<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
UNITED CITIES GAS COMPANY
(Name of Issuer)
COMMON STOCK, WITHOUT PAR VALUE
(Title of Class of Securities)
909823106000
(CUSIP Number)
STEPHEN A. BOUCHARD, ESQ.
FLEISCHMAN AND WALSH, L.L.P.
1400 SIXTEENTH STREET, N.W.
WASHINGTON, D.C. 20036
(202) 939-7900
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
AUGUST 20, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this state-
ment [ ]. (A fee is not required only if the reporting person:
1) has a previous statement on file reporting beneficial owner-
ship of more than five percent of the class of securities
described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of
such class. See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
information which would alter disclosures provided in a prior
cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise sub-
ject to the liabilities of that section of the Act but shall be
subject to all other provisions of the Act (however, see the
Notes.)
This Amendment No. 1 amends and supplements the Schedule 13D
filed with the Securities and Exchange Commission on August 1,
1996 on behalf of the Reporting Person. Capitalized terms used
herein without definition shall have the respective meanings
ascribed thereto in such Schedule 13D.
Item 4. Purpose of Transaction
- -------------------------------
Item 4 is hereby amended and supplemented in its entirety to read
as follows:
(a)-(j)
The Reporting Person intends to continuously review its invest-
ment in the Issuer, and to explore all options that may be avail-
able to it relating to its investment in the Issuer.
(a)
The Reporting Person may purchase additional shares of Common
Stock, or may in the future decide to sell a portion or all of
any shares of Common Stock that it may now or hereafter own. The
Reporting Person's decisions as to additional purchases or any
sales of any shares of Common Stock will be made in light of mar-
ket conditions, applicable legal and regulatory considerations,
and other factors that the Reporting Person may from time to time
deem appropriate.
(b)-(j)
Although the Reporting Person presently has no definite plans or
proposals relating to or that would result in any transaction of
the types described in paragraphs (b) through (j) of Item 4 to
Schedule 13D, the Reporting Person is exploring options that
could relate to or result in plans or proposals in the future
with respect to one or more such transactions, including opposing
or proposing alternatives to the sale of the Issuer to Atmos
Energy Corporation (NYSE: ATO; "Atmos") as presently proposed by
the Issuer's board of directors. Such alternatives may include
transactions involving or affecting the Issuer or its securities,
either directly or indirectly, including transactions involving
or affecting the Issuer's proposed purchaser, Atmos, or its
securities.
To assist it in its exploration of such options, on August 20,
1996, the Reporting Person filed a complaint in the United States
District Court for the Middle District of Tennessee (Nashville
Division) (the "Tennessee Complaint"), alleging that the Issuer's
board of directors failed to exercise their fiduciary duties
properly in approving the proposed merger into Atmos. The
Tennessee Complaint seeks preliminary and permanent injunctive
relief against the Issuer (1) to prevent its taking any further
action to consummate the proposed merger until such time as the
Issuer's board has properly exercised its fiduciary duties and
(2) directing the Issuer to provide the Reporting Person with
confidential information in order to provide the Reporting Person
with the option of making an informed offer for the Issuer, in
the event it determines to do so. A copy of the Tennessee Com-
plaint is filed as Exhibit 3 hereto.
On August 6, 1996, the Issuer and Atmos filed a joint Complaint
(the "MPSC Complaint") against the Reporting Person with the
Public Service Commission of the State of Missouri (the "MPSC").
The MPSC Complaint alleges, among other things, that the
Reporting Person purchased Common Stock without the prior
approval of the MPSC in violation of Missouri law. The MPSC
Complaint seeks, among other things, (i) a declaration by the
MPSC that the purchases of Common Stock by the Reporting Person
are in violation of Missouri law and are void and of no effect,
(ii) an order by the MPSC requiring the Reporting Person to
submit a plan of divestiture of the Common Stock for approval of
the MPSC, (iii) an order by the MPSC requiring that the Reporting
Person cease and desist any further purchases of the Common
Stock, (iv) an order by the MPSC requiring the Reporting Person
to refrain from exercising any incidents of ownership in the
Common Stock, and (v) maximum penalties in the amount of two
thousand dollars ($2,000) for each separate and distinct offense
of Missouri Law by the Reporting Person. The Reporting Person
intends to defend vigorously against the MPSC Complaint.
On August 19, 1996, the Reporting Person filed a complaint in the
United States District Court for the Eastern District of Missouri
(Southern Division) (the "Missouri Complaint") seeking a declara-
tory judgment that the Reporting Person is entitled to all the
usual and customary rights and privileges of ownership of its
shares of Common Stock because the Missouri statute that is the
basis of the MPSC Complaint is not applicable to the Reporting
Person's purchases of the Common Stock or otherwise is unconsti-
tutional under the federal and Missouri constitutions. A copy of
the Missouri Complaint is filed as Exhibit 4 hereto.
Item 7. Material to be Filed as Exhibits
- -----------------------------------------
Item 7 is hereby amended and supplemented by adding the following
at the end thereof:
Exhibit 3 Complaint of Southern Union Company filed in the
United States District Court for the Middle District of Tennessee
(Nashville Division) on August 20, 1996
Exhibit 4 Complaint of Southern Union Company filed in the
United States District Court for the Eastern District of Missouri
(Southern Division) on August 19, 1996
Exhibit 5 Press release of Southern Union Company issued on
August 20, 1996
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this state-
ment is true, complete and correct.
August 20, 1996
- ---------------
(Date)
STEPHEN A. BOUCHARD
- -------------------
(Signature)
Stephen A. Bouchard
Attorney-in-fact
- -------------------
(Name and Title)
Index to Exhibits
-----------------
Exhibit 3 Complaint of Southern Union Company filed in the
United States District Court for the Middle District of Tennessee
(Nashville Division) on August 20, 1996
Exhibit 4 Complaint of Southern Union Company filed in the
United States District Court for the Eastern District of Missouri
(Southern Division) on August 19, 1996
Exhibit 5 Press release of Southern Union Company issued on
August 20, 1996
<PAGE>
EXHIBIT - 3
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
SOUTHERN UNION COMPANY, )
)
Plaintiff, )
)
v. ) Case No.
)
UNITED CITIES GAS COMPANY, )
JERRY H. BALLENGEE, )
DWIGHT C. BAUM, )
RICHARD W. CARDIN, )
THOMAS J. GARLAND, )
DALE A. KEASLING, )
GENE C. KOONCE, )
VINCENT J. LEWIS, )
DENNIS L. NEWBERRY, )
STIRTON OMAN, JR., )
TIMOTHY W. TRIPLETT, )
GEORGE C. WOODRUFF, JR., )
JAMES B. FORD, )
THOMAS R. BLOSE, JR., )
)
Defendants. )
COMPLAINT
---------
For its complaint against the Defendant, United Cities Gas Com-
pany ("United") and the individual officers and directors of
United named herein, Plaintiff Southern Union Company
("Southern") states:
JURISDICTION AND VENUE
----------------------
1. This is an action for injunctive relief to enforce
Southern's rights.
2. This Court has subject matter jurisdiction over this con-
troversy pursuant to 28 U.S.C. Section 1332 because the
parties are citizens of different states and the amount in
controversy exceeds $50,000, exclusive of interest and
costs.
3. Venue is proper in this District and this Division because
United resides in this District within the meaning of 28
U.S.C. Section 1391(c) and maintains offices within this
Division, and because a substantial part of the events or
omissions giving rise to the claims occurred in this
District.
THE PARTIES
-----------
4. Southern is a corporation organized under the law of the
State of Delaware and has its principal offices and place of
business in the State of Texas.
5. United is a corporation organized under the law of the
States of Illinois and Virginia and has its principal
offices and place of business in the State of Tennessee.
6. Defendants Jerry H. Ballengee, Dwight C. Baum,
Richard W. Cardin, Thomas J. Garland, Dale A. Keasling,
Gene C. Koonce, Vincent L. Lewis, Dennis L. Newberry,
Stirton Oman, Jr., Timothy W. Triplett and
George C. Woodruff, Jr. are each members of United's Board
of Directors. None of these defendants are a citizen of
Delaware or Texas.
7. Defendant Gene C. Koonce is the Chief Executive Officer of
United and a member of its Board of Directors. He resides
in Tennessee.
8. Defendant James B. Ford is the Senior Vice President and
Treasurer of United. He resides in Tennessee.
9. Defendant Thomas R. Blose, Jr. is the Senior Vice President
- Operations and Engineering of United. He resides in
Tennessee.
CLAIM FOR INJUNCTIVE RELIEF
---------------------------
10. Prior to July 19, 1996, Southern acquired, in securities
transactions executed on the NASDAQ, 585,000 shares of
United's common stock. These shares represented approxi-
mately four and one-half percent (4 1/2%) of the issued and
outstanding shares of United common stock. At present,
Southern owns 854,300 shares (including 100 shares held in
Southern's name and evidenced by a certificate issued by
United) of United's common stock for which Southern has paid
in excess of Sixteen Million Dollars ($16,000,000).
11. On May 6, 1996, Peter H. Kelley, President of Southern, and
Ronald J. Endres, Executive Vice President and Chief
Financial Officer of Southern, attended the Financial
Analysts Conference of the American Gas Association. Also
present and making a presentation was James B. Ford, Senior
Vice President and Treasurer of United. Mr. Ford discussed
the financial condition and results of operations of United
at this meeting. In response to a question he indicated
that United was a buyer at the right price and a seller at
the right price.
12. Following Mr. Ford's presentation, Mr. Kelley and Mr. Endres
approached Mr. Ford and told him that Southern was
interested in United and wanted to meet with United repre-
sentatives about a possible acquisition transaction.
Mr. Ford said United was agreeable to such a meeting.
Thereafter, Mr. Endres spoke by telephone with Mr. Ford on
several occasions, attempting to schedule a meeting.
Mr. Ford offered a trip to Europe and a trip to the Olympics
as excuses for not holding a meeting. Finally, he agreed to
a meeting of certain United officers with Southern officers
on August 7, 1996 at Southern's offices in Austin, Texas.
That meeting never took place.
13. On or about July 22, 1996, United announced that it had
entered into definitive agreements whereby United would be
acquired, through a merger, by Atmos Energy Corporation
("Atmos"). A copy of the definitive agreements are attached
hereto as Exhibit A.
14. The representations of Mr. Ford concerning a meeting between
United and Southern were part of a deliberate effort to mis-
lead Southern into believing that it would have an oppor-
tunity to make an offer to acquire United. This was done
because United's senior management did not want to consider
an offer from Southern. They feared they would lose their
jobs, lucrative salaries, retirement benefits, emoluments
and perquisites if Southern acquired United. Instead, while
United was stalling and postponing acquisition discussions
with Southern, its management was actively pursuing United's
sale to Atmos to protect their jobs and other benefits.
15. On July 5, 1996, United entered into a Confidentiality
Agreement to exchange with Atmos confidential financial
information pertaining to United, which would give Atmos an
opportunity to make a bid. Thereafter on July 13, 1996,
Atmos and United signed a Stand-Still Agreement. Six days
later on July 19, 1996, Atmos and United entered into
definitive agreements (collectively, the "definitive agree-
ment"), pursuant to which United is to be sold to Atmos.
The definitive agreement provides that Atmos will be paid a
break-up fee of $15,000,000 if the definitive agreement is
terminated (i) by United in the exercise of the fiduciary
duties of the United board of directors with respect to a
competing transaction, (ii) by Atmos if the United board of
directors takes a position recommending a competing trans-
action or fails to recommend the merger with Atmos to the
shareholders of United, or (iii) by Atmos if the share-
holders of United approve a competing transaction.
16. Pursuant to the definitive agreement, Mr. John B. Ford,
Mr. Thomas R. Blose, Jr. and Mr. Gene C. Koonce will receive
lucrative employment contracts from Atmos; Mr. Ford and
Mr. Blose will share with others in a $5,000,000 benefit;
and Mr. Koonce will receive a $2,247,434 benefit.
The following allegations are made upon information and
belief:
17. Prior to July 1996, the Board of Directors of United had not
considered a transaction involving the sale of United and
had not:
(a) Caused to be prepared studies of United's financial
condition with a view toward determining the maximum
amount that could be realized by the shareholders;
(b) Engaged investment bankers charged with studying the
value of United in a transaction with an unrelated
party;
(c) Taken other necessary and appropriate steps prior to
the time a corporation determines that it should be
sold.
18. United's senior management was aware of Southern's reputa-
tion for entrepreneurial activities and efficient manage-
ment. They were concerned that their jobs, lucrative
salaries, retirement benefits, emoluments and perquisites
would not survive an acquisition of United by Southern.
19. Acting in haste in response to Southern's expressions of
interest, United's senior management determined that Atmos
would be the company most likely to offer them jobs, lucra-
tive salaries, retirement benefits, emoluments and
perquisites and to retain their services for an extended
term. In their joint news release of July 19, 1996 the
chairman of Atmos confirmed their belief when he said that
the two companies had "similar management philosophies."
20. Having determined that Atmos was their desired new employer,
United's senior management pursued an exclusive plan of
action designed solely to arrange a transaction with Atmos
and thereby preclude any bid of Southern.
21. The break-up fee is unconscionable in size, is not reason-
ably related to any cost to Atmos and is designed to protect
the positions sought by United's senior management. Such
amount, which could be an additional cost to Southern in a
transaction involving United, together with United's agree-
ment not to disclose confidential information to any party
desiring to make a bid for United, precludes Southern from
making an informed bid for United since Atmos possesses
information concerning the financial condition and prospects
of United that are otherwise unavailable to Southern.
22. United's management intentionally negotiated the terms of
the definitive agreement concerning nonsolicitation of com-
peting offers (Section 3.2), the termination of the defini-
tive agreements (Section 3.11(b)(i) and Section 7.1), and
the making of any agreement with respect to a Competing
Transaction during the term of the definitive agreement
(Section 3.11(b)(ii)) so that, when operating in conjunction
with the control share acquisition provisions of the laws of
Illinois and Virginia (Paragraph 5/7.85 of the Illinois
Business Corporations Act and Paragraph 725 of the Virginia
Stock Corporation Act, respectively), the terms will effec-
tively preclude United's shareholders, including Southern,
from from securing consideration and approval of any com-
peting offers on the same basis as that by which the trans-
action contemplated by the definitive agreements may be
considered and approved by United's shareholders.
23. In authorizing the execution of the definitive agreement on
July 19, 1996 the Board of Directors of United failed in its
duty of care and loyalty in the following respects:
A. The board failed to consider and reach a judgment that
United should be offered for sale prior to beginning the
process;
B. The Board failed to meet on sufficient occasions and for
sufficient time to consider a transaction, including the
occasion when it approved the authorization of the
July 19, 1996 definitive agreement, and was otherwise
uninformed concerning the offer of Atmos and the fact
that it might be inferior to an offer that could be made
by another party;
C. The Board met in haste and without due deliberation;
D. The Board was not informed of Southern's willingness and
ability to make an offer;
E. The Board was not informed that it was possible that
Mr. Ford, Mr. Blose and Mr. Koonce would lose their
positions if a sale were made to Southern, whereas they
were to receive valuable benefits under the transaction
with Atmos;
F. The definitive agreement was not made available to the
Directors sufficiently prior to the meeting and
financial information in sufficient detail was not made
available prior to the meeting concerning potential
bidders for United and the offers that they might be
willing to make.
G. The Board deprived the shareholders of the opportunity
to obtain enhanced value for their shares by first fore-
stalling Southern from making an offer that management
did not want to consider and then entering into the no
shop, breakup fee and confidentiality provisions in the
definitive agreement with Atmos to attempt to prevent
Southern from making such an offer.
WHEREFORE, Plaintiff prays for a preliminary and permanent
injunction directing the Defendants to deliver to Plaintiff all
confidential information furnished to Atmos and enjoining the
Defendants from taking any further action to consummate the
merger with Atmos pursuant to the definitive agreement until one
of the following events has occurred:
A. Following receipt of an offer from Southern or a third
party, United's Board after becoming fully informed has
considered and determined in the exercise of their
fiduciary responsibilities that a sale is in the best
interest of United and its shareholders and has compared
Southern's offer and any other person's offer to acquire
United to Atmos' offer contained in the definitive
agreement and determined in the exercise of reasonable
business judgment that Atmos has offered superior value
to the United shareholders than Southern or any third
party has offered; or
B. No offer to acquire United has been made by Southern or
any third party within thirty (30) days after all of
such confidential information is furnished to Southern
and United's Board after becoming fully informed has
considered and determined in the exercise of their
fiduciary responsibilities that a sale is in the best
interest of United and its shareholders and that the
Atmos' offer represents fair value to United's share-
holders.
Plaintiff further prays that this Court retain jurisdiction after
entry of the preliminary and permanent injunctions for the pur-
pose of deciding if any determination by United's Board that
Atmos' offer is superior to Southern's offer or any third party
offer is in fact and law an exercise of reasonable business
judgment consistent with the Board's fiduciary responsibilities
to United's shareholders.
Plaintiff also prays for its costs and such other relief as the
Court may deem appropriate.
Respectfully submitted,
Harwell Howard Hyne Gabbert & Manner, P.C.
By GLENN B. ROSE
---------------
Glenn B. Rose
18th Floor
First American Center
315 Deaderick Street
Nashville, Tennessee 37238
615-256-0500
FAX 615-251-1057
Thompson Coburn
By W. STANLEY WALCH
------------------
W. Stanley Walch
Kenton E. Knickmeyer
One Mercantile Center
St. Louis, Missouri 63101
314-552-6000
FAX 314-552-7000
Attorneys for Plaintiff
Southern Union Company
Fleischman and Walsh, LLP
Stephen A. Bouchard
1400 16th St. NW
Washington, D.C. 20036
202-939-7900
FAX 202-265-5706
Of Counsel
<PAGE>
EXHIBIT - 4
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
SOUTHERN DIVISION
SOUTHERN UNION COMPANY, )
)
Plaintiff, )
)
v. ) Case No.
)
UNITED CITIES GAS COMPANY, )
)
Defendant. )
COMPLAINT
---------
For its complaint against the Defendant, United Cities Gas Com-
pany ("United"), Plaintiff Southern Union Company ("Southern")
states:
JURISDICTION AND VENUE
----------------------
1. This is an action for declaratory judgment (pursuant to 28
U.S.C. Section 2201) to establish Southern's status as a
shareholder of United.
2. This Court has subject matter jurisdiction over this con-
troversy (a) pursuant to 28 U.S.C. Section 1332 because the
parties are citizens of different states and the amount in
controversy exceeds $50,000, exclusive of interest and
costs, and (b) pursuant to 28 U.S.C. Section 1331 because
Southern's action arises, in part, under the Constitution
and laws of the United States.
3. Venue is proper in this District and this Division because
United resides in this District within the meaning of 28
U.S.C. Section 1391(c) and maintains offices within this
Division.
THE PARTIES
-----------
4. Southern is a corporation organized under the law of the
State of Delaware and has its principal offices and place of
business in the State of Texas. Southern has a distinct
operating division, Missouri Gas Energy ("MGE"), which sells
natural gas to customers in western Missouri pursuant to a
certificate of public convenience and necessity granted to
MGE by the Missouri Public Service Commission ("PSC").
5. United is a corporation organized under the law of the
States of Illinois and Virginia and has its principal
offices and place of business in the State of Tennessee.
United has operations in northeastern and southeastern
Missouri in which it sells natural gas to customers pursuant
to certificates of public convenience and necessity granted
to United by the PSC.
DECLARATORY JUDGMENT
--------------------
6. Prior to July, 1996, Southern acquired, in securities trans-
actions executed on the NASDAQ, 585,000 shares of United's
common stock. MGE did not participate in any way in pur-
chasing these shares of United's common stock. These shares
represented approximately four and one-half percent (4 1/2%)
of the issued and outstanding shares of United common stock.
7. On or about July 22, 1996, United announced that it had
entered into definitive agreements whereby United would be
acquired, through a merger, by Atmos Energy Corporation
("Atmos").
8. Between July 23, 1996 and July 31, 1996, Southern acquired
an additional 269,300 shares of common stock of United
through transactions executed on the NASDAQ. MGE did not
participate in any way in purchasing these shares of
United's common stock. As a result, Southern now holds a
total of 854,300 shares of United common stock, representing
approximately six and one-half percent (6 1/2%) of the issued
and outstanding shares of United common stock. All of such
shares are held by Southern in street name, except 100
shares that, as of August 6, 1996, are held of record. None
of the United shares owned by Southern are treated as assets
of MGE.
9. Southern's cash investment in the shares of United common
stock exceeds sixteen million dollars ($16,000,000).
10. On August 1, 1996, Southern timely filed with the Securities
and Exchange Commission (the "SEC") a Schedule 13D,
reporting its ownership of in excess of five percent (5%) of
the issued and outstanding common stock of United.
11. On or about August 6, 1996, United, joined by Atmos, filed a
complaint with the PSC in which it is asserted, among other
matters, that Southern's purchases of United common stock
are void pursuant to R.S.Mo. Section 393.190.3 because
Southern did not, prior to purchasing the shares of United
common stock described above, apply for or obtain approval
of the acquisition by the PSC pursuant to R.S.Mo. Section
393.190.2. A copy of that complaint is annexed hereto as
Exhibit 1.
12. Southern believes that the statute relied on by United and
Atmos does not apply to its open market purchases of shares
of United common stock because (a) the shares purchased by
Southern constitute an investment by Southern unrelated to
MGE's operation of a "gas plant", and consequently, pursuant
to R.S.Mo. Section 393.140(12), no approval was required
by the PSC; and (b) Southern's purchases of United shares do
not constitute a purchase of "the stock" of United within
the meaning of R.S.Mo. Section 393.190.2.
13. To the extent, if any, that R.S. Mo. Section 393.190
applies in the factual context of this situation and pur-
ports to render void Southern's acquisition of United's
shares, the statute is unconstitutional and, therefore, void
for each of the following reasons:
A. The statute impermissibly delegates legislative
authority to an administrative agency in violation of
Art. II, Section 1 of the Missouri Constitution because
it fails to prescribe the standards by which the PSC
shall determine whether or not to approve applications
for the acquisition of the stock of a gas corporation;
B. As applied in the context of this case, the statute
impermissibly purports to permit the State of Missouri
and the PSC to exercise jurisdiction over the internal
affairs of a foreign (Illinois and Virginia) corpora-
tion, which exercise is a void attempt by the State of
Missouri to make extraterritorial application of the law
of the State;
C. As applied in the context of this case, the statute
impermissibly attempts to regulate the time and manner
and the types of notification required to purchase and
sell securities in interstate commerce, a field which is
occupied to the exclusion of state law by the provisions
of the Securities Exchange Act of 1934, 15 U.S.C. Sec-
tion 78a et seq., and particularly by Sections 13 and 14
of the Exchange Act, 15 U.S.C. Sections 78m, 78n. As
such, the Missouri statute (R.S.Mo. Section 393.190) is
preempted by federal law and void under the Supremacy
Clause of the Constitution of the United States, U.S.
Const. Art. VI, Clause 2;
D. As applied in the context of this case, the statute
constitutes an unreasonable burden on, and constitutes
an impermissible attempt by the State of Missouri to
regulate the purchase and sale of securities in inter-
state commerce and is, therefore, void under the Com-
merce Clause of the Constitution of the United States,
U.S. Const. Art. I, Sec. 8, Clause 3.
14. Based on United's stated position in its Complaint to the
PSC, Southern is informed and believes that United is
refusing or will refuse to recognize Southern's beneficial
ownership of the 854,300 shares of United common stock
purchased by Southern by refusing to permit the United
shares purchased by Southern to be voted by Southern or its
proxy, suspending Southern's right to transfer the shares to
a third party and otherwise impeding Southern's rights and
priviledges as a United shareholder, all in reliance on the
alleged voidness -- pursuant to R.S.Mo. Section 393.190.3
-- of Southern's purchases of the 854,300 United shares made
in open market transactions on the NASDAQ.
15. A controversy also exists by virtue of United's filing of
the Complaint in the PSC in an attempt to obtain an admini-
strative declaration that Southern's purchases of 854,300
shares of United are void. The PSC's jurisdiction only
extends to the statutorily delegated authority to approve or
disapprove an application to acquire the stock of a gas
corporation. It has no statutory authority on the applica-
tion of an interested party to declare particular transac-
tions void or to deprive Southern of its property rights in
the shares. Any attempt to determine such issues by the PSC
would be an exercise of judicial authority in violation of
constitutional separation of powers principles reposing all
judicial authority in the courts. Althogh the PSC has made
no attempt to exercise such jurisdiction in response to the
Complaint filed by United, the filing thereof by United
demonstrates tha a controversy exists which is ripe for
judicial resolution by this Court.
16. By reason of the foregoing, an actual controversy exists
between Southern and United concerning Southern's status as
a shareholder of United.
WHEREFORE, Southern Union Company prays that this Court enter its
Declaratory Judgment determining:
A. that Southern Union Company is the owner of 854,300
shares of common stock of United Cities Gas Company;
B. that Southern Union Company is entitled to have such
shares transferred to its name on the books of United
Cities Gas Company;
C. that Southern Union Company is entitled to all the usual
and customary rights and privileges of shareholders of
United Cities Gas Company, including, but not limited
to:
1. the right to receive dividends in respect of
Southern's shares of United common stock as such
dividends shall be declared;
2. the right to vote Southern's shares of United common
stock on all matters which shall be presented to
United's shareholders for vote;
3. the right to inspect United's books and records;
4. the right to receive a list of the names and
addresses of United's other shareholders;
5. the right to submit resolutions for consideration by
United's shareholders;
6. the right to submit nominations for the election of
Directors of United;
and awarding Southern Union Company its costs and such other and
further relief to which it is entitled.
Respectfully submitted,
Thompson Coburn
By W. STANLEY WALCH
------------------------
W. Stanley Walch, #4623
Kenton E. Knickmeyer, #3577
One Mercantile Center
St. Louis, Missouri 63101
314-552-6000
314-552-7000 fax
Attorneys for Plaintiff
Southern Union Company
OF COUNSEL:
Stephen A. Bouchard
Fleischman and Walsh, LLP
1400 16th St. N.W.
Waxhington, DC 20036
202-939-7900
FAX 202-265-5706
<PAGE>
EXHIBIT - 5
SOUTHERN UNION COMPANY SEEKS TO ENJOIN
UNITED CITIES GAS COMPANY FROM FURTHER ACTIONS TO
MERGE INTO ATMOS ENERGY CORPORATION
AUSTIN, TEXAS (August 20, 1996) -- Southern Union Company
(NYSE:SUG) announced today that it has filed suit against United
Cities Gas Company (NASDAQ:UCIT), its Board of Directors and cer-
tain of its Executive Officers in U.S. District Court for the
Middle District of Tennessee (Nashville Division) with respect to
United Cities' sale by merger into Atmos Energy Corporation
(NYSE:ATO). Southern Union alleges that United Cities' Board and
Officers failed to exercise their fiduciary duties properly in
approving the proposed merger with Atmos. Southern Union seeks
preliminary and permanent injunctive relief against United
Cities: (1) to prevent its taking any further action to consum-
mate the proposed merger until such time as the Board has
properly exercised its fiduciary duties, and (2) to direct United
Cities to provide Southern Union with confidential information in
order to provide Southern Union with the option of making an
informed offer for United Cities. Southern Union is the owner of
854,300 common shares, or 6.5 percent of shares outstanding, of
United Cities.
On August 6, 1996, United Cities and Atmos jointly filed a com-
plaint with the Missouri Public Service Commission (MPSC) against
Southern Union alleging that Southern Union's purchases of United
Cities shares violated a Missouri utility regulatory statute.
Their complaint seeks, among other things, a declaration by the
MPSC that the purchases by Southern Union are null and void, and
an order prohibiting Southern Union from making additional pur-
chases of United Cities shares. Southern Union intends to defend
vigorously against the United Cities and Atmos complaint before
the MPSC.
Southern Union filed a complaint yesterday against United Cities
in the U.S. District Court for the Eastern District (Southern
Division) of Missouri seeking a declaratory judgment that
Southern Union is entitled to all the usual and customary rights
and privileges of ownership of its United Cities shares because
the Missouri statute that is the basis of the United Cities/
Atmos complaint at the MPSC is not applicable to Southern
Union's purchases of United Cities shares or otherwise is uncon-
stitutional under the federal and Missouri constitutions.
Southern Union Company headquartered in Austin, Texas, dis-
tributes natural gas to approximately 968,000 customers in Texas
and Missouri through two divisions, Southern Union Gas and
Missouri Gas Energy. Southern Union Gas serves approximately
497,000 in Texas (including cities of Austin, Brownsville, El
Paso, Galveston and Port Arthur). Missouri Gas Energy serves
approximately 471,000 customers in western Missouri (including
the cities of Kansas City, St. Joseph, Joplin and Monett).
