Sandell Asset Management Corp. Again Seeks Concrete Plan From Board of Southern Union Company (NYSE: SUG) to Close Valuation Gap and Urges Board to Consider Sale of the Company

Sandell Affiliate Announces Intention to Nominate Director Candidates and

Commences Litigation Seeking to Invalidate Entrenchment Bylaw

Dec 05, 2006, 00:00 ET from Sandell Asset Management Corp.

    NEW YORK, Dec. 5 /PRNewswire/ -- Sandell Asset Management Corp.
 announced that it has sent a letter to Southern Union Company again seeking
 concrete steps to enhance stockholder value and close the valuation gap
 between the stock price and what Sandell believes to be the stock's
 intrinsic value. In the absence of a plan from Southern Union, Sandell
 itself put forth various proposed initiatives for value creation and openly
 requested input from the board. Sandell urged the board to put the company
 up for sale if it remains unwilling to restructure the company in a manner
 more conducive to public market value creation. "In our experience, well
 governed companies that take their responsibility to shareholders seriously
 detail specific plans for value creation and allow management and the Board
 to be graded against such goals," Sandell said in the letter. "Regrettably,
 we have seen no such plan from SUG and can only assume that one does not
 exist," the letter continued. "We firmly believe that Southern Union has a
 very valuable collection of assets and that the market currently does not
 fully reflect the value of these assets ... If the Board is unwilling to
 restructure the Company in a manner more conducive to public market value
 creation, we urge the Board to put Southern Union up for sale." Attached to
 the letter was an analysis containing more specific details of Sandell's
 proposals. Sandell and certain of its affiliates hold more than 9.8% of the
 company's common stock and are, to their knowledge, the company's largest
     Sandell also announced that Castlerigg Master Investments Ltd., an
 investment fund affiliated with Sandell, notified Southern Union of its
 intention to nominate three highly qualified independent candidates for
 election to the board of directors at the 2007 annual meeting of
 stockholders. Sandell, Castlerigg and others currently intend to conduct a
 proxy solicitation seeking to elect this minority slate to the board. In
 connection with the notice, Castlerigg simultaneously delivered a demand
 letter seeking to exercise its right pursuant to Delaware law to inspect
 and make copies or extracts from certain stocklist materials of Southern
     In order to preserve its right as a stockholder to nominate director
 candidates, Castlerigg also filed a complaint in the Delaware Court of
 Chancery in which it, among other things, charges that the director
 nomination provision of Southern Union's bylaws is invalid. The suit
 alleges that the challenged bylaw provision is an entrenchment device that
 purports to strip stockholders of their right under Delaware law to
 nominate director candidates by providing that candidates must be approved
 by a hand-picked committee of incumbent directors.
     "We will continue to make every effort to work constructively with the
 board and management in our efforts to focus them on delivering maximum
 value for the benefit of all stockholders," said Thomas E. Sandell,
 founder, principal and Chief Executive Officer of Sandell Asset Management
 Corp. "We each have a significant vested interest in seeing the company's
 valuation improved."
     About Sandell Asset Management Corp.
     Sandell Asset Management Corp. is a multi-billion dollar global
 investment management firm, founded by Thomas E. Sandell, that focuses on
 global corporate events and restructurings throughout North America,
 Continental Europe, the United Kingdom, Latin America and the Asia-Pacific
 theatres. Sandell frequently will take an "active involvement" in
 facilitating financial or organizational improvements accruing to the
 benefit of investors.

SOURCE Sandell Asset Management Corp.