Southwest Gas merger hearings pushed back to February 2000

David Strow

Thursday, Oct. 28, 1999 | 11:02 a.m.

Hearings in Arizona on the $1.8 billion merger of Southwest Gas Corp. and an Oklahoma company have been pushed back to next year -- but an Arizona official is vowing this delay will be the last.

In a Securities and Exchange Commission document filed Wednesday, Las Vegas-based Southwest Gas said the Arizona Corporation Commission had decided to delay hearings on Southwest's planned merger with Tulsa, Okla.-based ONEOK Inc. until Feb. 11, 2000. Hearings had been set for Dec. 2.

"The ACC staff requested an additional eight weeks to review the voluminous information filed in this matter, as well as conduct additional discovery," Southwest's SEC filing said.

It is the fifth delay so far in Arizona, and was ordered by the ACC's hearing officer after requests from the ACC staff and the Arizona Residential Utility Customers Association. Southwest Gas had initially hoped to close the transaction by the end of the year.

"There's a feeling here that this could go on forever," said Jerry Porter, chief aide to ACC Chairman Carl Kunasek. "This will be the last delay, and the staff is supposed to have a report right after New Year's."

Hearings were initially set to begin Sept. 1 when it was revealed ACC Commissioner Jim Irvin was the subject of state and federal investigations into allegations he participated in an effort to derail a hostile bid by Austin, Texas-based Southern Union Co. through the regulatory process. That charge was initially raised in a federal racketeering lawsuit by Southern Union against Southwest Gas and ONEOK, filed July 20 in Phoenix.

Wednesday's delay was triggered by the release of nearly 1,000 pages of internal documents from Prudential Securities Inc. to the ACC. The documents detailed Prudential's dealings with Jack Rose, former executive secretary of the ACC. The documents seem to indicate Rose was attempting to broker an $800 million financing package for Prudential from ONEOK, connected to the Southwest Gas transaction. Southern Union claims it was harmed by the alleged involvement of Irvin and Rose in the deal.

ONEOK has denied any such negotiations, or any intent to use Prudential in a Southwest Gas transaction.

"We believe that the additional time ... is entirely appropriate," said Southwest spokesman Lew Phelps. "The Arizona Corporation Commission needs to take the time to fully understand all of the details involved here. If they require more time to come to a complete understanding, that's the right thing to do.

"We're absolutely confident that at the end of this process, the facts will show that Southwest Gas, its officers and representatives did nothing illegal or improper with their conduct with the Arizona Corporation Commission or anywhere else."

Phelps wouldn't comment on whether Southwest believed the Prudential papers were jeopardizing the merger.

"Until we get to the end of this process, no speculation about the outcome will be appropriate," he said.

The merger has been approved in Nevada, as well as by Southwest Gas shareholders. However, the deal cannot move forward unless approved by Arizona, home to a majority of Southwest Gas's customers.

The repeated delays are starting to frustrate some officials in the ACC.

Porter, ONEOK's most vocal critic in the ACC, said he wanted the vote to move forward as soon as possible.

"My own read here is that this thing needs to come to a vote," Porter said. "It's not good for Southwest Gas to be kept in limbo. At some point very soon, this needs to be resolved favorably or not favorably."