Southwest Gas PR Exec Pleads Fifth 354 Times Says Southern Union Company.

Business Editors & Energy/Legal Writers

AUSTIN, Texas--(BUSINESS WIRE)--Jan. 11, 2001

Southern Union Company (NYSE:SUG) issues the following press release in response to statements reported yesterday that were made by Southwest Gas Corporation (NYSE:SWX) attorney Michael O'Connor.

In Southern Union Company's lawsuit (U.S.D.C., District of Arizona, case No. CIV-99-1294-PHX-ROS) against Southwest Gas Corporation, Lewis Phelps, a senior member of Sitrick & Company, Southwest Gas' public relations firm and Southwest's primary contact, took the Fifth Amendment privilege against self incrimination a total of 354 times in response to questions related to Phelps' work for Southwest Gas in its failed merger.

"It is ironic, to say the least, that while Southwest Gas is claiming that Southern Union's case against Southwest is without merit, its agents are pleading the Fifth," said Peter H. Kelley, president and chief operating officer of Southern Union Company. "For months, Southwest Gas Corporation tried to hide from us, from its own shareholders and from the public, its use of Sitrick & Company to defeat Southern Union's offer. Now that we have obtained Sitrick & Company documents and Lewis Phelps has taken the Fifth, we understand why."

According to Dennis K. Morgan, Southern Union Company senior vice president -- Legal, "Even before Southwest Gas Corporation's Board of Directors had decided whether to accept ONEOK's (NYSE:OKE) or Southern Union's offers during the very time Southwest was supposedly evaluating Southern Union's offer in good faith, Sitrick & Company documents (April 1999) reveal that Southwest Gas' senior management set out on a 'strategy,' the 'challenge' of which was to 'convince' Southwest Gas' shareholders that ONEOK's lower bid was preferable to Southern Union's financially superior offer. This strategy culminated -- one week before the shareholders' vote on the merger -- in Phelps using two aliases to post messages anonymously on Yahoo! Finance for Southwest Gas. In these anonymous postings, Phelps argued to Southwest Gas shareholders that anyone who voted against the Southwest Gas/ONEOK merger was 'nuts.'"

Morgan further stated, "Amazingly, Sitrick & Company even billed Southwest Gas through its attorneys, O'Melveny & Myers, and was paid for these anonymous 'Web postings.'" Morgan explained that Thomas Sheets, Southwest Gas' general counsel, approved the invoices for payment. Michael Sitrick, the principal owner of Sitrick & Company, testified (U.S.D.C., District of Arizona, Dec. 4, 2000) that all the work Sitrick & Company did on behalf of Southwest Gas was with Southwest's knowledge and consent. As Southern Union Company reported earlier this week, Thomas Sheets, the general counsel for Southwest Gas, also posted messages anonymously on Yahoo! Finance message boards of Southwest, ONEOK and Southern Union using four different aliases. Under oath, Sheets described his own conduct as "nuts."

Southern Union is an international energy distribution company serving nearly 1.6 million customers in Texas, Missouri, Pennsylvania, Rhode Island, Massachusetts, Florida, and Mexico. Its natural gas operating divisions include Southern Union Gas, Missouri Gas Energy, PG Energy, Atlantic Utilities, and New England. In Texas, Southern Union Gas serves approximately 523,000 customers, including the cities of Austin, El Paso, Brownsville, Galveston, and Port Arthur. Missouri Gas Energy serves approximately 491,000 customers in western Missouri, including the cities of Kansas City, St. Joseph, Joplin, and Monett. And, in Pennsylvania, PG Energy serves approximately 154,000 customers, including the cities of Wilkes-Barre, Scranton and Williamsport. New England serves 286,000 customers throughout Rhode Island, Massachusetts including Fall River and North Attleboro. Atlantic Utilities operates in Florida.

This release and other Company reports and statements issued or made from time to time contain certain "forward-looking statements" concerning projected future financial performance, expected plans or future operations. Southern Union Company cautions that actual results and developments may differ materially from such projections or expectations.

Investors should be aware of important factors that could cause actual results to differ materially from the forward-looking projections or expectations. These factors include, but are not limited to: weather conditions in the Company's service territories; cost of gas; regulatory and court decisions; the receipt of timely and adequate rate relief; the achievement of operating efficiencies and the purchase and implementation of new technologies for attaining such efficiencies; impact of relations with labor unions of bargaining-unit employees; and the effect of strategic initiatives (including any recent, pending or potential acquisition or merger, and any related financing arrangements) on earnings and cash flow. Most of these factors are difficult to accurately predict and are generally beyond the control of the Company.