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Allegheny's Noia says he'll retire

March 07, 2003|by SCOTT BUTKI and JULIE GREENE

scottb@herald-mail.comjulieg@herald-mail.com

Alan Noia, Allegheny Energy Inc. chairman, president and chief executive officer, announced Thursday he plans to voluntarily retire from the debt-ridden utility when a successor is found.

Noia, 57, of Boonsboro, has been with the Hagerstown-based company for 34 years, starting as a summer intern for a survey crew in 1966. He was named to his current position in 1996.

His retirement follows months of company problems, including a debt rating downgrading, flaws found in its books and lawsuits against the company.

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Reached by phone Thursday night in New York City, Noia said he is proud of how he ran the company.

"We had some tough times at the end but the whole sector is not doing well," he said.

News of Noia's impending retirement came on the eve of a crucial shareholders' meeting for Allegheny Energy in New York City, where it will be determined if shareholders will give company officials the chance to sell all or part of the utility.

Noia and company spokeswoman Debbie Beck said the timing of the announcement was unrelated to today's stockholders meeting.

Allegheny officials are asking shareholders to eliminate the shareholder privilege called pre-emptive rights, which allows shareholders to pre-empt 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.

Allegheny officials have said well-known companies have inquired about investing in Allegheny or buying part ownership of the company, but pre-emptive rights impeded those efforts.

Noia said today's vote is important because the provision up for a vote has "outlived its usefulness" and is blocking the company from exploring another "option to access the capital market."

Allegheny announced last week that the company and its energy trading subsidiary, Allegheny Energy Supply Co., had negotiated $2.437 billion in secured and unsecured loans, to be repaid through 2007. The announcement came after months of credit deadline extensions. Company officials also had threatened to file for bankruptcy.

Noia said he has been considering retirement for months but did not want to leave until after the refinancing was resolved.

At the request of the Allegheny board of directors, Noia's retirement will not be effective until a successor is found, Beck said.

While the board intends to "make appropriate arrangements" to Noia for staying on while a replacement is found, that amount has not been determined, Beck said. She had no information on whether there would be a retirement package beyond his pension, she said.

Allegheny board members will use an executive search firm to find a successor, a process which Noia estimated would take four to six months.

Board member Wendall Holland, reached in New York City, said it would be inappropriate to comment on Noia's retirement.

The news of Noia's retirement was announced after the New York Stock Exchange closed for the day. Allegheny Energy shares closed Thursday at $5.50, down 16 cents with a composite volume of 921,000 shares. The company's 52-week high was $43.86 in April 2002.

Much of Allegheny's financial woes are attributed to its entering the energy trading market.

When Allegheny bought Global Energy Markets, Merrill Lynch's energy marketing and trading unit, in January 2001, Noia said in a prepared statement, "GEM will create significant value for shareholders as we transform Allegheny Energy into a major national player in the energy marketplace."

Allegheny Energy and Merrill Lynch are embroiled in litigation over that deal. Allegheny officials allege Merrill Lynch misrepresented Global Energy Markets' volume, revenues and growth. Merrill Lynch countered by claiming Allegheny Energy is trying to avoid paying $115 million it owes on the deal.

The collapse of Enron in the fall of 2001 left several energy trading companies reeling, including Allegheny Energy. Last October, Moody's Investors Services downgraded Allegheny's debt rating to "junk bond" status because of the company's declining cash flow and earnings.

"Basically, the roof caved in on us," Noia told investors during a recent telephone conference. But as the company conserves cash and raises more, Noia said "we hope to see those credit ratings turned around."

Asked Thursday about Allegheny Energy's decision to enter the energy trading market, Noia said, "It was the right decision at the time." He said he prefers not to second-guess past decisions.

Allegheny Energy's net losses for the first three quarters of 2002 were $334.4 million, or $2.67 per share, according to unaudited financial numbers the company released in December.

Beck said the company had a total debt of $5.1 billion.

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