Allegheny wants option to sell

January 09, 2003|by JULIE E. GREENE

HAGERSTOWN - In their continuing efforts to raise capital, Allegheny Energy officials want to have the option of selling part ownership of the public utility, a company spokeswoman said Wednesday.

Allegheny Energy spokeswoman Cynthia Shoop would not say whether company officials have gotten offers or are entertaining an offer to buy the entire company.

"We explore all opportunities to enhance shareholder value," Shoop said.

Allegheny filed a request Wednesday with the U.S. Securities and Exchange Commission, asking to allow shareholders to vote on whether they will give up a certain shareholder privilege called preemptive rights.


Preemptive rights allow shareholders to preempt or prevent the private sale of company stock to anyone else without first giving shareholders the right to buy that stock under the same terms and conditions, Shoop said.

Several "well-known" firms have expressed interest in investing in Allegheny Energy or buying part ownership of the company, according to Shoop and the filing. Preemptive rights have impeded those efforts, the filing states.

Firms are still interested in making such deals, Shoop said.

Such deals "can be especially important in times like these when both the company and the capital markets, at least for energy companies, are under great stress," the filing states.

The energy market has been in turmoil since the collapse of Enron.

Last month, Allegheny officials announced the utility had $334.4 million in losses for the first three quarters of 2002 and they may seek Chapter 11 bankruptcy protection if they can't secure financing.

Selling part ownership of the company is one avenue to securing financing, Shoop said.

Allegheny officials also are continuing to negotiate with lenders to secure up to $2 billion in financing, Shoop said.

If the SEC approves Wednesday's request, Allegheny officials hope to move quickly to solicit proxies to amend the company's charter and eliminate stockholders' preemptive rights, Shoop said.

The company's charter dates back to 1925 when preemptive rights were more common, Shoop said. Companies were smaller and preemptive rights helped them prevent hostile takeovers, she said.

Few public companies today have preemptive rights for their stockholders, she said.

To view the SEC filing on the Internet, go to

Allegheny Energy has yet to release its third quarter earnings for 2002.

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