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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 21, 2000
SOUTHWEST GAS CORPORATION
(Exact name of registrant as specified in its charter)
California 1-7850 88-0085720
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
5241 Spring Mountain Road
Post Office Box 98510
Las Vegas, Nevada 89193-8510
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 876-7237
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<PAGE>
Item 5. Other Events
On January 4, 2000, the staff of the Arizona Corporation Commission (ACC) issued
a report that stated it was unable to recommend approval of the merger of
Southwest Gas Corporation (the Company) and ONEOK, Inc. (ONEOK) due to concerns
about ONEOK's actions and fitness to serve in Arizona. On January 10, 2000,
ONEOK requested a 10-day delay in filing its rebuttal testimony in response to
the ACC staff report and recommendations. On January 14, 2000 the ACC granted
ONEOK's request for a 10-day delay and extended the hearing on the proposed
merger to February 22, 2000. On January 18, 2000, the Company sent ONEOK a
letter demanding that ONEOK cure the deficiencies identified in the ACC staff
report. A copy of this letter is attached.
On January 21, 2000 ONEOK responded to the Company's January 18th letter and
stated that it was terminating the merger agreement with the Company. In
addition, ONEOK filed a complaint against the Company in the United States
District Court for the Northern District of Oklahoma (Case No. 00CV063 K)
seeking a declaratory judgment that ONEOK has properly terminated the merger
agreement with the Company. ONEOK also informed the Company that it has filed a
withdrawal of its Application for an Order Authorizing Implementation of the
Agreement and Plan of Merger with the ACC. A copy of ONEOK's January 21st letter
and press release is attached.
On January 24, 2000 the Company filed a complaint against ONEOK and Southern
Union Company in the United States District Court for the District of Arizona
(Case No. CIV'00, 0119 PHX VAM) seeking unspecified damages against both
companies. Additional information about this complaint is provided in the
attached press release.
On June 9, 1999, the Company signed a Memorandum of Understanding (MOU) to
settle a purported shareholder class action filed on December 16, 1998 against
the Company and its directors arising out of the proposed merger with ONEOK. The
MOU was subject to several conditions, including the consummation of the
acquisition of the Company by ONEOK, a condition that will not be satisfied. The
MOU was not an admission of any of the shareholder plaintiffs' allegations. The
Company and its directors have denied and continue to deny any liability based
on the allegations in the purported shareholder class action.
Item 7. Exhibits
99.1 Letter from Southwest Gas Corporation to ONEOK dated January 18, 2000
99.2 Letter from ONEOK to Southwest Gas Corporation dated January 21, 2000
99.3 ONEOK press release dated January 21, 2000
99.4 Southwest Gas Corporation press release dated January 24, 2000
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SOUTHWEST GAS CORPORATION
Date: January 26, 2000 /s/ EDWARD A. JANOV
-----------------------------
Edward A. Janov
Vice President/Controller and
Chief Accounting Officer
EXHIBIT 99.1
[Southwest Gas Corporation letterhead]
CONFIDENTIAL
January 18, 2000
ONEOK, Inc.
100 West Fifth Street
Tulsa, OK 74103
ATTN: John A. Gaberino, Jr.
Re: Agreement and Plan of Merger, dated December 14, 1998, Among
ONEOK, Inc., Oasis Acquisition Corporation, and Southwest Gas
Corporation, as amended (the "Agreement")
Gentlemen:
As we are all now aware, Deborah R. Scott, the Director, Utilities Division of
the Arizona Corporation Commission (the "ACC") has given direct testimony to the
effect that the Staff of the ACC believes that approval of the merger of Oasis
Acquisition Corporation and Southwest Gas Corporation, as contemplated by the
Agreement, at this stage would be premature because ONEOK "has not provided
sufficient evidence to make an affirmative showing that the proposed merger is
in the public interest." In her direct testimony, Ms. Scott stated that the
Staff was unable to recommend approval of the merger at this time because of:
... the concerns addressed in Ms. Jaress' [Manager, Financial Analysis,
Utilities Division of the ACC] testimony regarding ONEOK's poor safety
record as compared to that of Southwest Gas; numerous consumer service
complaints; the potential financial liabilities, depending on the
outcome of the civil litigation matters; compounded by the allegations
set forth in the civil litigation; and the questionable conduct of
ONEOK representatives discussed above [in her direct testimony]....
<PAGE>
ONEOK, Inc.
Page 2
January 18, 2000
In her direct testimony, Ms. Scott makes several points that go to actions by
ONEOK and its executives. Ms. Scott recounts evidence regarding ONEOK's actions
in connection with the drafting of Commissioner Irvin's letter to the Southwest
Gas Board and ONEOK's relationship with Mr. Rose. Ms. Scott concludes that
"[t]he evidence described above casts doubts on ONEOK's truthfulness and the
Company's [ONEOK'S] ability to identify inappropriate conduct and apparent
conflicts of interest, or of its disregard for such actions."
These assertions by Ms. Scott, her recommendation to the ACC, and the stated
reasons therefor indicate that ONEOK has breached the Agreement because of its
failure to use all commercially reasonable efforts to obtain the required
regulatory approval from the ACC and to take all action and to do, or cause to
be done, all things necessary, proper, or advisable to consummate and make
effective the merger, all as required by the Agreement. We hereby demand that
you cure these breaches in accordance with the terms and conditions of the
Agreement.
We intend to continue to comply with our obligations under the Agreement,
reserving all our rights thereunder.
Very truly yours,
/s/ MICHAEL O. MAFFIE
Michael O. Maffie
President and Chief Executive Officer
c Robert A. Yolles, Esq.
Donald A. Kihle, Esq.
Members of the Board of Directors of ONEOK, Inc.
EXHIBIT 99.2
(ONEOK LETTERHEAD)
January 21, 2000
Southwest Gas Corporation
5241 Spring Mountain Road
Las Vegas, Nevada 89102
Attention: George C. Biehl (via fax to 702/364-8597)
Re: Agreement and Plan of Merger, dated as of December 14, 1998,
as amended among ONEOK, Inc., OASIS Acquisition Corporation,
and Southwest Gas Corporation (the "Merger Agreement")
Ladies and Gentlemen:
We received Michael Maffie's letter dated January 18, 2000, asserting
that ONEOK is in breach of the Merger Agreement. ONEOK rejects and denies any
notion that ONEOK has committed any breach of the Merger Agreement.
As you know, the Initial Termination Date under the Merger Agreement
was December 14, 1999. We have not entered into any agreement with you or
otherwise acknowledged that the conditions for an extension of this date under
Section 8.1(b) of the Merger Agreement were met. Accordingly, this letter
constitutes written notice to you that ONEOK has elected to terminate the Merger
Agreement and abandon the Mergers contemplated thereby pursuant to Section
8.1(b) of the Merger Agreement. The conditions for an extension of the Initial
Termination Date beyond December 14, 1999 under Section 8.1(b) were not met due
to the fact that, at that date, several conditions to the Closing under the
Merger Agreement had not been fulfilled and were not capable of being fulfilled.
Among these failed conditions was and is the pendency of Southern Union's
litigation against Southwest and ONEOK seeking billions of dollars in damages,
which would render Section 7.2(b) of the Merger Agreement incapable of
fulfillment as it applies to a "bringdown" to any date of Closing of Southwest's
representations in Sections 3.6 and 3.7 of the Merger Agreement.
Sincerely,
ONEOK, INC.
By: /s/ LARRY W. BRUMMETT
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Larry W. Brummett
<PAGE>
George C. Biehl
Southwest Gas Corporation
January 21, 2000
Page 2
cc: Oasis Acquisition Corporation
Robert A. Yolles (via fax to 312/782-8585)
Donald A. Kihle (hand delivered)
Frances E. Lossing (via fax to 213/430-6407)
EXHIBIT 99.3
ONEOK Financial News
ONEOK, Inc. Contact: Weldon Watson, 918-588-7158
P.O. Box 871
Tulsa, OK 74102-0871 For Immediate Release, January 21, 2000
ONEOK CALLS OFF MERGER WITH SOUTHWEST GAS
-----------------------------------------
Tulsa, Oklahoma -- ONEOK (NYSE: OKE) today announced that its Board of
Directors has voted to terminate its planned merger with Southwest Gas (NYSE:
SWX). The termination decision was made pursuant to a provision in the merger
agreement that permitted any party to terminate if certain conditions were not
fulfilled by December 14, 1999. ONEOK notified Southwest of the termination
today.
"We worked very hard to make this deal happen," said ONEOK Chairman and
Chief Executive Officer Larry Brummett, "but the bottom line is that even if we
assume that all regulatory approvals could be received in a timely manner, there
is simply too much financial risk associated with Southwest Gas right now and we
have a responsibility to protect our shareholders from excessive risk."
Brummett expressed financial concerns about Southwest, citing pending
claims against Southwest in a lawsuit filed by Southern Union, an Austin, Texas,
natural gas distributor that made a competing, unsuccessful bid to acquire
Southwest. That lawsuit, filed in July 1999, subsequent to the signing of the
merger agreement, was recently highlighted by Arizona regulatory staff as a
reason not to recommend approval of the merger at this time.
The merger had already received unanimous regulatory approval in Nevada
and had been recommended by the regulatory staff of the Public Utility
Commission for approval in California.
Brummett said ONEOK had been focused heavily on the Southwest Gas
merger for the past 12 months, but that Southwest's potential multi-million
dollar liability was too much risk for ONEOK to assume.
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<PAGE>
Page 2
"ONEOK's strategy of growth through acquisitions has not changed,"
Brummett said. "We just won't be making this particular acquisition. There are
other opportunities in the natural gas market that better meet our business
objectives, and we will be actively pursuing such opportunities."
The ONEOK and Southwest merger, under consideration for the past year,
would have created the largest stand-alone natural gas distribution network in
the U.S. ONEOK currently serves customers in Oklahoma and Kansas, and Southwest
serves Arizona and parts of California and Nevada.
ONEOK, Inc., is an integrated natural gas company involved in
production, processing, gathering, storage and transmission. The company is also
the largest natural gas distributor in Kansas and Oklahoma, operating as Kansas
Gas Service Company and Oklahoma Natural Gas Company, serving 1.4 million
customers.
# # #
Statements contained in this release that include company expectations or
predictions are forward-looking statements intended to be covered by the safe
harbor provisions of the Securities Act of 1933 and the Securities Exchange Act
of 1934. It is important to note that the actual results could differ materially
from those projected in such forward-looking statements. More information about
the ONEOK and Southwest Gas transaction can be found under Company News on the
ONEOK web site at www.oneok.com. Service area maps and logos are available under
Media Kit.
EXHIBIT 99.4
For Immediate Release
For further information contact:
Mike Sitrick or Lew Phelps
Sitrick And Company
310-788-2850 or [email protected]
----------------------
Shareholder Contact: Laura Hobbs, Las Vegas, NV
(702) 876-7237
SOUTHWEST GAS SUES ONEOK FOR BREACH OF CONTRACT AND FRAUD FOLLOWING UNJUSTIFIED
ATTEMPT TO CANCEL MERGER AGREEMENT
Southwest Gas Also Sues Southern Union Co.
For Breach of Contract and Interference with Contract
Phoenix, AZ (January 24, 2000) - Southwest Gas Corp. (NYSE:SWX) has sued
ONEOK, Inc. (NYSE: OKE) following ONEOK's unjustified attempt to cancel the
merger agreement between it and Southwest Gas.
The lawsuit, filed today in the U.S. District Court for the District of Arizona
in Phoenix, seeks unspecified damages from ONEOK for breach of contract, breach
of the implied covenant of good faith and fair dealing, fraud in the inducement,
and fraud related to its actions connected to the merger agreement and its
cancellation of the agreement.
The Public Utilities Commission of Nevada, one of three state regulatory
agencies required to approve the merger, voted unanimously last June to approve
it. Shareholders of Southwest Gas also voted nearly 80% in favor of the proposed
transaction. Review of the merger was originally scheduled to take place last
fall by the Arizona Corporation Commission, but that decision was delayed by ACC
concerns about ONEOK's actions and fitness to serve in Arizona. ONEOK's attempt
last Friday to withdraw its application before the ACC has brought the merger
effort to a halt, since ACC approval is required before consummation of the
transaction, Southwest Gas said.
Southwest Gas also has sued Southern Union Co. (NYSE:SUG) seeking unspecified
damages from Southern Union for breach of contract, breach of the implied
covenant of good faith and fair dealing, and interference with a contract, all
related to Southern Union's attempts to block the proposed Southwest Gas-ONEOK
combination after Southern Union's unsolicited offer was rejected by Southwest
Gas in favor of ONEOK's offer.
--more--
<PAGE>
Southwest Gas Lawsuit, page 2 of 2
"Southwest Gas has been greatly damaged by the improper conduct of both ONEOK
and Southern Union in this complex year-long process," said Michael O. Maffie,
president and chief executive officer of Southwest Gas. "With this lawsuit, we
hope and expect to recover the damages caused by the acts of the two utilities
that were competing for our company."
"With the merger plan now repudiated by ONEOK, Southwest Gas will continue to
provide outstanding service to its valued customers in Arizona, Nevada and
California," Mr. Maffie said.
Southwest Gas Corporation is headquartered in Las Vegas, NV, and is the fastest
growing natural gas utility company in the country. It provides natural gas
service to more than 1.2 million residential, commercial and industrial
customers in Arizona and Nevada, and parts of northeastern and southeastern
California. The company's common stock is traded on the New York Stock Exchange
under the symbol SWX. More information about the company is available at
http://www.swgas.com.
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ONEOK is headquartered in Tulsa, OK, and has natural gas utility operations in
Kansas and Oklahoma. Southern Union is headquartered in Austin, TX, and has
natural gas utility operations in Missouri and Texas. It also is in the process
of acquiring utility properties in New England.
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