billion, for Southwest, a bid Southwest's board has accepted. It rejected an unsolicited bid of $33.50, or $1.88 billion, offered by Southern Union, based in Austin, Texas.

Southern Union, under an injunction from a federal judge in Oklahoma barring it from trying to influence Southwest's shareholders, did not send anyone to the meeting.

"I believe you're (employees) here because you care about the future of this company," said Thomas Sheets, vice president and general counsel of Southwest. "ONEOK has told us that our jobs will be secure. It is illogical for anyone to criticize the board for considering these kind of things ... the degree of customer service, community involvement."

The most significant criticism of Southern Union came from Deputy Attorney General Eric Witkoski, who works in the state Bureau of Consumer Protection.

"Our focus is the ratepayers, to make sure there's no harm to them," Witkoski said. "We have done some preliminary analysis of Southern Union, and we would have difficulty supporting their application."

Witkoski said Southern Union's more expensive bid for Southwest would put pressure on a combined Southern-Southwest to increase rates. He added that he spoke to state officials in Missouri, who told him "they've had some serious ... concerns about how they operated there."

Witkoski's comments gave credence to one of Southwest's main arguments for spurning Southern Union: that such a merger would probably not win the approval of state regulators.

Southwest won accolades from leaders of several Las Vegas charities.

"We have had a long-standing relationship with Southwest Gas, and we support the merger with ONEOK," said Lt. Col. Maud Sullivan of the Salvation Army. "Through their help, we have been able to help underprivileged families and seniors who have had trouble paying their gas bills.

"We think it's important to have these kind of things in the community. We feel with this merger (with ONEOK), this will continue to go on ... these companies are compatible. We want to see the same kind of support continue."

By contrast, Southern Union has little history of supporting the communities it serves, claimed Garth Winckler, president of the United Way of Southern Nevada. He said he'd called his counterparts in Austin and Tulsa to ask how the companies involved themselves in the community.

"Their answers were like Charles Dickens' 'Tale of Two Cities' ... the best of times, the worst of times," Winckler said. "These two companies have a much different corporate philosophy. It appears Southern Union is much less invested in the community it serves."

Only one speaker wasn't buying the praise for Southwest: John Menerdierck, a Las Vegas retiree. The resident of the Meadows Mobile Home Community used the forum to blast Southwest for allegedly tripling the gas bills of the community's 600 senior residents after repairing a gas leak in February 1998.

"We were paying $30 to $40 monthly bills," he said. "Our bills went to $150 a month, and some of us are paying $190. Southwest made $50 million, $60 million this quarter. I think we paid a good portion of that. I can see why two major corporations would be interested in Southwest Gas."

Another Las Vegas resident, John Smith, said he was a Southwest shareholder, and expressed concern that no Southern Union official attended. The difference between ONEOK's and Southern Union's bid, he said, meant $5,000 to him.

"I don't buy stock to be a Good Samaritan," Smith said. "I buy stock to make a buck. Something's missing because Southern Union isn't here to present their case."

Commissioner Don Soderberg told the audience the commission had granted intervenor status to Southern Union, and he believed the injunction didn't prevent the Texas company from attending the meeting. But Southern Union Treasurer George Yankowski said his company was obeying the judge's order by staying away.

Soderberg