Allegheny Energy Reviews StatementsNov 5, 2002 | AP
Yet another energy company, this time Allegheny Energy Inc., has found flaws in its books, and the struggling utility said it was delaying its third-quarter earnings.
Allegheny revealed little about the nature of the errors in its past financial statements. The company said Monday its third-quarter results, expected in early November, will not be released until after the company and its auditor, PricewaterhouseCoopers LLP, finish a comprehensive review.
Allegheny's stock, which has fallen more than 85 percent in the past six months, closed up 17 cents at $5.78 a share in trading on the New York Stock Exchange.
"Obviously, more uncertainty is not going to be viewed positively," said Paul T. Ridzon, an energy stock analyst with McDonald Investments.
Hagerstown-based Allegheny is reeling from the downturn in energy trading following the collapse of Enron Corp. The company borrowed heavily to enter the arena last year, buying Merrill Lynch & Co.'s energy-trading business for $490 million. Now it is fighting lawsuits, debt problems and declining profits.
In a statement released Monday, Allegheny said it recently identified "miscalculations in business segment information" for the second quarter, which it reported to the Securities and Exchange Commission. The company said it then began a comprehensive review and found additional errors in other financial statements.
Spokeswoman Debra Beck would not elaborate on the errors or the periods in which they occurred.
In addition to that review, Allegheny said it was studying the value of its energy trading portfolio in light of market conditions.
Chairman Alan J. Noia said he hoped the delay in financial reporting would be brief.
"We remain confident in the fundamental soundness of our businesses and back-to-basics strategy," Noia said.
The company announced in July it was refocusing on its core utility business.
Allegheny also announced that two subsidiaries, Allegheny Energy Supply Co. LLC and Allegheny Generating Co., had received waivers from bank lenders under syndicated credit agreements that extend through Nov. 29. Allegheny had announced Oct. 8 that those subsidiaries were in technical default of credit agreements after the parent company declined to post additional collateral.
"The waivers enable us to continue working with our bank lenders to secure additional funding and a longer-term solution to our liquidity needs," Beck said.
Allegheny Energy provides electricity and natural gas to about 1.7 million customers in Maryland, Ohio, Pennsylvania, Virginia and West Virginia.