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
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 stockholder. 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 Union. 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.
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