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Allegheny Energy delays vote

March 10, 2003|by JULIE E. GREENE

julieg@herald-mail.com

Allegheny Energy delayed the deadline for a crucial shareholders vote by a week, a move that some utility analysts say could benefit the company.

The voting deadline on a proposal to eliminate a shareholder privilege that Allegheny officials have said impeded efforts to sell part or all of the utility is now March 14.

The outcome was expected to be learned yesterday, but instead Allegheny officials adjourned the special meeting for shareholders.

Allegheny spokeswoman Debbie Beck said Alan Noia's surprise announcement late Thursday that he would retire as chairman, president and chief executive officer as soon as a successor is found had "nothing to do" with the decision to delay the voting deadline.

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The decision to adjourn Friday's meeting in New York City was made to give shareholders more time to consider the proposal to eliminate pre-emptive rights, Beck said.

But some utility analysts said Allegheny officials may want to give shareholders more time to digest Noia's news.

The timing of Noia's retirement announcement was unusual, said Barry Abramson, a utility analyst with Gabelli Asset Management Inc.

"He's not close to retirement age," Abramson said of the 57-year-old.

Gabelli officials announced Tuesday they would vote their clients' shares against the proposal because they believe all shareholders should be treated equally. As a utility analyst, Abramson does not decide how to vote clients' shares. That's up to the portfolio managers, he said.

Noia's retirement could sway some votes in Allegheny's favor, said Abramson and utility analyst David Burks with Hilliard Lyons Inc. in Louisville, Ky.

Shareholders that were disgruntled over the stock's performance in the last year may have adopted an "anti-management" stance and voted against the proposal, Burks said. That stance may now turn around.

Allegheny's stock closed at $5.66 Friday, up 16 cents. The company's 52-week high was $43.86 last April.

"I'm inclined to think the vote will be reasonably close either way, but I don't have a strong sense of where it's going," Burks said.

Pre-emptive rights allow shareholders to 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 buying part ownership in Allegheny, but pre-emptive rights impeded those efforts.

The proposal to eliminate this impediment for potential investors is another step Allegheny officials are taking to raise cash and pay down debt. A recent $2.437 billion financing deal that prevented the company from filing for bankruptcy must be repaid through 2007.

While the vote is important in Allegheny's efforts to raise cash and attract investors, Burks said shareholders also have valid concerns about the value of their investments in Allegheny being diluted.

Companies that buy into ownership of another company often are offered stock at a cheaper price. The addition of those shares could dilute the earnings per share, Burks said.

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