Southern Natural Gas tenders for all 6 1/8% notes

By Jennifer Chiou

New York, Nov. 30 - Southern Natural Gas Co. announced the start of a tender offer for any and all of its $100 million of 6 1/8% notes due Sept. 15, 2008.

The company said that the offer is the first step in its previously announced plan to reduce its outstanding debt by about $289 million.

The tender offer expires at midnight ET on Dec. 27.

For each $1,000 principal amount, the company said it will determine the payout using the 3.625% Treasury due Oct. 31, 2009 and a fixed spread of 75 basis points, which will include a $10.00 premium for those who tendered by 5 p.m. ET on Dec. 12.

The company will also pay accrued interest.

Pricing will be set at 2 p.m. ET on Dec. 12.

Southern Natural Gas said it anticipates an initial settlement following the early tender deadline.

Merrill Lynch & Co. (888 654-8637 or call collect 212 449-4914) and JPMorgan (866 834-4666 or call collect 212 834-4802) are the dealer managers. Global Bondholder Services Corp. is the depositary and information agent (866 952-2200 or call collect 212 430-3774).

The Delaware-based company is involved in natural gas transportation and storage and liquid natural gas terminalling operations. It is a subsidiary of El Paso Corp.

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