By James Hannah
The Associated Press

DAYTON, Ohio - While analysts are encouraged by the management shake-up at DPL Inc., some remain concerned about the utility company's ability to come up with cash in an emergency.

DPL's board of directors announced Sunday the retirement of president and chief executive Stephen Koziar Jr. and the resignations of chairman Peter Forster and interim chief financial officer Caroline Muhlenkamp.

DPL's subsidiary, Dayton Power & Light, serves customers in parts of Butler and Warren counties.

The announcement came after an outside law firm hired to investigate the company's accounting and governance delivered a report that was critical of top management.

DPL said Monday that the Securities and Exchange Commission has asked the company to voluntarily provide documents relating to the concerns by a DPL employee that triggered the investigation. The company said it is cooperating.

The report said DPL should have reported to the SEC a business deal between DPL and a private company owned by Forster and Muhlenkamp that ensured the pair would continue to be paid if DPL was sold.

Robert Hornick, senior director of Fitch Ratings, a New-York based bond-rating firm, said Monday that completion of the investigation and new leadership at DPL are good signs.

But Hornick said he remains concerned that DPL continues not to have access to the bond market because the investigation has delayed the filing of its annual report with the SEC. He said DPL has enough cash to pay off its debts for now.

"But we'd like to see a company have a cushion," he said.

Dayton Power & Light serves about 500,000 customers in western Ohio. DPL had 2003 sales of $1.19 billion.

DPL's board of directors appointed James Mahoney, president of its energy marketing division, as chief executive officer. Treasurer Pamela Holdren was named interim chief financial officer, and the board elected board member Robert Biggs as chairman.

Frank James, president of James Investment Research, said the new executives are likely to be more open with investors, giving the investment community more confidence in the company.

"If people have more confidence and don't think untoward things are being done, it's got to be good," he said.

James, an analyst who follows the utilities industry, said DPL and the former executives have been trying to run a company while managing a large portfolio of investments. He said the new managers should focus more on the energy business.

James said DPL's earnings are about 20 percent higher than they were a year ago and that its dividend is nearly 5.5 percent, about twice the average.

"It's got a lot of good factors," James said. "I do think the future of the company ought to be bright."

DPL's audit committee hired Cincinnati law firm Taft, Stettinius & Hollister on March 17 to investigate concerns raised in a memo by DPL controller Daniel Thobe after he declined to sign off on DPL's 2003 annual report.

Stanley Arkin, attorney for Forster and Muhlenkamp, called the investigation "baseless." He said they resigned only because it was better for the welfare of the company given the environment created by the investigation.

"There is no basis at all for these people to have been dealt with as they were dealt with," Arkin said. "We'll call it 2004 panic by the board."

Koziar did not return a message left at his home seeking comment.