Southwest Gas says potential damages limited in suit

Tuesday, Jan. 8, 2002 | 10:43 a.m.

Southwest Gas Corp. said Monday its potential damages in a lawsuit it is defending against in an Arizona federal court total $1 million, plus possible punitive damages.

Southwest Gas is embroiled in litigation with two former suitors for the company: ONEOK Inc. of Tulsa, Okla., and Southern Union Co. of Austin, Texas. After an unsolicited bid by Southern Union was rejected by Southwest in 1999, Southern Union sued Southwest and ONEOK, raising charges of regulatory manipulation. The charges prompted ONEOK to withdraw its $1.8 billion offer for Southwest in early 2000, and all three companies ended up suing one another.

In a Friday ruling a Phoenix federal judge dismissed claims by ONEOK and Southwest Gas against Southern Union. Southern Union will be allowed to proceed with claims against ONEOK and Southwest Gas, and ONEOK and Southwest Gas may proceed with claims against each other. In all cases, the companies may claim out-of-pocket expenses associated with the failed merger deals, plus potential punitive damages.

Southwest Gas said the potential exposure of both companies from Southern Union's expenses totals about $1 million, plus potential punitive damages. Michael O'Connor, an attorney representing Southwest Gas, said expenses claimed by both ONEOK and Southwest Gas against each other total about $4 million.

Southwest Gas said it believes it will prevail in the remaining claims, but that its potential exposure to the remaining claims, including punitive damages, "will not have a material impact on its financial condition."

"Southwest believes the economics of further litigation should dictate an early resolution of this matter," said Southwest Gas Chairman Thomas Hartley. A trial is now set to begin in Phoenix on Oct. 15.

Meanwhile, ONEOK said its potential exposure on claims by Southern Union and Southwest is less than $7 million, not including possible punitive damages. ONEOK Chairman and Chief Executive David Kyle said he was "very pleased" with the ruling, noting that original claims by Southern Union and Southwest Gas against ONEOK had exceeded $1 billion.