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CEO: Allegheny's efforts paying off

March 13, 2004|by TAMELA BAKER

tammyb@herald-mail.com

While acknowledging more work was needed to restore the company's fortunes, Allegheny Energy officials maintained Friday that efforts made in 2003 to begin rebuilding the Hagerstown-based utility were paying off.

A major refinancing deal announced earlier this week not only would save the company some $60 million in interest payments, but meant Allegheny "no longer will be facing a financial crisis," said Paul J. Evanson, chairman and chief executive officer.

Speaking to energy analysts in a conference call Friday morning, Evanson said the refinancing was one of two major objectives the company already had accomplished.

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The other was telling: Evanson noted that the utility not only had filed its annual Form 10-K with the Securities and Exchange Commission on time, "but actually a little early," he said.

Last year, an internal review of accounting errors delayed the filing for eight months. At that point, the company posted an annual net loss of $632.7 million for 2002.

The utility's net loss for 2003 was $355 million, according to company officials.

While Chief Financial Officer Jeffrey Serkes said that "our financial results should be less volatile" because of action the company has taken, he warned that several factors still could affect the utility's performance in 2004, particularly in the second quarter.

Those factors include seasonal business, an increase of $35 million in the utility's maintenance costs and a cost of $45 million to $60 million resulting from outages at two of the utility's plants. But the company also would realize benefits from the sale of some of its assets and from a reduction of $20 million per quarter in interest, beginning in the second quarter.

The company's decisions to quit western energy trading markets and to refinance its debts cut losses considerably, officials said. Evanson noted that all three rating agencies "took us from negative outlooks to stable" as a result of the company's efforts.

Even so, when asked by an analyst whether the utility would be offering an earnings guidance for the year, Evanson said the utility was "not forecasting this year; it's a transitional year."

Allegheny's stock closed at $12.59 on Wall Street on Friday, an increase of 24 cents over Thursday.

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