Allegheny's annual meeting canceled, pending restatement

Delay of May 8 session follows CEO's retirement

March 11, 2003|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

Still reeling from a surprise retirement announcement from its chairman and chief executive officer, Alan J. Noia, Allegheny Energy Inc. said yesterday that its 2003 annual shareholders meeting will be postponed from May 8 until a comprehensive review of financial statements is completed.

Allegheny, which has yet to release 2002 and first-quarter 2003 results, said it does not expect to file results with regulators by March 31 as normally required.

Allegheny has already warned that errors discovered during the review so far will require a restatement of earnings for the first two quarters of last year.

The Hagerstown energy company is trying to regain its footing after two subsidiaries defaulted on several credit agreements in October. After months of negotiations and legal problems, Allegheny received a $2.4 billion refinancing deal from its lenders Feb. 25 to help it avoid bankruptcy.

Just last week, Allegheny extended the deadline for a crucial proxy vote by a week - to this Friday - allowing shareholders more time to decide whether the company can sell stock privately without first offering the shares to stockholders.

Shareholders have become frustrated by the company's low stock price, lack of dividend payment and the financial debacle of the past year.

Besides the private equity offering, the company also is pursuing sales of several assets and examining ways to further reduce costs and improve operating efficiencies to pay off debt and restore its financial health.

Allegheny has been preparing weary investors for months for what may come out of the internal examination.

"At this point, we're continuing to work closely with our independent accountants to conclude our comprehensive review of our financial statements," Debbie Beck, an Allegheny spokeswoman, said yesterday. "We're looking to complete this as soon as possible. Our emphasis is on getting the work we're doing on the review completely right. We're not going to rush through it, so I can't speculate on timing at this point.

"We will notify shareholders as soon as possible once we establish a date for the meeting."

Allegheny, which has $5.1 billion in debt, initiated the review of company finances in the third quarter of 2002 not long after firing the head of its energy trading unit on grounds that he violated company conflict-of-interest policies. Allegheny has not released earnings since then.

But in preliminary figures filed with the Securities and Exchange Commission in December, Allegheny showed a net loss of $334.4 million, or $2.67 per share, for the nine months that ended Sept. 30. Allegheny has warned that it might have to restate nine-month results as well.

The company is selecting an executive search firm to find a new leader. Noia, who has been with the company for 34 years, will stay until a successor is named.

Allegheny's stock dropped 55 cents yesterday to close at $5.11 on the New York Stock Exchange.

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