Southwest Gas merger picks up support; hearings delayed again

David Strow

Tuesday, Sept. 14, 1999 | 11:35 a.m.

Hearings on Las Vegas-based Southwest Gas Corp.'s planned merger with ONEOK Inc. have been delayed yet again in Arizona.

On Friday, Southwest announced in a Securities and Exchange Commission filing that hearings before the Arizona Corporation Commission have been rescheduled to begin Nov. 4, two weeks after the original date scheduled. However, hearings were delayed because of scheduling issues involving some of the parties involved, rather than new concerns by Arizona regulators.

Hearings were initially delayed at the beginning of September to allow the commission to further investigate the involvement of Arizona Commissioner Jim Irvin and former ACC executive secretary Jack Rose in the Southwest-ONEOK deal. ACC Chairman Carl Kunasek's office has expressed concerns that the regulatory process was used to avoid a proxy battle for Southwest, a charge both Southwest and ONEOK deny.

Meanwhile, the ACC granted intervenor status to the Arizona Utility Investors Association, which says it plans to support the ONEOK takeover. The association represents about 6,000 investors and its corporate membership includes Southwest.

The current charges delaying Arizona hearings "have cast a pall over the merger, at least to some extent," said association President Bill Meek. However, he said the association remains convinced that the ONEOK offer is superior to that of Southern Union Co., the Texas company whose higher bid for Southwest was spurned earlier this year.

"One, it's very difficult to unravel a deal the two companies have already approved," Meek said. "Two, if the deal did become unraveled, I think the shareholders would be very badly served, because there's no way in the world Southern Union is going to get that company.

"There's no question those shareholders that want cash would suffer as a result of losing this deal."

Meek, who has been involved in extensive testimony before the ACC over the past five years, said he doubted the deal would be scuttled by Arizona regulators. He noted that Kunasek and Irvin have been engaged in a bitter political feud for several years.

"Southern Union knew the effect it would have on the Arizona Commission" when it filed a racketeering lawsuit against ONEOK and Southwest, Meek said. "There's a big difference between the rarefied atmosphere of deciding whether ONEOK is a fit company ... and the ugly mood that prevails in the Arizona commission.

"Southern Union knew the effect it would have on the Arizona commission when it filed its lawsuit. But I have a hard time believing two of those commissioners will kill this deal on what seems to be ... a lot of innuendo."

Although the organization has been granted intervenor status, Meek said it isn't certain that the organization will actually give testimony.

"We need to preserve our ability to file testimony if we need to," Meek said. "I'm going to wait and see what the record looks like."