AN ARTICLE YESTERDAY MISSTATED THE VALUE OF NISOURCE'S MOST RECENT OFFER TO BUY COLUMBIA ENERGY GROUP. NISOURCE HAS OFFERED $68 A SHARE. THE ARTICLE ALSO MISCHARACTERIZED A STATEMENT BY COLUMBIA CHAIRMAN OLIVER G. RICHARD III. RICHARD SAID COLUMBIA'S MANAGEMNT IS NOT OPPOSED TO A TAKEOVER, BUT HE WAS NOT REFERRING SPECIFICALLY TO THE NISOURCE BID. (PUBLISHED 06/24/99)

Columbia Energy Group Chairman Oliver G. Richard III said yesterday that he thinks the company's shareholders understand the message he has been trying to deliver since NiSource Inc., an Indiana-based utility company, made an unsolicited $5.7 billion buyout offer earlier this month -- that it's not a good deal.

Richard, who has been meeting with major shareholders in recent weeks and who will meet with both analysts and investors tomorrow and Friday, said in an interview that management isn't dead set against the takeover "but we certainly wouldn't sell to someone who offers a cheap price," he said, putting the NiSource bid in that category.

NiSource has made two offers for Columbia, a Herndon-based utility company that explores for, produces, transports and sells natural gas. In April, NiSource offered $63 a share for Columbia just before Columbia launched its own unsuccessful bid to acquire Consolidated Natural Gas Co. Then, after CNG opted to merge with Dominion Resources Inc. instead, NiSource offered $86 a share, all in cash. Columbia's board rejected that offer.

Since then, NiSource Chairman Gary L. Neale and Richard have been trying to swing the company's major investors to their side. Richard said that his goal is to convince them that their interests are better served by Columbia's go-it-alone strategy. Richard said the offer from the smaller NiSource "seems like a better deal for their stockholders than ours."

"In effect, NiSource is attempting a 1980s-style hostile leveraged buyout of our company," Richard said in a letter yesterday to Columbia employees, who own about 10 percent of the company's stock. NiSource's Neale has indicated that he might pursue a hostile takeover attempt or some other strategy in the wake of the board's rejection of his offer, but he hasn't announced yet his plan.

Larry Larsen, a NiSource spokesman, disputed Richard's characterization of the bid as a leveraged buyout. He noted it was an all-cash offer that involved borrowing against NiSource's assets, not Columbia's.

Columbia's stock closed yesterday at $63, up 37 1/2 cents, a price that doesn't reflect its true value, Richard said in his letter to employees.

CAPTION: OLIVER G. RICHARD III