S&P: Southern Union unaffected

Standard & Poor's said Thursday that Southern Union Co.'s (BBB/negative/--) sale of common equity is in line with expectations for the rating and has no credit implications.

The company is using the $87 million of net proceeds from the sale of 4.8 million shares to reduce debt and strengthen its balance sheet following the Panhandle Eastern Pipeline acquisition. Subsequently, Southern Union has become the primary bidder for Enron Corp.'s pipeline assets, known as CrossCountry Energy LLC.

In anticipation of potential acquisition-financing needs, Southern Union's management entered into a forward contract for the sale of 6.2 million shares of equity with the possibility of an additional 1.65 million shares. The company's proposed joint venture structure with GE Commercial Finance for financing these assets is commensurate with Southern Union's objective to improve its balance sheet.

S&P said that if Southern Union is the successful bidder for these assets, the rating impact will be determined after a review of the long-term prospects for the acquired pipelines' cash flows, as well as an analysis of the execution risks associated with integrating this large acquisition into Southern Union's existing pipeline system.

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