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| 2002 News and Press Releases |
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HEADLINE:
DPL Suit Begins Court Process; Attorneys Receive Internal Company Documents
By: Christopher Montgomery and Tom Beyerlein
Dayton Daily News. December 22, 2002
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EXCERPT: Under court order, DPL Inc. on Friday began giving internal company documents to attorneys for the plaintiffs in one of 10 lawsuits sparked by DPL's controversial $1 billion investment portfolio. The plaintiffs want to know how much DPL's board of directors knew about the risky investments and how the portfolio was valued by PricewaterhouseCoopers, DPL's independent auditor. PricewaterhouseCoopers also is named as a defendant in the lawsuits. Attorney Stanley Chesley said he wants the details DPL management provided directors about the portfolio. He also wants to take sworn depositions by February from three board members and the company's chief financial officer, Elizabeth McCarthy. The beginning of the discovery process is the first major development since Dayton Power and Light Co.'s parent company, its directors and top managers were hit by a flurry of litigation this summer. The lawsuits came after DPL announced a $155 million writedown in the investments and a $71.4 million second-quarter loss. The company also restated its earnings for 2001 and the first half of 2002 after Pricewater- houseCoopers demanded a change in DPL's accounting method. DPL's stock price plunged - from about $27 a share to the $15 range. While the lawsuits differ somewhat, they allege that DPL officials misled investors about the risky nature of the portfolio investments, which make up a quarter of DPL's total assets. The majority of the investments are in private equities spread across 500 companies in 30 countries. They are not easily converted to cash, and the contracts DPL has with its investment firms may require the company to invest an additional $442 million during the next six years. "We are pleased that we can move forward in this case because we feel that the shareholders are entitled to know what the situation with the company is," Chesley said. "We don't think they've ever been given a full disclosure as to when (DPL officials) knew what." Seven of the 10 shareholder lawsuits against DPL are class actions in federal court and seem destined for lengthy delays. But a $200 million lawsuit filed by Chesley on behalf of the Austern Trust, a private trust of two Cincinnati shareholders, is proceeding more swiftly in Hamilton County Common Pleas Court, and has been scheduled for trial Oct. 7, 2003. It's this lawsuit that has triggered the discovery process.
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