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Vote gives Allegheny more fiscal options

March 17, 2003|by LAURA ERNDE

laurae@herald-mail.com

Allegheny Energy stockholders narrowly agreed to surrender their pre-emptive rights Friday, opening the door to a sale of part or all of the utility.

The move will give the financially ailing company more options to raise cash, Allegheny spokeswoman Debra A. Beck said.

Allegheny's proposal needed the approval of more than half of the 126.6 million shares of stock that were entitled to vote.

At a special Friday meeting in New York City, 51.9 percent of the votes were cast in favor of eliminating pre-emptive rights, which Allegheny officials have said impeded efforts to sell part or all of the utility, Beck said.

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About 10.4 percent were cast against the proposal and the rest did not vote, she said.

"We are pleased that our stockholders voted to remove the pre-emptive rights provision," Chief Executive Officer Alan J. Noia said in a prepared statement.

The Hagerstown-based company mailed ballots to its shareholders Jan. 31. They were allowed to vote by mail, over the Internet or via phone, Beck said.

The special meeting was scheduled for a week ago but was delayed to give shareholders more time to consider the proposal, she said.

A day earlier, Noia announced he would retire when a successor is found, but Beck has said that was not a factor in the delay.

Allegheny's stock price remained virtually unchanged on the mid-day news of the vote, closing down one penny at $5.08 per share.

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.

"We've been approached by several well-known firms that have expressed interest in making equity investments. We'll certainly explore those options," Beck said.

Allegheny is exploring the sale of assets to raise cash, she said.

Allegheny needs to raise cash and pay down its debt. A recent $2.437 billion financing deal that staved off a bankruptcy filing must be repaid by the end of 2007.

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