8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): August 7, 2003

PEREGRINE SYSTEMS, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	000-22209	95-3773312
(State of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

3611 Valley Centre Drive, San Diego, California	92130
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code:        (858) 481-5000

NOT APPLICABLE

(Former Name or Former Address, if Changed Since Last Report)

TABLE OF CONTENTS

	ITEM 5. Other Events
SIGNATURE
EXHIBIT INDEX
EXHIBIT 99.1
EXHIBIT 99.2
EXHIBIT 99.3

ITEM 5. Other Events

On August 7, 2003, Peregrine Systems, Inc. (“Peregrine”) issued a press release announcing that Peregrine’s Fourth Amended Plan of Reorganization as Modified, Dated July 14, 2003 (“Plan of Reorganization”), as confirmed by the U.S. Bankruptcy Court for The District of Delaware in an order dated July 18, 2003 (the “Confirmation Order”), would become effective as of August 7, 2003 and that Peregrine is formally emerging from Chapter 11 bankruptcy protection as of that date. A copy of the press release is attached hereto as Exhibit 99.1.

On August 7, 2003, Peregrine Systems, Inc. published on its website a list of “frequently asked questions” for its stockholders and bondholders regarding the cancellation and exchange of Peregrine’s outstanding securities upon effectiveness of its plan of reorganization. A copy of these frequently asked questions is available online at www.peregrine.com and copies have been attached hereto as Exhibits 99.2 and 99.3.

* * *

SIGNATURE

     Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: August 7, 2003

PEREGRINE SYSTEMS, INC.
By:	/s/ Kathryn Vizas
	Kathryn Vizas     General Counsel

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release, dated August 7, 2003.
99.2	Frequently Asked Stockholder Questions, dated August 7, 2003.
99.3	Frequently Asked Bondholder Questions, dated August 7, 2003.

EX-99.1 3 a91986exv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 (PEREGRINE NEWS RELEASE GRAPHIC) FOR IMMEDIATE RELEASE PEREGRINE SYSTEMS(R) COMPLETES CHAPTER 11 REORGANIZATION; COMPANY TO REPAY CREDITORS AND PRESERVE SUBSTANTIAL EQUITY FOR SHAREHOLDERS FIRST PUBLIC ENTERPRISE SOFTWARE COMPANY TO EMERGE FROM CHAPTER 11 SAN DIEGO, AUG. 7, 2003 -- Peregrine Systems, Inc., a global provider of Consolidated Asset and Service Management software, today announced that it has completed all requirements for emerging from bankruptcy court supervision under Chapter 11 and will implement its confirmed Plan of Reorganization. Peregrine's restructuring plan provides full recovery by many creditors, a substantial equity stake in the reorganized company to existing shareholders and sustains the company's business in enterprise software. The Plan of Reorganization of Peregrine Systems, Inc. (Plan) was confirmed by the U.S. Bankruptcy Court for the District of Delaware on July 18, and it will become effective today. The Plan was modified -- from the original version initially filed by Peregrine on Jan. 20 -- to reflect a consensus among all major constituencies in the company's reorganization, including the Official Committee of Unsecured Creditors and the Official Committee of Equity Security Holders. "We are proud to be the first enterprise software company to reorganize successfully under Chapter 11 as a public entity," said Gary Greenfield, Peregrine's CEO. "Last year was a remarkable one for Peregrine. We owe our success to the loyalty of our customers and partners, and an extraordinary commitment among employees worldwide to move the company forward. "We have focused and mobilized the company in Consolidated Asset and Service Management with software products that enable organizations to manage IT for the business," said Greenfield. "We are continuing to deliver new product releases that drive out costs through asset management best practices and improved service delivery across global operations. As we develop the next-generation enterprise IT management software, Peregrine is poised for new opportunities and growth." Colleen Niven, vice president of research at AMR Research, said, "As Peregrine continues to emerge and deliver on commitments, sticking to core competencies and listening to customers bode well for its success. As a leader in the service and asset management space, it has a great opportunity."1 www.peregrine.com Peregrine Systems, Inc. (PEREGRINE SYSTEMS LOGO) 3611 Valley Center Drive San Diego, CA 92130 - more - - ---------- 1 The AMR Research Alert, "Peregrine's Renewed Focus" (March 19, 2003) SERVING CUSTOMERS AND PARTNERS During the past year, Peregrine continued to work with partners and serve its worldwide customers. Gary Bullard, general manager of IBM Global Solutions, said, "Peregrine's Consolidated Asset and Service Management software is an important component of our e-business on demand solutions to help customers reduce costs. We look forward to continuing to work with Peregrine in the future." Jorg Matz, senior consultant in the Peregrine Competence Center at Lufthansa Systems, commented, "We have been committed to Peregrine for the last 14 years because its products are the best available on the market. ServiceCenter(R)'s great flexibility allows us to adapt the software exactly to our needs. Last year, we enhanced the solution by implementing AssetCenter(R) and all Get-It(TM) modules." Among Peregrine's 3,500 customers are Global 1000 companies with enterprise-wide implementations, as well as midsize organizations and departments. They include: AXA Asia Pacific Holdings; AAA of Michigan; Aeroports de Paris; ActewAGL; Bank of America; Bayer Corp.; Circuit City; Danske Bank; Enterprise Rent-A-Car; First Data International, Australia, New Zealand, South Asia; IMS Health, Inc.; Japan Tobacco, Inc.; Kokuyo Co., Ltd.; Kawasaki Heavy Industries, Ltd./Benic Solutions Corp.; Lufthansa Systems; Panasonic; and the University of New Mexico. Peregrine's strategic partners include leading global service delivery organizations, which deploy Consolidated Asset and Service Management offerings to serve large numbers of their own customers. As a result, Peregrine has established important relationships with managed service providers, systems integrators and resellers (such as IBM Corp., Evergreen Systems, Inc., Infrasolve Ltd., ITM Brazil, Linium and Rubik). NEW BOARD OF DIRECTORS The Plan called for the creation of a new, seven-member board of directors, effective today. Pursuant to the Bankruptcy Court's Confirmation Order dated July 18, the Official Committee of Unsecured Creditors named four of the new directors, while the Official Committee of Equity Security Holders selected three. Accordingly, the new board will consist of the following directors: - - Carl Goldsmith, 37, managing director and portfolio manager at MW Post Advisory Group, LLC, and a director of Pacific Aerospace & Electronics, Inc.; - - Jim Harris, 57, president and founder of Seneca Financial Group, Inc., and a director of El Paso Electric Company's board, member of its Executive Committee and chairman of its Nominating and Governance Committee; - - Robert Horwitz, 51, managing member of RH Capital Associates, LLC, and a director of Dice, Inc.; - - Mark Israel, 48, director of distribution and channel sales for Magellan Products, a division of Thales Navigation; - - James Jenkins, 55, portfolio manager at Mellon HBV Alternative Strategies, LLC, and a director of Telespectrum Worldwide, Inc.; - - John Mutch, 47, general partner and founder of MVenture Holdings, LLC, and a director of Brio Software, Inc. and Overland Storage; and - - Ben Taylor, 41, managing director at Weiss, Peck & Greer Investments, a division of Robeco USA, LLC. "The management team looks forward to working with these incoming directors as Peregrine begins a new chapter," said Greenfield. In addition, he saluted the outgoing board members, saying: "These leaders in business and technology formed a truly world-class board that has served us well in recent months. We thank them all for the guidance and insight they brought to Peregrine as we navigated a difficult period in the company's history." MILESTONES IN REORGANIZATION Within the past year, Peregrine achieved a number of significant milestones. The company successfully reorganized its business in core areas of strength in enterprise software, continuing to offer best-in-class solutions for asset and service management. Peregrine introduced new versions of its flagship products, ServiceCenter and AssetCenter, established Customer Advisory Councils in North America and EMEA (Europe, Middle East and Asia) and continued to invest resources in research and development, customer support and professional services. - more - (PEREGRINE SYSTEMS LOGO) Earlier this year, Peregrine completed a restatement of financial results for 11 quarters in fiscal years 2002, 2001 and 2000. Recently, the company reached agreement with the Securities and Exchange Commission (SEC) in a civil action it has filed against the company, and the agency announced it would not seek financial damages in the case. Pursuant to Peregrine's agreement with the SEC, the company today filed a Form 8-K containing an assessment of its internal controls and financial reporting procedures. Peregrine is also continuing to implement a compliance program with a focus on company-wide processes and procedures. In addition, the board of directors is in the process of completing the selection of a new compliance officer. Following the effective date of the Plan, Nasdaq Market Operations and Participants Services will issue a new symbol for Peregrine's common stock. The new stock symbol will be posted on Peregrine's Web site as soon as it becomes available. Peregrine filed a voluntary Chapter 11 petition on Sept. 22, 2002 after accounting irregularities came to light, requiring a restatement of 11 quarters of financial results. ABOUT PEREGRINE Founded in 1981, Peregrine Systems, Inc. develops and sells enterprise software to enable its 3,500 customers worldwide to manage IT for the business. The company's Consolidated Asset and Service Management offerings allow organizations to improve asset management and gain efficiencies in service delivery -- driving out costs, increasing productivity and accelerating return on investment. The company's flagship products -- ServiceCenter and AssetCenter - -- are complemented by Employee Self Service, Automation and Integration capabilities. Peregrine is headquartered in San Diego, Calif. and conducts business from offices in the Americas, Europe and Asia Pacific. For more information, please visit: www.peregrine.com. Peregrine Systems, ServiceCenter, AssetCenter, and Get-It are trademarks of Peregrine Systems, Inc. or its affiliates. All other marks are the property of their respective owners. FORWARD LOOKING STATEMENTS This release contains forward-looking statements about Peregrine, including statements regarding its business and future opportunities and growth and its proceeding under Chapter 11 of the U.S. Bankruptcy Code. These statements are based on management's beliefs and certain assumptions, estimates and projections. As a result, such statements are subject to numerous risks and significant uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Consequently, such statements should not be regarded as a representation or warranty by Peregrine that such results will be realized. Peregrine disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Factors that could cause actual results to differ materially from such forward-looking statements include, but are not limited to, (a) intense competition within Peregrine's industry; (b) general economic trends and events; (c) that the market for the sale of Peregrine's products and services may not develop or grow as expected; (d) the factors discussed below, and (e) other factors that are described from time to time in reports Peregrine files with the SEC, including, but not limited to, risk factors set forth in the Disclosure Statement in Support of the Fourth Amended Plan of Reorganization, dated May 29, 2003 and attached as Exhibit T3E-1 to the Application for Qualification on Form T-3 Peregrine filed with the SEC on July 7, 2003 and the risk factors contained in Form 8-K that Peregrine filed on July 18, 2003 regarding approval of its Plan of Reorganization. CAUTIONARY STATEMENT FOR INVESTORS Trading in Peregrine's securities is highly speculative and risky. Information that may be relevant to persons trading in Peregrine's securities includes, without limitation, the following. Peregrine disclaims any intention or obligation to update or revise these cautionary statements and any information contained therein, whether as a result of new information, future events or otherwise. - more - (PEREGRINE SYSTEMS LOGO) - On April 4, 2003, Peregrine filed with the SEC on Form 8-K audited financial results for the fiscal years ended March 31, 2002, 2001 and 2000. These results restated previously reported results for the first three quarters of fiscal 2002 and all of fiscal years 2001 and 2000. Peregrine has not published financial results for the fiscal year ended March 31, 2003. Peregrine also has not published restated quarterly results for quarters within the restatement period or issued quarterly results for quarters subsequent to the restatement period (i.e., for the quarters ended June 30, 2002, Sept. 30, 2002, Dec. 31, 2002 and June 30, 2003). Peregrine has not filed with the SEC amended Form 10-Q reports or Form 10-K reports for periods covered by the restatement, and it has not filed a Form 10-K for the periods ended March 31, 2002 or 2003, or a Form 10-Q report for the periods ended June 30, 2002, Sept. 30, 2002, Dec. 31, 2002 or June 30, 2003. - On August 5, 2003, as required by Peregrine's consent and undertaking with the SEC, Peregrine filed with the SEC a Form 8-K containing an assessment of ongoing deficiencies in its internal control structure and procedures for financial reporting. - Although Peregrine has entered into a consent decree with the SEC, the Department of Justice's investigation of Peregrine relating to events preceding Peregrine's bankruptcy remains open. The SEC's and DOJ's investigations of individuals are continuing and may include current and former employees of Peregrine. The company is providing its full cooperation to the SEC and DOJ in their investigations and continues to provide them with documents that may be relevant to their investigations. Although the company is cooperating with these investigations, it does not have access to all the information available to the SEC and the DOJ. It is possible that new information could come to light as a result of the ongoing investigations. The ultimate impact of these investigations on Peregrine's financial condition, results of operations, customer relations and management is uncertain, though Peregrine may face financial penalties and adverse reputational effects depending on the outcome of the investigations. - The most recently filed discussion describing Peregrine's business is contained in the Disclosure Statement, dated May 29, 2003, which was amended or superceded in certain respects by the Fourth Amended Plan of Reorganization and the Confirmation Order, each entered on July 18, 2003. Section VII of the Disclosure Statement outlines several risk factors relating to Peregrine, its business and the bankruptcy proceeding. The Disclosure Statement is attached as Exhibit T3E-1 to the Application for Qualification on Form T-3 Peregrine filed with the SEC on July 7, 2003. The Fourth Amended Plan of Reorganization and the Confirmation Order are attached as Exhibits 2.1 and 2.2, respectively, to the Form 8-K Peregrine filed with the SEC on July 18, 2003. Because certain information in the Disclosure Statement has been amended or superceded by information contained in Fourth Amended Plan of Reorganization and the Confirmation Order, the Disclosure Statement must be read in conjunction with such documents. - The Form 8-K Peregrine filed on July 18, 2003 regarding approval of its Plan of Reorganization includes statements regarding (a) the timing of the initial or any interim or final distribution of New PSI Common Stock, (b) the amount of cash, the number of shares of New PSI Common Stock, and the principal amount of Reorganization Notes to which Peregrine's creditors are entitled and (c) the amount of New PSI Common Stock that holders of claims against or interests in Peregrine are eligible to receive. Factors that could cause actual results to differ materially from these statements include, but are not limited to, the following (capitalized terms that are not otherwise defined in this release are as defined in the Fourth Amended Plan of Reorganization and/or the Confirmation Order, each entered on July 18, 2003 and attached as Exhibits 2.1 and 2.2, respectively, to the Form 8-K Peregrine filed on July 18, 2003): - the ability to determine the number of shares of New PSI Common Stock to be distributed by the Stock Disbursing Agent on the schedule set forth in the Plan; - the amount of Class 8 Obligations in Peregrine's Chapter 11 proceeding; - more - (PEREGRINE SYSTEMS LOGO) - any election by Peregrine to extend the deadline by which the final distribution of Reserved New PSI Common Stock must be made; - the effect of any dispute with the Post-Emergence Equity Committee or others regarding the allocation of the Initial Class 9 Securities and the Reserved New PSI Common Stock between classes of claimants and interest holders under the Plan or the number of shares of the Initial Class 9 Securities and the Reserved New PSI Common Stock distributable under the Plan; - the effect of rounding on a holder's Pro Rata share of distributions; - the inability of Peregrine to satisfy any applicable requirements for trading of New PSI Common Stock on the over the counter and other national markets or exchanges; - decisions made by securities market regulators that can effect the timing and methods of trading in the New PSI Common Stock; and - the possibility of future proceedings in and adjudications by the Bankruptcy Court. - - Peregrine expects its securities initially to trade over-the-counter. Peregrine presently is unable to predict when or if its securities will be listed on a national securities exchange or quoted on the Nasdaq National Market System. Nasdaq Market Operations will determine the timing and the methods pursuant to which trading in New PSI Common Stock will commence. Peregrine advises you to check with your stockbroker to determine when and how trading will take place in the New PSI Common Stock. To the extent that active trading markets in Peregrine's securities develop and persist, the prices at which such securities might trade depend upon a number of factors, including industry conditions, the performance of, and investor expectations for, Peregrine post-reorganization and market factors, such as the number of holders who may wish to dispose of their securities to raise funds or recognize losses for tax purposes or otherwise. Furthermore, prices will be set based on incomplete financial information, as described above, until such time as Peregrine is able to bring its public disclosures current. # # # (PEREGRINE SYSTEMS LOGO) EX-99.2 4 a91986exv99w2.txt EXHIBIT 99.2 Exhibit 99.2 FAQ: PLAN OF REORGANIZATION - EQUITY HOLDERS - -------------------------------------------------------------------------------- AUGUST 7, 2003 Forward Looking Statements. This communication contains forward-looking statements about Peregrine and its plan of reorganization. Such statements are based on management's beliefs and certain assumptions, estimates and projections. As a result, such statements are subject to numerous risks and significant uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Consequently, such statements should not be regarded as a representation or warranty by Peregrine that such results will be realized. Peregrine disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Factors that could cause actual results to differ materially from such forward-looking statements are discussed in the following sections: - Where can I find information about Peregrine's financial performance and its current business operations?; - Where can I find further information about Peregrine's plan of reorganization?; - What risk factors should I be aware of?; and - the Forward Looking Statements section, at the close of this FAQ notice. WHEN DOES PEREGRINE EMERGE FROM ITS CHAPTER 11 REORGANIZATION? The effective date for Peregrines Plan of Reorganization is August 7, 2003 (the "Effective Date"). The company's Fourth Amended Plan of Reorganization, as Modified, Dated July 14, 2003 (the "Plan") was confirmed by the Bankruptcy Court for the District of Delaware in an order dated July 18, 2003. DID CREDITORS AND STOCKHOLDERS AGREE TO PEREGRINE'S MODIFIED PLAN? The Plan was modified to reflect a consensus among all major constituencies in the company's reorganization, including the Official Committee of Unsecured Creditors and the Official Committee of Equity Holders (the "Equity Committee"). HOW MANY SHARES OF NEW COMMON STOCK ARE BEING ISSUED IN THE REORGANIZED COMPANY? Under the provisions of the Plan, shares of Old Common Stock in Peregrine (ticker symbol: PRGNQ) are canceled at the close of business on the Effective Date. Also on the Effective Date, Peregrine is issuing 15 million shares of New PSI Common Stock in the reorganized company (CUSIP No. 71366Q 20 0). In addition, 2.65 million shares of New PSI Common Stock are being set aside for future issuance under the 2003 Equity Incentive Plan. The New PSI Common Stock will trade over-the-counter under a new ticker symbol to be assigned by Nasdaq Market Operations and Participants Services ("Nasdaq Market Operations"). Nasdaq Market Operations will also determine when and how trading in the New PSI Common Stock will take place. 1 WHAT DO I NEED TO DO TO RECEIVE ANY NEW PSI COMMON STOCK TO WHICH I MAY BE ENTITLED? If you hold shares of the Old PSI Common Stock at the close of business on the Effective Date your shares of Old PSI Common Stock are canceled and in exchange you have a right to certain distributions that may include shares of New PSI Common Stock as well as other interests discussed below. Other than being a holder of Old PSI Common Stock on the Effective Date, you do not have to take any action to maintain your right to such distributions. Peregrine's transfer agent, Mellon Investor Services, will retain a list of such holders at the close of business on the Effective Date and all distributions, if any, made to holders of Old PSI Common Stock will be made to the persons on that list. Mellon will send a transaction notice to you following the date on which shares have been entered in your name on the Company's books and records that are maintained by Mellon. DO I NEED TO TAKE ANY ACTION NOW TO RECEIVE ANY DISTRIBUTIONS OF NEW PSI COMMON STOCK THAT I MAY BE OWED? You need not surrender any stock certificates evidencing the Old PSI Common Stock, and there is no other action you need take at this time to receive the distributions to which you are entitled under the Plan. HOW MANY SHARES OF NEW PSI COMMON STOCK WILL I RECEIVE? Pursuant to the Plan, in accordance with applicable bankruptcy law, holders of the Old PSI Common Stock and certain securities litigation claimants have been placed into the same "class" - Class 9. Under the Plan, the members of Class 9 are entitled to receive, among other things, their pro rata share of the "Class 9 Reserve" and, if applicable, the "Class 7/9 Reserve". (For an explanation of the "Class 9 Reserve" and the "Class 7/9 Reserve", see the section "How will the New PSI Common Stock in the reorganized company be divided?") However, as a practical matter, the division of such stock between the holders of Old PSI Common Stock on the one hand and securities litigation claimants on the other hand cannot be made at this point for several reasons. Peregrine believes that this division of stock in the Class 9 Reserve and, if applicable, the Class 7/9 Reserve will depend on whatever settlement or agreement can be worked out by the two main constituencies in Class 9, as represented by the Equity Committee prior to the Effective Date (and the Post-Emergence Equity Committee after the Effective Date) and plaintiffs in the pending class action securities litigation. These parties have been in settlement negotiations. In the event that a settlement or other agreement cannot be worked out by these parties, this matter will be resolved by the Bankruptcy Court. Based on the foregoing, at this time, we are unable to advise you as to how many shares of New PSI Common Stock you will receive, if any, or when you will receive those shares. Any estimate of the number of shares you may receive would be highly uncertain at this point. You should be aware, however, that if you do receive shares of New PSI Common Stock, the number of shares that you receive would likely be a small fraction of the number of shares of Old PSI Common Stock you held on the Effective Date due to the following factors: 2 - The fewer number of shares of New PSI Common Stock that will be outstanding following the Effective Date (15 million) compared to the number of shares of Old PSI Common Stock that will be canceled (approximately 197.4 million); - The allocation of most of the shares of New PSI Common Stock (between 63% and 67%) to holders of Peregrine bonds (Class 7 under the Plan); and - The potential division of the remaining 33% to 37% of the shares of New PSI Common Stock between the two main constituencies in Class 9 -- the holders of Old PSI Common Stock on the one hand and certain securities litigation claimants on the other hand. In addition, fractional shares will not be issued and the number of shares you receive will be rounded down to the nearest whole number. You should also be aware that, depending upon the outcome of the settlement discussions between the two main constituencies in Class 9, it is possible, although unlikely, that you will not receive any shares of New PSI Common Stock. You and other shareholders would receive notice of any potential settlement that may be reached between the two main constituencies in Class 9, and any such settlement would be subject to Bankruptcy Court approval. WHAT WILL HAPPEN TO MY PEREGRINE STOCK IN THE REORGANIZED COMPANY? The Old PSI Common Stock is canceled as of the close of business on the Effective Date. In exchange, persons in Class 9 will receive up to 4,950,000 shares of the reorganized company's New PSI Common Stock (33% of the reorganized company). Class 9 includes those persons who held shares of Old PSI Common Stock at the close of trading on the Effective Date, together with persons described in the Plan who have claims pending against the company based on prior purchases of Old PSI Common Stock, as well as certain other subordinated claims. As discussed above, the allocation of the shares between the securities litigation claimants on the one hand and the holders of Old PSI Common Stock on the other hand will likely depend on the outcome of settlement negotiations between the Equity Committee (representing the holders of Old PSI Common Stock) and representatives of the securities litigation claimants. (The Equity Committee will be dissolved shortly after the Effective Date, and the Post-Emergence Equity Committee after the Effective Date would carry on any such settlement negotiations.) If these parties are unable to reach a negotiated settlement, the allocation will be decided by the Bankruptcy Court. In addition, Class 9 may receive up to an additional 600,000 shares of the reorganized company's New PSI Common Stock (4% of the reorganized company), depending on the final amount of Allowed Class 8 Claims (general unsecured claims). As set forth in the Plan, in some circumstances, some, most or all of these additional shares may be distributed to bondholders in Class 7, rather than the shareholders and securities litigation claimants in Class 9. The allocation of any additional shares from the Class 7/9 Reserve will also likely be subject to the negotiations between the Equity Committee and representatives of the securities litigation claimants. 3 In addition to shares of New PSI Common Stock, Class 9 will have the right to receive cash proceeds, if any, that may be generated from certain potential litigation claims of Peregrine that will be transferred to an independent Litigation Trust provided for in the Plan (see below). The allocation of these trust proceeds, if any, may also be subject to negotiation between the Equity Committee and representatives of the securities litigation claimants. HOW WILL THE NEW PSI COMMON STOCK IN THE REORGANIZED COMPANY BE DIVIDED? The Plan provides for the New PSI Common Stock to be divided between holders of Class 7 Claims (Peregrine bondholders) and holders of Class 9 Claims (stockholders, securities litigation claimants and certain other subordinated claimants) in the following way: - - Bondholders in Class 7 receive in the aggregate 63% of the stock (9,450,000 shares) (the "Class 7 Reserve"). - - Stockholders and securities litigation claimants in Class 9 will receive an aggregate 33% of the stock (4,950,000 shares) (the "Class 9 Reserve"); provided, however, that the actual division of stock between the stockholders on the one hand and the securities litigation claimants on the other hand will likely be decided in a settlement between the Equity Committee and representatives of securities litigation claimants. (The Equity Committee will be dissolved shortly after the Effective Date, and the Post-Emergence Equity Committee after the Effective Date will carry on any such settlement negotiations.) In the event that this division cannot be consensually resolved, this matter will be determined by the Bankruptcy Court. - - 4% of the stock (600,000 shares) (the "Class 7/9 Reserve") is reserved for later distributions to either Class 7 Claims or Class 9 Claims or both. Under the Plan, the shares in the Class 9 Reserve and the Class 7/9 Reserve will be held by the Stock Disbursing Agent for final distribution and will be considered issued and outstanding as of the Effective Date. Until they are distributed in accordance with the Plan, shares in the Class 9 Reserve and the Class 7/9 Reserve will be voted by the Stock Disbursing Agent in accordance with instructions given by the Post-Emergence Equity Committee which shall be formed as of the Effective Date. Peregrine has agreed to serve as the Stock Disbursing Agent under the Plan. In addition to the shares to be issued to the bondholders in Class 7 and the stockholders and securities claimants in Class 9, 2.65 million shares of New PSI Common Stock have been reserved for issuance under Peregrine's 2003 Equity Incentive Plan. The percentages set forth above do not account for the potential dilution from the issuance of shares of New PSI Common Stock under the 2003 Equity Incentive Plan. The New PSI Common Stock will be trading over-the-counter under a new ticker symbol to be assigned by Nasdaq Market Operations. 4 HOW WILL THE NEW PSI COMMON STOCK BE DIVIDED BETWEEN STOCKHOLDERS AND SECURITIES LITIGATION CLAIMANTS IN CLASS 9? As noted above, settlement discussions are underway between the Equity Committee and representatives of the securities litigation claimants. The Bankruptcy Court must approve any settlement that may be reached by these two main constituencies in Class 9. If these parties are unable to reach a negotiated settlement, the Bankruptcy Court will decide the allocation. HOW WILL STOCKHOLDERS IN CLASS 9 SHARE IN THE CLASS 7/9 RESERVE NOTED ABOVE? Class 9 will be eligible to receive up to an additional 600,000 shares of New PSI Common Stock (equivalent to 4% of the reorganized company), depending on the amount of General Expense claims (Class 8) and other factors. Distributions of these shares will be on a quarterly basis, commencing with a first distribution on or before October 31, 2003, if practicable. However, distributions from the Class 7/9 Reserve to Class 9 Claims, including holders of Old PSI Common Stock, will not take place until a settlement between the Post-Emergence Equity Committee and representatives of securities litigation claimants is reached or some other resolution is adjudicated by the Bankruptcy Court. WHO ARE THE SECURITIES LITIGATION CLAIMANTS THAT MAY BE SHARING IN THE DIVISION OF NEW STOCK AND PROCEEDS, IF ANY, FROM THE LITIGATION TRUST? Certain securities litigation claimants may share in the Class 9 Reserve and the Class 9 share, if any, of the Class 7/9 Reserve, as a result of class action lawsuits brought on behalf of purchasers of Old PSI Common Stock at various times between July 22, 1999 and May 3, 2002. The lawsuits alleged violations of securities laws. Settlement discussions are underway between the Equity Committee and representatives of the securities litigation claimants to agree on division of stock and proceeds, if any, from the Litigation Trust. Any agreement would require Bankruptcy Court approval. If the parties to the settlement discussions cannot reach an agreement, the division of the Class 9 Reserve and the Class 9 share, if any, of the Class 7/9 Reserve would be adjudicated by the Bankruptcy Court. WHEN WILL THAT SETTLEMENT BE REACHED? Peregrine cannot say precisely if and when a settlement between the Equity Committee and securities litigation claimants will be completed. Negotiations are currently underway between the Equity Committee and representatives for the securities litigation claimants. The Plan does not set a deadline for when settlement must be reached. If the parties to the settlement discussions cannot reach an agreement, the division of the Class 9 Reserve and the Class 9 share, if any, of the Class 7/9 Reserve would be adjudicated by the Bankruptcy Court. SINCE SHARES OF NEW PSI COMMON STOCK THAT ARE IN THE CLASS 9 RESERVE AND THE CLASS 7/9 RESERVE WILL NOT BE DISTRIBUTED ON THE EFFECTIVE DATE, WHAT WILL HAPPEN TO THEM? Under the Plan, until the apportionment of the shares in the Class 9 Reserve and the Class 7/9 Reserve is resolved, the shares are considered issued and outstanding as of the Plan's 5 Effective Date and will be held in book entry form by the Stock Disbursing Agent. In addition, a Voting and Distribution Agreement will be executed between the Stock Disbursing Agent, Peregrine, and the Post-Emergence Equity Committee as called for by the Plan that obligates the Stock Disbursing Agent to vote the shares it holds pursuant to instructions given by said Committee. Peregrine has agreed to serve as the Stock Disbursing Agent under the Plan. Once the Bankruptcy Court has approved a settlement or other resolution, the stock in the Class 9 Reserve will be distributed by Peregrine in its role as Stock Disbursing Agent in accordance with the terms of any such settlement or resolution. There is no deadline as to when any such settlement or resolution must be reached and the Class 9 Reserve distributed. Under the Plan, until shares from the Class 7/9 Reserve are distributed, the Post-Emergence Equity Committee will likewise provide instructions to the Stock Disbursing Agent on how undistributed shares in the Class 7/9 Reserve are to be voted should any vote of Peregrine stockholders occur prior to such distribution. Therefore, Peregrine, in its role as Stock Disbursing Agent under the Plan, will cast votes for the shares in both the Class 9 Reserve and the Class 7/9 Reserve as instructed by the Post-Emergence Equity Committee until the shares in those reserves are distributed in accordance with the Plan. ONCE THAT SETTLEMENT IS REACHED OR ADJUDICATED, WILL I RECEIVE ALL OF THE SHARES OF NEW PSI COMMON STOCK TO WHICH I AM ENTITLED? Because holders of Old PSI Common Stock may be entitled to receive shares of New PSI Common Stock from two separate reserves, the Class 9 Reserve and the Class 7/9 Reserve, that are each subject to separate sets of conditions, it is possible that you may not receive all of the shares of New PSI Common Stock to which you are entitled when a settlement or other resolution is reached. It is possible that you will receive shares from the Class 9 Reserve and/or the Class 7/9 Reserve at a time agreed to in such settlement or at a later date in accordance with the Court's resolution. However, in all likelihood, you will not receive any shares from either the Class 9 Reserve or the Class 7/9 Reserve until a settlement between the Equity Committee and representatives of the securities litigation claimants is reached or other resolution is ordered by the Bankruptcy Court. OTHER THAN MY PRO RATA SHARES, IF ANY, OF NEW PSI COMMON STOCK ISSUED FROM THE CLASS 9 RESERVE AND THE CLASS 7/9 RESERVE DISCUSSED ABOVE, WILL I RECEIVE ANYTHING ELSE IN EXCHANGE FOR THE CANCELLATION OF MY SHARES OF OLD PSI COMMON STOCK? Subject to any settlement that may be reached between the Equity Committee and the securities litigation claimants, holders of Old PSI Common Stock may also receive a pro rata interest in cash proceeds, if any, from certain potential litigation claims of Peregrine. With limited exceptions, Peregrine's potential rights, claims and causes of action against third parties (including any potential claims against former directors, officers or professional firms formerly engaged by Peregrine) will be transferred to an independent Litigation Trust, which is provided for in the Plan. This trust will be charged with evaluating the merits of such claims and supervising their prosecution, if prosecution is appropriate. After payment of litigation trust expenses and other costs, proceeds generated by any such litigation would be shared by Class 9 in a manner to be determined 6 by any settlement between the Equity Committee and the securities litigation claimants. Because the apportionment of interests in the Litigation Trust would be subject to the terms of any settlement and due to the inherently uncertain nature of litigation, there can be no assurance regarding when or if holders of Old PSI Common Stock will ultimately receive any cash proceeds from the Litigation Trust. WILL SHARES OF NEW PSI COMMON STOCK BE LISTED ON A STOCK EXCHANGE? New PSI Common Stock is expected to initially trade over-the-counter. Under the Plan, Peregrine shall also use commercially reasonable efforts to list the New PSI Common Stock on a national securities exchange or cause the New PSI Common Stock to be quoted on the Nasdaq National Market System. We are presently unable to predict when or if such listing will occur. WHEN WILL TRADING IN NEW PSI COMMON STOCK COMMENCE? Nasdaq Market Operations will determine the timing and the methods pursuant to which trading in New PSI Common Stock will commence. We advise you to check with your stockbroker to determine when and how trading will take place in the New PSI Common Stock. You should be aware, however, that shares of New PSI Common Stock that may be issued to you from the Class 9 Reserve and the Class 7/9 Reserve will not be issued directly to your brokerage account, but will instead be issued through Peregrine's transfer agent, Mellon Investor Services, Direct Registration System. (See information below). In determining whether to trade in New PSI Common Stock, you should also be aware that there is limited information available regarding Peregrine's current and historical financial and operating results. We strongly advise you to consider carefully the answers to the following questions discussed below: - Where can I find information about Peregrine's financial performance and its current business operations?; - Where can I find further information about Peregrine's plan of reorganization?; - What additional risk factors should I be aware of?; and - the Forward Looking Statements section, at the close of this FAQ notice. Due to the factors discussed in these sections, we believe that trading in New PSI Common Stock would be highly speculative. In addition, if you are considering trading in New PSI Common Stock on the basis of your current holdings in Old PSI Common Stock before you receive your distribution, if any, of New PSI Common Stock, we strongly advise you that such trading would be highly speculative because we are unable to estimate the number of shares of New PSI Common Stock you may receive and it is possible, although unlikely, that you may not receive any shares of New PSI Common Stock. See the answer above to the question - "How many shares of New PSI Common Stock will I receive?" 7 WILL SHARES OF NEW PSI COMMON STOCK TRADE BEFORE I RECEIVE ANY SHARES ISSUABLE TO ME FROM THE CLASS 9 AND THE CLASS 7/9 RESERVES? Shares of New PSI Common Stock are issuable as of the Effective Date to bondholders from the Class 7 Reserve pursuant to the Plan whereas the shares issuable to you from the Class 9 Reserve and the Class 7/9 Reserve will not be issued until it becomes practicable to do so. That is, the precise allocation of the Class 9 Reserve and the Class 9 share, if any, of the Class 7/9 Reserve between the holders of Old PSI Common Stock on the one hand and securities litigation claimants on the other hand will likely depend on the Equity Committee prior to the Effective Date (and the Post-Emergence Equity Committee after the Effective Date) and representatives of the securities litigation claimants reaching a settlement. If such a settlement is not reached, the allocation of this stock will be resolved by the Bankruptcy Court (see above). Therefore, subject to the determination by Nasdaq Market Operations regarding when and how trading in the New PSI Common Stock will occur, trading in the shares of New PSI Common Stock issued from the Class 7 Reserve may commence prior to any distributions to you. However, any such trading will not affect your rights to receive shares of New PSI Common Stock from the Class 9 Reserve and the Class 7/9 Reserve or the amount of any such shares, if any, issuable to you. If you are considering trading in New PSI Common Stock on the basis of your current holdings in Old PSI Common Stock before you receive your distribution, if any, of New PSI Common Stock, we strongly advise you that such trading would be highly speculative because we are unable to estimate the number of shares of New PSI Common Stock you may receive and it is possible, although unlikely, that you may not receive any shares of New PSI Common Stock. See the answer above to the question "How many shares of New PSI Common Stock will I receive?" IF I SELL MY SHARES OF NEW PSI COMMON STOCK IF AND WHEN THEY ARE DISTRIBUTED FROM THE CLASS 9 RESERVE, WILL I STILL RETAIN MY RIGHT TO RECEIVE LATER DISTRIBUTIONS FROM THE CLASS 7/9 RESERVE, IF ANY, AND CASH PROCEEDS FROM THE INDEPENDENT LITIGATION TRUST, IF ANY? Peregrine's transfer agent, Mellon Investor Services, will retain a list of the holders of Old PSI Common Stock at the close of trading on the Effective Date and that list will not be modified to reflect later transactions in New PSI Common Stock. All distributions, if any, made to holders of Old PSI Common Stock will be made to the persons on that list. In addition, that list will be made available to the Litigation Trust for use in determining persons eligible to receive an interest in the Litigation Trust. Therefore, even if you sell shares of New PSI Common Stock distributed to you, if any, from the Class 9 Reserve, any rights or interests that you may have in future distributions, if any, of New PSI Common Stock, or in the Litigation Trust, will be distributed to you in accordance with the Plan and/or any Court-approved settlement, and will not be affected by any sale of shares of New PSI Common Stock that you may receive. As discussed above, however, there can be no assurances whether there will be any initial or subsequent distributions to the holders of Old PSI Common Stock. 8 WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO ME OF THE DISTRIBUTIONS OF THE SHARES OF NEW PSI COMMON STOCK AND POSSIBLE OTHER CONSIDERATION? You should not be taxable on the receipt of your share, if any, of the New PSI Common Stock distributed from the Class 9 Reserve. Some portion of any distributions of any New PSI Common Stock you may receive from the Class 7/9 Reserve will be taxable to you as interest income, while the remainder of any such distributions should be nontaxable to you. Although there is some uncertainty as to how and when to account for this interest income, we believe you should be taxable only when you receive that New PSI Common Stock and then only to the extent the fair market value of the New PSI Common Stock received (measured on the date of receipt) exceeds the discounted present value of that New Common Stock. The discounted present value of any New Common Stock you might receive from the Class 7/9 Reserve should be determined by discounting the fair market value of that New PSI Common Stock (measured on the date of receipt) by the appropriate "applicable federal rate", assuming compounding, from the date the New PSI Common Stock is received to the Effective Date. The tax treatment of the right to receive possible future payments from the Litigation Trust is uncertain. The IRS may assert that you are taxable immediately on the value of such right. In addition, if you are not required to realize taxable income until you receive a distribution from the Litigation Trust, a portion of such distribution may be characterized as interest for federal income tax purposes. The U.S. federal income tax consequences to holders of the Old PSI Common Stock are complex and depend upon a number of factors. You are urged to consult with your own tax advisors regarding the tax treatment of the distributions. IF I RECEIVE SHARES OF NEW PSI COMMON STOCK, WILL THEY BE IN CERTIFICATED OR BOOK-ENTRY FORM? The Company's transfer agent, Mellon Investor Services, will maintain the New PSI Common Stock in book-entry form under its Direct Registration System. This book-entry form of ownership permits stockholders to own, record and transfer shares electronically, without having a physical stock certificate issued. Shares of New PSI Common Stock that may be issued to you, if any, will be held in your name and recorded electronically on the company's books and records, which are maintained by Mellon Investor Services. Under this system, you will have all the traditional rights and privileges afforded stockholders with your stock directly registered to your name. If you wish to have a physical stock certificate, you may request one. After shares of New PSI Common Stock, if any, have been issued to you through the Direct Registration System, you may also request to have the shares transferred to your brokerage account. If and when New PSI Common Stock is issued under the Direct Registration System, further information on that system will be made available to you. WHERE CAN I FIND INFORMATION ABOUT PEREGRINE'S FINANCIAL PERFORMANCE AND ITS CURRENT BUSINESS OPERATIONS? There is limited information available regarding Peregrine's current and historical financial and operating results. Trading in our securities is highly speculative and risky. 9 Information that may be relevant to persons trading in our securities includes the following: - - On April 4, 2003, we filed with the SEC on Form 8-K audited financial results for fiscal years 2002, 2001 and 2000. These results restated previously reported results for the first three quarters of fiscal 2002 and all of fiscal years 2001 and 2000. We have not published restated quarterly results for quarters within the restatement period or issued quarterly results for quarters subsequent to the restatement period (i.e., for the quarters ended June 30, 2002, Sept. 30, 2002, and Dec. 31, 2002). We have not filed with the SEC amended Form 10-Q reports or Form 10-K reports for periods covered by the restatement, and we have not filed a Form 10-K for the periods ended March 31, 2002 or 2003, or a Form 10-Q report for the periods ended June 30, 2002, Sept. 30, 2002, Dec. 31, 2002 and June 30, 2003. - - The most recently filed discussion describing our business is contained in the Disclosure Statement, dated May 29, 2003, which was amended or superceded in certain respects by the Fourth Amended Plan of Reorganization which was filed on July 14, 2003, and the Confirmation Order which was entered by the Bankruptcy Court on July 18, 2003. Section VII of the Disclosure Statement outlines several risk factors relating to us, our business and the bankruptcy proceeding. The Disclosure Statement is attached as Exhibit T3E-1 to the Application for Qualification on Form T-3 we filed with the SEC on July 7, 2003. The Fourth Amended Plan of Reorganization and the Confirmation Order are attached as Exhibits 2.1 and 2.2, respectively, to the Form 8-K we filed with the SEC on July 18, 2003. Because certain information in the Disclosure Statement has been amended or superceded by information contained in Fourth Amended Plan of Reorganization and the Confirmation Order, the Disclosure Statement must be read in conjunction with such documents. WHERE CAN I FIND FURTHER INFORMATION ABOUT PEREGRINE'S PLAN OF REORGANIZATION? The Disclosure Statement, dated May 29, 2003, which was amended or superceded in certain respects by the Fourth Amended Plan of Reorganization which was filed on July 14, 2003, and the Confirmation Order which was entered by the Bankruptcy Court on July 18, 2003. Section VII of the Disclosure Statement outlines several risk factors relating to us, our business and the bankruptcy proceeding. The Disclosure Statement is attached as Exhibit T3E-1 to the Application for Qualification on Form T-3 we filed with the SEC on July 7, 2003. The Fourth Amended Plan of Reorganization and the Confirmation Order are attached as Exhibits 2.1 and 2.2, respectively, to the Form 8-K we filed with the SEC on July 18, 2003. Because certain information in the Disclosure Statement has been amended or superceded by information contained in Fourth Amended Plan of Reorganization and the Confirmation Order, the Disclosure Statement must be read in conjunction with such documents. In addition, the Form 8-K we filed on July 18, 2003 regarding approval of our Plan of Reorganization includes statements regarding (a) the timing of the initial or any interim or final distribution of New PSI Common Stock, (b) the amount of cash, the number of shares of New PSI Common Stock, and the principal amount of Reorganization Notes to 10 which our creditors are entitled and (c) the amount of New PSI Common Stock that holders of claims against or interests in Peregrine are eligible to receive. WHAT RISK FACTORS SHOULD I BE AWARE OF? You should be aware of the factors discussed in Disclosure Statement and in the SEC filings referenced above. In addition, factors that could cause actual results to differ materially from the statements contained herein include, but are not limited to, the following (capitalized terms that are not otherwise defined in this release are as defined in the Fourth Amended Plan of Reorganization and/or the Confirmation Order attached as Exhibits 2.1 and 2.2, respectively, to the Form 8-K we filed on July 18, 2003): - - the ability to determine the number of shares of New PSI Common Stock to be distributed by Peregrine in its role as the Stock Disbursing Agent on the schedule set forth in the Plan; - - the amount of Class 8 Obligations in our Chapter 11 proceeding; - - any election by the Company to extend the deadline by which the final distribution of New PSI Common Stock from the Class 7/9 Reserve must be made; - - the effect of any dispute with the Post-Emergence Equity Committee or others regarding the allocation of the Initial Class 9 Securities and the Reserved New PSI Common Stock between classes of claimants and interest holders under the Plan or the number of shares of the Initial Class 9 Securities and the Reserved New PSI Common Stock distributable under the Plan; - - the effect of rounding on a holder's Pro Rata share of distributions; - - the inability of Peregrine to satisfy any applicable requirements for trading of New PSI Common Stock on the over-the-counter and other national markets or exchanges; - - decisions made by securities market regulators that can effect the timing and methods of trading in the New PSI Common Stock; - - the possibility of future proceedings in and adjudications by the Bankruptcy Court; - - although Peregrine has entered into a consent decree with the SEC, the Department of Justice's investigation of Peregrine relating to events preceding Peregrine's bankruptcy remains open. The SEC's and DOJ's investigations of individuals are continuing and may include current and former employees of Peregrine. Peregrine is providing its full cooperation to the SEC and DOJ in their investigations and continues to provide them with documents that may be relevant to their investigations. Although Peregrine is cooperating with these investigations, it does not have access to all the information available to the SEC and the DOJ. It is possible that new information could come to light as a result of the ongoing investigations. The ultimate impact of these investigations on Peregrine's financial condition, results of operations, customer relations and management is uncertain, though Peregrine may face financial penalties and adverse reputational effects depending on the outcome of the investigations; and - - we expect the New PSI Common Stock initially to trade over-the-counter. We are presently unable to predict when or if our securities will be listed on a national securities exchange or quoted on the Nasdaq National Market System. Nasdaq Market Operations will determine the timing and the methods pursuant to which trading in New PSI Common Stock will commence. We advise you to check with your stockbroker to determine when and how trading will take place in the New PSI Common Stock. To the extent that an active trading market develops and persists in Peregrine securities, the prices at which such securities might trade depend upon a number of factors, including industry conditions, the performance of, and investor expectations for, Peregrine post-reorganization and market factors, such as the number of holders who may wish to dispose of their securities to raise funds or recognize losses for tax purposes or otherwise. In addition, you should also review the discussion of "Forward-Looking Statements" immediately following and be aware of the factors discussed therein and other factors that are described from time to time in reports we file with the SEC. FORWARD LOOKING STATEMENTS This communication contains forward-looking statements about Peregrine, including statements regarding (a) the timing of the initial or any interim or final distribution, (b) the number of shares of New PSI Common Stock to which you are entitled, (c) the amount of New PSI Common Stock that you are eligible to receive, (d) the eligibility of New PSI Common Stock for trading on any organized market and the timing and methods by which such any such trading may occur; and (e) the amount of any interest you may have in the Litigation Trust. These statements are based on management's beliefs and certain assumptions, estimates and projections. As a result, such statements are subject to numerous risks and significant uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements.. Consequently, such statements should not be regarded as a representation or warranty by Peregrine that such results will be realized. Peregrine disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, (a) the ability of Peregrine and others to determine the number of shares of New PSI Common Stock to be distributed by Peregrine 12 in its role as the Stock Disbursing Agent on the schedule set forth in the Plan, (b) the amount of Class 8 Obligations in Peregrine's Chapter 11 proceeding, (c) any election by Peregrine to extend the deadline by which the final distribution of New PSI Common Stock must be made, (d) the effect of any dispute with the Post-Emergence Equity Committee or others regarding the allocation of the Class 9 Reserve, the Class 7/9 Reserve and the Litigation Trust between classes of claimants and interest holders under the Plan on the time when the distribution of New PSI Common Stock by Peregrine in its role as the Stock Disbursing Agent shall occur, (e) the effect of rounding on a holder's Pro Rata share of distributions, (f) the inability of Peregrine to satisfy any applicable requirements for trading of New PSI Common Stock on the over the counter and other national markets or exchanges, (g) decisions made by securities market regulators that can effect the timing and methods of trading in the New PSI Common Stock, (h) the possibility of future proceedings in and adjudications by the Bankruptcy Court, and (i) other factors that are described from time to time in reports we file with the SEC, including, but not limited to risk factors, set forth in the Disclosure Statement in Support of the Fourth Amended Plan of Reorganization, dated May 29, 2003 and attached as Exhibit T3E-1 to the Application for Qualification on Form T-3 Peregrine filed with the SEC on July 7, 2003, the risk factors contained in Form 8-K that Peregrine filed on July 18, 2003 regarding approval of its Plan of Reorganization, and Peregrine's filings with the United States Securities and Exchange Commission. 13 EX-99.3 5 a91986exv99w3.txt EXHIBIT 99.3 EXHIBIT 99.3 FAQ: PLAN OF REORGANIZATION - BONDHOLDERS - -------------------------------------------------------------------------------- AUGUST 7, 2003 Forward Looking Statements. This communication contains forward-looking statements about Peregrine and its plan of reorganization. Such statements are based on management's beliefs and certain assumptions, estimates and projections. As a result, such statements are subject to numerous risks and significant uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Consequently, such statements should not be regarded as a representation or warranty by Peregrine that such results will be realized. Peregrine disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Factors that could cause actual results to differ materially from such forward-looking statements are discussed in the following sections: - - Where can I find information about Peregrine's financial performance and its current business operations?; - - Where can I find further information about Peregrine's plan of reorganization?; - - What risk factors should I be aware of?; and - - the Forward Looking Statements section, at the close of this FAQ notice. WHEN DOES PEREGRINE EMERGE FROM ITS CHAPTER 11 REORGANIZATION? The effective date for Peregrine's Plan of Reorganization is August 7, 2003 (the "Effective Date"). The company's Fourth Amended Plan of Reorganization, as Modified, Dated July 14, 2003 (the "Plan") was confirmed by the Bankruptcy Court for the District of Delaware in an order dated July 18, 2003. DID CREDITORS AND STOCKHOLDERS AGREE TO PEREGRINE'S MODIFIED PLAN? The Plan was modified to reflect a consensus among all major constituencies in the company's reorganization, including the Official Committee of Unsecured Creditors and the Official Committee of Equity Holders (the "Equity Committee"). HOW WILL THE COMPANY REPAY CREDITORS? The company will repay creditors with cash (on or shortly after the Effective Date or in installments over time), new common stock in the reorganized company (the "New PSI Common Stock") or notes, release of liabilities, return of collateral, and retention of liens, depending on provisions for each class of creditors in the Plan. HOW MANY SHARES OF NEW COMMON STOCK ARE BEING ISSUED IN THE REORGANIZED COMPANY? Under the provisions of the Plan, shares of Old Common Stock in Peregrine (ticker symbol: PRGNQ) are canceled at the close of business on the Effective Date. Also on the Effective Date, Peregrine is issuing 15 million shares of New PSI Common Stock in the reorganized company (CUSIP No. 71366Q 20 0). In addition, 2.65 million 1 shares of New PSI Common Stock are being set aside for future issuance under the 2003 Equity Incentive Plan. The New PSI Common Stock will trade over-the-counter under a new ticker symbol to be assigned by Nasdaq Market Operations and Participants Services ("Nasdaq Market Operations"). Nasdaq Market Operations will also determine when and how trading in the New PSI Common Stock will take place. WHAT DO I NEED TO DO TO RECEIVE ANY DISTRIBUTIONS OF SECURITIES AND CASH TO WHICH I MAY BE ENTITLED AS A HOLDER OF PEREGRINE'S 5-1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2007? If you hold Peregrine's 5-1/2% Convertible Subordinated Notes due 2007 (the "Old PSI Notes") at the close of business on the Effective Date, you will have a right to certain distributions of the reorganized company that will include Peregrine's new 6-1/2% Senior Notes due 2007 (CUSIP No. 71366Q AD 3) (the "New PSI Notes"), shares of New PSI Common Stock and a cash payment. Other than being a holder of Old PSI Notes on the Effective Date, you do not have to take any action to maintain your right to such distributions. With the exception of shares of New PSI Common Stock from the "Class 7/9 Reserve" (see below) that may be distributed to you on a quarterly basis beginning October 31, 2003, we expect that the distributions of cash and securities to which you are entitled will take place reasonably promptly following the Effective Date in exchange for the cancellation of the Old PSI Notes that you hold. Your holdings of the Old PSI Notes will be canceled and the cash and securities will be credited to your account through the book entry system maintained by The Depositary Trust Company (DTC) promptly following the Effective Date without any action required on your part. A list of the holders of the Old PSI Notes as of the Effective Date will be retained and will also be used for future distributions from the Class 7/9 Reserve to which you may be entitled (see discussion below). DO I NEED TO TAKE ANY ACTION NOW TO RECEIVE ANY DISTRIBUTIONS OF CASH, NEW PSI NOTES OR NEW PSI COMMON STOCK THAT I MAY BE OWED? You need not surrender any certificates evidencing the Old PSI Notes or the Old PSI Common Stock, and there is no other action you need take at this time to receive the distributions to which you are entitled under the Plan. HOW WILL THE NEW PSI COMMON STOCK IN THE REORGANIZED COMPANY BE DIVIDED? The Plan provides for the New PSI Common Stock to be divided between holders of Class 7 Claims (Peregrine bondholders) and holders of Class 9 Claims (stockholders, securities litigation claimants and certain other subordinated claimants) in the following way: - - Bondholders in Class 7 receive in the aggregate 63% of the stock (9,450,000 shares) (the "Class 7 Reserve"). - - Stockholders and securities litigation claimants in Class 9 will receive an aggregate 33% of the stock (4,950,000 shares) (the "Class 9 Reserve"); provided, however, that the actual division of stock between the stockholders on the one hand and the 2 securities litigation claimants on the other hand will likely be decided in a settlement between the Equity Committee which represents the holders of Old PSI Common Stock and representatives of securities litigation claimants. (The Equity Committee will be dissolved shortly after the Effective Date, and the Post-Emergence Equity Committee after the Effective Date will carry on any such settlement negotiations.) In the event that this division cannot be consensually resolved, this matter will be determined by the Bankruptcy Court. - - 4% of the stock (600,000 shares) (the "Class 7/9 Reserve") is reserved for later distributions to either Class 7 Claims or Class 9 Claims or both. Under the Plan, the shares in the Class 9 Reserve and the Class 7/9 Reserve will be held by the Stock Disbursing Agent for final distribution and will be considered issued and outstanding as of the Effective Date. Until they are distributed in accordance with the Plan, shares in the Class 9 Reserve and the Class 7/9 Reserve will be voted by the Stock Disbursing Agent in accordance with instructions given by the Post-Emergence Equity Committee which shall be formed as of the Effective Date. Peregrine has agreed to serve as the Stock Disbursing Agent under the Plan. In addition to the shares to be issued to the bondholders in Class 7 and the stockholders and securities litigation claimants in Class 9, 2.65 million shares of New PSI Common Stock have been reserved for issuance under Peregrine's 2003 Equity Incentive Plan. The percentages set forth above do not account for the potential dilution from the issuance of shares of New PSI Common Stock under the 2003 Equity Incentive Plan. The New PSI Common Stock will be trading over-the-counter under a new ticker symbol to be assigned by Nasdaq Market Operations. HOW ARE HOLDERS OF THE OLD PSI NOTES (CLASS 7) TREATED UNDER THE PLAN? The Old PSI Notes are canceled as of the close of business on the Effective Date. In exchange, each bondholder will receive (1) a cash distribution equal to 30% of principal and accrued interest on his bonds, (2) his pro rata share of $58.8 million in original principal amount of the New PSI Notes, and (3) his pro rata share of 9,450,000 shares of the New PSI Common Stock (63% percent of the reorganized company). In addition, bondholders may receive up to an additional 600,000 shares of the New PSI Common Stock (4% of the reorganized company), depending on the final amount of Allowed Class 8 Claims (general unsecured claims), as well as other factors. (These percentages do not account for potential dilution due to shares of New PSI Common Stock set aside for future issuance under Peregrine's 2003 Equity Incentive Plan. See above). HOW WILL BONDHOLDERS IN CLASS 7 SHARE IN THE CLASS 7/9 RESERVE NOTED ABOVE? Bondholders are eligible to receive up to an additional 600,000 shares of New PSI Common Stock (equivalent to 4% of the reorganized company). These shares may be distributed to the bondholders or the Class 9 Claims or both depending on the amount of General Expense claims (Class 8) and other factors. Distributions of these shares will be on a quarterly basis, commencing with a first distribution of those shares, if any, that bondholders are entitled to receive, on or before October 31, 2003. 3 WHAT ADJUSTMENTS WILL BE MADE IN DISTRIBUTING PRO RATA SHARES OF CASH, NEW PSI NOTES AND NEW PSI COMMON STOCK TO BONDHOLDERS? Subject to Plan requirements regarding the number of pro rata shares to be issued, your pro rata share is subject to certain adjustments, which are described below: - - In the case of the cash distribution, if your pro rata share includes a fraction of a cent, the actual payment to you will be rounded down to the nearest whole cent. - - In the case of any distribution of New PSI Common Stock, no fractional shares of the stock will be distributed. If your pro rata share calls for the distribution of a fractional share of New PSI Common Stock, the number of shares that you will be entitled to receive will be rounded down to the nearest whole number of shares or, if less than a single share, no shares will be distributed. No cash or other consideration will be paid in compensation for fractional shares. - - In the case of any distribution of New PSI Notes, the New PSI Notes will be distributed in denominations of $1,000 and integral multiples thereof. If your pro rata share calls for the distribution of a principal amount of New Notes in a denomination of less than $1,000 or an integral multiple thereof, the principal amount of New Notes that you will be entitled to receive will be rounded down to the nearest integral multiple of $1,000 or, if less than $1,000, no New Notes will be distributed. AS A BONDHOLDER, WHEN WILL I RECEIVE MY SHARE OF THE CASH, NEW PSI NOTES AND NEW PSI COMMON STOCK? Bondholders will receive their initial distribution of cash, New PSI Notes and New PSI Common Stock reasonably promptly following the Effective Date. Distribution of the portion of New PSI Common Stock held in the Class 7/9 Reserve that is allocated to bondholders, if any, will take place on at least a quarterly basis, commencing with a first distribution on or before the end of October 2003. All of the New Common Stock held in the Class 7/9 Reserve is required under the Plan to be distributed within 90 days of the second anniversary of the Plan's effective date, unless extended by Peregrine for no more than a single additional year. WILL THE NEW PSI NOTES BE IN CERTIFICATED OR BOOK-ENTRY FORM? The indenture trustee, registrar and paying agent for the New PSI Notes will be U.S. Bank. The New Notes will be evidenced by a single Global Note in the name of CEDE & Co., the nominee of The Depositary Trust Company (DTC). The Global Note will be held by U.S. Bank, as custodian for DTC. The New PSI Notes will be maintained by DTC in book-entry form. Banks, brokers and other DTC participants will enter the New Notes for the account of their customers, and the New PSI Notes may be transferred in the same manner as other securities. WILL THE NEW PSI NOTES BE LISTED ON A STOCK EXCHANGE? The Company has no current intention to list the New PSI Notes on a national exchange or Nasdaq. There can be no assurance that a market for the New PSI Notes will develop or, if developed, that it will be maintained. 4 WILL THE NEW PSI COMMON STOCK BE IN CERTIFICATED OR BOOK-ENTRY FORM? The New PSI Common Stock issued to the bondholders will likewise be evidenced by a single global stock certificate in the name of CEDE & Co., the nominee of The Depositary Trust Company (DTC). The New PSI Common Stock issued to the bondholders will be maintained by DTC in book-entry form. Banks, brokers and other DTC participants will enter the New PSI Common Stock for the account of their customers, and the New PSI Common Stock may be transferred in the same manner as other securities. WILL SHARES OF NEW PSI COMMON STOCK BE LISTED ON A STOCK EXCHANGE? New PSI Common Stock is expected to initially trade over-the-counter. Under the Plan, Peregrine shall also use commercially reasonable efforts to list the New PSI Common Stock on a national securities exchange or cause the New PSI Common Stock to be quoted on the Nasdaq National Market System. We are presently unable to predict when or if such listing will occur. WHEN WILL TRADING IN NEW PSI COMMON STOCK COMMENCE? Nasdaq Market Operations will determine the timing and the methods pursuant to which trading in New PSI Common Stock will commence. We advise you to check with your stockbroker to determine when and how trading will take place in the New PSI Common Stock. In determining whether to trade in New PSI Common Stock, you should also be aware that there is limited information available regarding Peregrine's current and historical financial and operating results. We strongly advise you to consider carefully the answers to the following questions discussed below: - - Where can I find information about Peregrine's financial performance and its current business operations?; - - Where can I find further information about Peregrine's plan of reorganization?; - - What risk factors should I be aware of?; and - - the Forward Looking Statements section, at the close of this FAQ notice. Due to the factors discussed in these sections, we believe that trading in New PSI Common Stock would be highly speculative. WILL SIGNIFICANT NUMBERS OF ADDITIONAL SHARES OF NEW PSI COMMON STOCK BE DISTRIBUTED UNDER THE PLAN AFTER SHARES ARE ISSUED TO BONDHOLDERS FROM THE CLASS 7 RESERVE AND THE CLASS 7/9 RESERVE? Pursuant to the Plan, the 4,950,000 shares in the Class 9 Reserve (representing 33% of the shares of New PSI Common Stock on an undiluted basis) may not be distributed until the Equity Committee representing the holders of Old PSI Common Stock that was canceled on the Effective Date reaches a settlement with the representatives of certain securities litigation plaintiffs as to apportionment of the Class 9 Reserve or other resolution is adjudicated and ordered by the Bankruptcy Court. (The Equity Committee will be dissolved shortly after the Effective Date, and the Post-Emergence Equity 5 Committee after the Effective Date will carry on any such settlement negotiations.) Under the Plan, until the apportionment of the shares in the Class 9 Reserve is resolved the shares are considered issued and outstanding as of the Plan's Effective Date and will be held in book entry form by the Stock Disbursing Agent. In addition, a Voting and Distribution Agreement will be executed among the Stock Disbursing Agent, Peregrine, and the Post-Emergence Equity Committee as called for by the Plan that obligates the Stock Disbursing Agent to vote the shares it holds pursuant to instructions given by the Post-Emergence Equity Committee. Peregrine has agreed to serve as the Stock Disbursing Agent under the Plan. Once the court has approved a settlement or resolution, the stock will be distributed by Peregrine in its role as Stock Disbursing Agent in accordance with the terms of any such settlement or resolution. There is no deadline as to when any such settlement or resolution must be reached and the Class 9 Reserve distributed. Under the Plan, until shares from the Class 7/9 Reserve are distributed, the Post-Emergence Equity Committee will likewise provide instructions to the Stock Disbursing Agent on how undistributed shares in the Class 7/9 Reserve are to be voted should any vote of Peregrine stockholders occur prior to such distribution. Therefore, Peregrine, in its role as Stock Disbursing Agent under the Plan, will cast votes for the shares in both the Class 9 Reserve and the Class 7/9 Reserve as instructed by the Post-Emergence Equity Committee until the shares in those reserves are distributed in accordance with the Plan. The rights and interests of bondholders under the Plan will not be affected by any such settlement or resolution between the holders of Old PSI Common Stock and the securities litigation plaintiffs, but trading volume and liquidity in New PSI Common Stock may be affected when the Class 9 Reserve is distributed to holders of Class 9 Claims following the settlement or resolution. The timing of the distribution of shares of New PSI Common Stock, if any, that may be apportioned to Class 9 Claims from the Class 7/9 Reserve, may also not occur until such settlement or resolution is reached. In any event, no more than the total of 15 million shares allocated among the Chapter 11 claimants (see above) will be distributed under the Plan. In addition, 2.65 million shares have been set aside for future issuance under the 2003 Equity Incentive Plan. IF I SELL ANY OF MY NEW PSI NOTES OR ANY OF THE SHARES OF NEW PSI COMMON STOCK DISTRIBUTED TO ME BEFORE I RECEIVE ALL OF THE NEW PSI COMMON STOCK ISSUABLE TO BONDHOLDERS UNDER FROM THE CLASS 7/9 RESERVE, IF ANY, WILL I STILL RETAIN MY RIGHT TO RECEIVE LATER DISTRIBUTIONS FROM THE CLASS 7/9 RESERVE TO WHICH I MAY BE ENTITLED? A list of the holders of all Old PSI Notes on the Effective Date will be retained, and that list will not be modified to reflect later transactions in New PSI Notes or New PSI Common Stock. All distributions, if any, made to holders of Old PSI Notes will be made to the persons on the list. Therefore, even if you sell any New PSI Notes or any shares of New PSI Common Stock distributed to you, any rights or interests that you may have in future distributions, if any, of additional securities pursuant to the Plan, will be distributed to you in accordance with the Plan and will not be affected by any sale of shares of New PSI Common Stock that 6 you may receive. As discussed above, however, there can be no assurances whether there will be any initial or subsequent distributions to the bondholders of New PSI Common Stock from the Class 7/9 Reserve. WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO ME OF EXCHANGING THE OLD PSI NOTES FOR NEW PSI NOTES AND OTHER CONSIDERATION? You should be taxable on the initial distribution only to the extent of the lesser of (x) the total gain you realize (the excess of the value of the total package of consideration you receive over your basis in your Old PSI Notes) or (y) the amount of the consideration you receive other than consideration consisting either of New PSI Common Stock or, if the New PSI Notes are "securities" for federal income tax purposes, New PSI Notes. In calculating the gain you realize in the initial distribution, you may be required to allocate a portion of your basis in your Old PSI Notes to New PSI Common Stock that you may receive in interim distributions. Some portion of any interim distributions you receive will be taxable to you as interest income, while the remainder of any such distribution should be nontaxable to you. Although there is some uncertainty as to how and when to account for this interest income, we believe you should be taxable only when you receive an interim distribution, and then only to the extent the fair market value of the New PSI Common Stock received (measured on the date of receipt) exceeds the discounted present value of the New PSI Common Stock received. The discounted present value of any New PSI Common Stock you receive should be determined by discounting the fair market value of that New PSI Common Stock (measured on the date of receipt) by the appropriate "applicable federal rate", assuming compounding, from the date the New PSI Common Stock is received to the Effective Date. The U.S. federal income tax consequences to holders of the Old PSI Notes are complex and depend upon a number of factors. You are urged to consult with your own tax advisors regarding the tax treatment of the distributions. WHERE CAN I FIND INFORMATION ABOUT PEREGRINE'S FINANCIAL PERFORMANCE AND ITS CURRENT BUSINESS OPERATIONS? There is limited information available regarding Peregrine's current and historical financial and operating results. Trading in our securities is highly speculative and risky. Information that may be relevant to persons trading in our securities includes the following: - - On April 4, 2003, we filed with the SEC on Form 8-K audited financial results for fiscal years 2002, 2001 and 2000. These results restated previously reported results for the first three quarters of fiscal 2002 and all of fiscal years 2001 and 2000. We have not published restated quarterly results for quarters within the restatement period or issued quarterly results for quarters subsequent to the restatement period (i.e., for the quarters ended June 30, 2002, Sept. 30, 2002, and Dec. 31, 2002). We have not filed with the SEC amended Form 10-Q reports or Form 10-K reports for periods covered by the restatement, and we have not filed a Form 10-K for the periods ended 7 March 31, 2002 or 2003, or a Form 10-Q report for the periods ended June 30, 2002, Sept. 30, 2002, Dec. 31, 2002 and June 30, 2003. - - The most recently filed discussion describing our business is contained in the Disclosure Statement, dated May 29, 2003, which was amended or superceded in certain respects by the Fourth Amended Plan of Reorganization which was filed on July 14, 2003, and the Confirmation Order which was entered by the Bankruptcy Court on July 18, 2003. Section VII of the Disclosure Statement outlines several risk factors relating to us, our business and the bankruptcy proceeding. The Disclosure Statement is attached as Exhibit T3E-1 to the Application for Qualification on Form T-3 we filed with the SEC on July 7, 2003. The Fourth Amended Plan of Reorganization and the Confirmation Order are attached as Exhibits 2.1 and 2.2, respectively, to the Form 8-K we filed with the SEC on July 18, 2003. Because certain information in the Disclosure Statement has been amended or superceded by information contained in Fourth Amended Plan of Reorganization and the Confirmation Order, the Disclosure Statement must be read in conjunction with such documents. WHERE CAN I FIND FURTHER INFORMATION ABOUT PEREGRINE'S PLAN OF REORGANIZATION? The Disclosure Statement, dated May 29, 2003, which was amended or superceded in certain respects by the Fourth Amended Plan of Reorganization which was filed on July 14, 2003, and the Confirmation Order which was entered by the Bankruptcy Court on July 18, 2003. Section VII of the Disclosure Statement outlines several risk factors relating to us, our business and the bankruptcy proceeding. The Disclosure Statement is attached as Exhibit T3E-1 to the Application for Qualification on Form T-3 we filed with the SEC on July 7, 2003. The Fourth Amended Plan of Reorganization and the Confirmation Order are attached as Exhibits 2.1 and 2.2, respectively, to the Form 8-K we filed with the SEC on July 18, 2003. Because certain information in the Disclosure Statement has been amended or superceded by information contained in Fourth Amended Plan of Reorganization and the Confirmation Order, the Disclosure Statement must be read in conjunction with such documents. In addition, the Form 8-K we filed on July 18, 2003 regarding approval of our Plan of Reorganization includes statements regarding (a) the timing of the initial or any interim or final distribution of New PSI Common Stock, (b) the amount of cash, the number of shares of New PSI Common Stock, and the principal amount of Reorganization Notes to which our creditors are entitled and (c) the amount of New PSI Common Stock that holders of claims against or interests in Peregrine are eligible to receive. WHAT RISK FACTORS SHOULD I BE AWARE OF? You should be aware of the factors discussed in Disclosure Statement and in the SEC filings referenced above. In addition, factors that could cause actual results to differ materially from the statements contained herein include, but are not limited to, the following (capitalized terms that are not otherwise defined in this release are as defined in the Fourth Amended Plan of Reorganization and/or the Confirmation Order attached as Exhibits 2.1 and 2.2, respectively, to the Form 8-K we filed on July 18, 2003): 8 - - the ability to determine the number of shares of New PSI Common Stock to be distributed by Peregrine in its role as the Stock Disbursing Agent on the schedule set forth in the Plan; - - the amount of Class 8 Obligations in our Chapter 11 proceeding; - - any election by the Company to extend the deadline by which the final distribution of New PSI Common Stock from the Class 7/9 Reserve must be made; - - the effect of any dispute with the Post-Emergence Equity Committee or others regarding the allocation of the Initial Class 9 Securities and the Reserved New PSI Common Stock between classes of claimants and interest holders under the Plan or the number of shares of the Initial Class 9 Securities and the Reserved New PSI Common Stock distributable under the Plan; - - the effect of rounding on a holder's Pro Rata share of distributions; - - the inability of Peregrine to satisfy any applicable requirements for trading of New PSI Common Stock on the over-the-counter and other national markets or exchanges; - - decisions made by securities market regulators that can effect the timing and methods of trading in the New PSI Common Stock; - - the possibility of future proceedings in and adjudications by the Bankruptcy Court; - - although Peregrine has entered into a consent decree with the SEC, the Department of Justice's investigation of Peregrine relating to events preceding Peregrine's bankruptcy remains open. The SEC's and DOJ's investigations of individuals are continuing and may include current and former employees of Peregrine. Peregrine is providing its full cooperation to the SEC and DOJ in their investigations and continues to provide them with documents that may be relevant to their investigations. Although Peregrine is cooperating with these investigations, it does not have access to all the information available to the SEC and DOJ. It is possible that new information could come to light as a result of the ongoing investigations. The ultimate impact of these investigations on Peregrine's financial condition, results of operations, customer relations and management is uncertain, though Peregrine may face financial penalties and adverse reputational effects depending on the outcome of the investigations; and - - we expect the New PSI Common Stock initially to trade over-the-counter. We are presently unable to predict when or if our securities will be listed on a 9 national securities exchange or quoted on the Nasdaq National Market System. Nasdaq Market Operations will determine the timing and the methods pursuant to which trading in New PSI Common Stock will commence. We advise you to check with your stockbroker to determine when and how trading will take place in the New PSI Common Stock. To the extent that an active trading market develops and persists in Peregrine securities, the prices at which such securities might trade depend upon a number of factors, including industry conditions, the performance of, and investor expectations for, Peregrine post-reorganization and market factors, such as the number of holders who may wish to dispose of their securities to raise funds or recognize losses for tax purposes or otherwise. In addition, you should also review the discussion of "Forward-Looking Statements" immediately following and be aware of the factors discussed therein and other factors that are described from time to time in reports we file with the SEC. FORWARD LOOKING STATEMENTS This communication contains forward-looking statements about Peregrine, including but not limited to statements regarding (a) the timing of the initial or any interim or final distribution; (b) the amount of cash, the number of shares of New PSI Common Stock, and the principal amount of New PSI Notes that you are entitled to receive; (c) the eligibility of the New PSI Common Stock for trading on any organized market and the timing and methods by which such trading may occur; and (d) the possible development of a trading market in the New PSI Notes. These statements are based on management's beliefs and certain assumptions, estimates and projections. As a result, such statements are subject to numerous risks and significant uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Consequently, such statements should not be regarded as a representation or warranty by Peregrine that such results will be realized. Peregrine disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, (a) the ability of Peregrine and others to determine the number of shares of New PSI Common Stock to be distributed by Peregrine in its role as the Stock Disbursing Agent on the schedule set forth in the Plan, (b) the amount of Class 8 Obligations in Peregrine's Chapter 11 proceeding, (c) any election by Peregrine to extend the deadline by which the final distribution of New PSI Common Stock must be made, (d) the effect of any dispute with the Post-Emergence Equity Committee or others regarding the allocation of New PSI Common Stock between classes of claimants and interest holders under the Plan on the time when the distribution of New PSI Common Stock by Peregrine in its role as Stock Disbursing Agent shall occur, (e) the effect of rounding on a holder's pro rata share of distributions, (f) the inability of Peregrine to satisfy any applicable requirements for trading of the New PSI Common Stock over the counter or in other national markets or exchanges, (g) decisions made by securities market regulators that can effect the timing and methods of trading in the New PSI Notes and the New PSI 10 Common Stock, (h) the possibility of future proceedings in and adjudications by the Bankruptcy Court, and (i) other factors that are described from time to time in reports we file with the SEC, including, but not limited to risk factors set forth in the Disclosure Statement in Support of the Fourth Amended Plan of Reorganization, dated May 29, 2003 and attached as Exhibit T3E-1 to the Application for Qualification on Form T-3 Peregrine filed with the SEC on July 7, 2003, the risk factors contained in Form 8-K that Peregrine filed on July 18, 2003 regarding approval of its Plan of Reorganization, and Peregrine's filings with the United States Securities and Exchange Commission. 11 -----END PRIVACY-ENHANCED MESSAGE-----

EX-99.1

                                                                    EXHIBIT 99.1

(PEREGRINE NEWS RELEASE GRAPHIC)

FOR IMMEDIATE RELEASE

PEREGRINE SYSTEMS(R) COMPLETES CHAPTER 11 REORGANIZATION; COMPANY TO REPAY
CREDITORS AND PRESERVE SUBSTANTIAL EQUITY FOR SHAREHOLDERS

FIRST PUBLIC ENTERPRISE SOFTWARE COMPANY TO EMERGE FROM CHAPTER 11

SAN DIEGO, AUG. 7, 2003 -- Peregrine Systems, Inc., a global provider of
Consolidated Asset and Service Management software, today announced that it has
completed all requirements for emerging from bankruptcy court supervision under
Chapter 11 and will implement its confirmed Plan of Reorganization. Peregrine's
restructuring plan provides full recovery by many creditors, a substantial
equity stake in the reorganized company to existing shareholders and sustains
the company's business in enterprise software.

The Plan of Reorganization of Peregrine Systems, Inc. (Plan) was confirmed by
the U.S. Bankruptcy Court for the District of Delaware on July 18, and it will
become effective today. The Plan was modified -- from the original version
initially filed by Peregrine on Jan. 20 -- to reflect a consensus among all
major constituencies in the company's reorganization, including the Official
Committee of Unsecured Creditors and the Official Committee of Equity Security
Holders.

"We are proud to be the first enterprise software company to reorganize
successfully under Chapter 11 as a public entity," said Gary Greenfield,
Peregrine's CEO. "Last year was a remarkable one for Peregrine. We owe our
success to the loyalty of our customers and partners, and an extraordinary
commitment among employees worldwide to move the company forward.

"We have focused and mobilized the company in Consolidated Asset and Service
Management with software products that enable organizations to manage IT for the
business," said Greenfield. "We are continuing to deliver new product releases
that drive out costs through asset management best practices and improved
service delivery across global operations. As we develop the next-generation
enterprise IT management software, Peregrine is poised for new opportunities and
growth."

Colleen Niven, vice president of research at AMR Research, said, "As Peregrine
continues to emerge and deliver on commitments, sticking to core competencies
and listening to customers bode well for its success. As a leader in the service
and asset management space, it has a great opportunity."1

www.peregrine.com

Peregrine Systems, Inc.                                 (PEREGRINE SYSTEMS LOGO)
3611 Valley Center Drive
San Diego, CA 92130

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- ----------
1     The AMR Research Alert, "Peregrine's Renewed Focus" (March 19, 2003)

SERVING CUSTOMERS AND PARTNERS

During the past year, Peregrine continued to work with partners and serve its
worldwide customers. Gary Bullard, general manager of IBM Global Solutions,
said, "Peregrine's Consolidated Asset and Service Management software is an
important component of our e-business on demand solutions to help customers
reduce costs. We look forward to continuing to work with Peregrine in the
future."

Jorg Matz, senior consultant in the Peregrine Competence Center at Lufthansa
Systems, commented, "We have been committed to Peregrine for the last 14 years
because its products are the best available on the market. ServiceCenter(R)'s
great flexibility allows us to adapt the software exactly to our needs. Last
year, we enhanced the solution by implementing AssetCenter(R) and all Get-It(TM)
modules."

Among Peregrine's 3,500 customers are Global 1000 companies with enterprise-wide
implementations, as well as midsize organizations and departments. They include:
AXA Asia Pacific Holdings; AAA of Michigan; Aeroports de Paris; ActewAGL; Bank
of America; Bayer Corp.; Circuit City; Danske Bank; Enterprise Rent-A-Car; First
Data International, Australia, New Zealand, South Asia; IMS Health, Inc.; Japan
Tobacco, Inc.; Kokuyo Co., Ltd.; Kawasaki Heavy Industries, Ltd./Benic Solutions
Corp.; Lufthansa Systems; Panasonic; and the University of New Mexico.

Peregrine's strategic partners include leading global service delivery
organizations, which deploy Consolidated Asset and Service Management offerings
to serve large numbers of their own customers. As a result, Peregrine has
established important relationships with managed service providers, systems
integrators and resellers (such as IBM Corp., Evergreen Systems, Inc.,
Infrasolve Ltd., ITM Brazil, Linium and Rubik).

NEW BOARD OF DIRECTORS

The Plan called for the creation of a new, seven-member board of directors,
effective today. Pursuant to the Bankruptcy Court's Confirmation Order dated
July 18, the Official Committee of Unsecured Creditors named four of the new
directors, while the Official Committee of Equity Security Holders selected
three.

Accordingly, the new board will consist of the following directors:

- -     Carl Goldsmith, 37, managing director and portfolio manager at MW Post
      Advisory Group, LLC, and a director of Pacific Aerospace & Electronics,
      Inc.;

- -     Jim Harris, 57, president and founder of Seneca Financial Group, Inc., and
      a director of El Paso Electric Company's board, member of its Executive
      Committee and chairman of its Nominating and Governance Committee;

- -     Robert Horwitz, 51, managing member of RH Capital Associates, LLC, and a
      director of Dice, Inc.;

- -     Mark Israel, 48, director of distribution and channel sales for Magellan
      Products, a division of Thales Navigation;

- -     James Jenkins, 55, portfolio manager at Mellon HBV Alternative Strategies,
      LLC, and a director of Telespectrum Worldwide, Inc.;

- -     John Mutch, 47, general partner and founder of MVenture Holdings, LLC, and
      a director of Brio Software, Inc. and Overland Storage; and

- -     Ben Taylor, 41, managing director at Weiss, Peck & Greer Investments, a
      division of Robeco USA, LLC.

"The management team looks forward to working with these incoming directors as
Peregrine begins a new chapter," said Greenfield. In addition, he saluted the
outgoing board members, saying: "These leaders in business and technology formed
a truly world-class board that has served us well in recent months. We thank
them all for the guidance and insight they brought to Peregrine as we navigated
a difficult period in the company's history."

MILESTONES IN REORGANIZATION

Within the past year, Peregrine achieved a number of significant milestones. The
company successfully reorganized its business in core areas of strength in
enterprise software, continuing to offer best-in-class solutions for asset and
service management. Peregrine introduced new versions of its flagship products,
ServiceCenter and AssetCenter, established Customer Advisory Councils in North
America and EMEA (Europe, Middle East and Asia) and continued to invest
resources in research and development, customer support and professional
services.

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                                                        (PEREGRINE SYSTEMS LOGO)

Earlier this year, Peregrine completed a restatement of financial results for 11
quarters in fiscal years 2002, 2001 and 2000. Recently, the company reached
agreement with the Securities and Exchange Commission (SEC) in a civil action it
has filed against the company, and the agency announced it would not seek
financial damages in the case. Pursuant to Peregrine's agreement with the SEC,
the company today filed a Form 8-K containing an assessment of its internal
controls and financial reporting procedures. Peregrine is also continuing to
implement a compliance program with a focus on company-wide processes and
procedures. In addition, the board of directors is in the process of completing
the selection of a new compliance officer.

Following the effective date of the Plan, Nasdaq Market Operations and
Participants Services will issue a new symbol for Peregrine's common stock. The
new stock symbol will be posted on Peregrine's Web site as soon as it becomes
available.

Peregrine filed a voluntary Chapter 11 petition on Sept. 22, 2002 after
accounting irregularities came to light, requiring a restatement of 11 quarters
of financial results.

ABOUT PEREGRINE

Founded in 1981, Peregrine Systems, Inc. develops and sells enterprise software
to enable its 3,500 customers worldwide to manage IT for the business. The
company's Consolidated Asset and Service Management offerings allow
organizations to improve asset management and gain efficiencies in service
delivery -- driving out costs, increasing productivity and accelerating return
on investment. The company's flagship products -- ServiceCenter and AssetCenter
- -- are complemented by Employee Self Service, Automation and Integration
capabilities. Peregrine is headquartered in San Diego, Calif. and conducts
business from offices in the Americas, Europe and Asia Pacific. For more
information, please visit: www.peregrine.com.

Peregrine Systems, ServiceCenter, AssetCenter, and Get-It are trademarks of
Peregrine Systems, Inc. or its affiliates. All other marks are the property of
their respective owners.

FORWARD LOOKING STATEMENTS

This release contains forward-looking statements about Peregrine, including
statements regarding its business and future opportunities and growth and its
proceeding under Chapter 11 of the U.S. Bankruptcy Code. These statements are
based on management's beliefs and certain assumptions, estimates and
projections. As a result, such statements are subject to numerous risks and
significant uncertainties that could cause actual results to differ materially
from those contemplated by the forward-looking statements. Consequently, such
statements should not be regarded as a representation or warranty by Peregrine
that such results will be realized. Peregrine disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.

Factors that could cause actual results to differ materially from such
forward-looking statements include, but are not limited to, (a) intense
competition within Peregrine's industry; (b) general economic trends and events;
(c) that the market for the sale of Peregrine's products and services may not
develop or grow as expected; (d) the factors discussed below, and (e) other
factors that are described from time to time in reports Peregrine files with the
SEC, including, but not limited to, risk factors set forth in the Disclosure
Statement in Support of the Fourth Amended Plan of Reorganization, dated May 29,
2003 and attached as Exhibit T3E-1 to the Application for Qualification on Form
T-3 Peregrine filed with the SEC on July 7, 2003 and the risk factors contained
in Form 8-K that Peregrine filed on July 18, 2003 regarding approval of its Plan
of Reorganization.

CAUTIONARY STATEMENT FOR INVESTORS

Trading in Peregrine's securities is highly speculative and risky. Information
that may be relevant to persons trading in Peregrine's securities includes,
without limitation, the following. Peregrine disclaims any intention or
obligation to update or revise these cautionary statements and any information
contained therein, whether as a result of new information, future events or
otherwise.

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                                                        (PEREGRINE SYSTEMS LOGO)

      -     On April 4, 2003, Peregrine filed with the SEC on Form 8-K audited
            financial results for the fiscal years ended March 31, 2002, 2001
            and 2000. These results restated previously reported results for the
            first three quarters of fiscal 2002 and all of fiscal years 2001 and
            2000. Peregrine has not published financial results for the fiscal
            year ended March 31, 2003. Peregrine also has not published restated
            quarterly results for quarters within the restatement period or
            issued quarterly results for quarters subsequent to the restatement
            period (i.e., for the quarters ended June 30, 2002, Sept. 30, 2002,
            Dec. 31, 2002 and June 30, 2003). Peregrine has not filed with the
            SEC amended Form 10-Q reports or Form 10-K reports for periods
            covered by the restatement, and it has not filed a Form 10-K for the
            periods ended March 31, 2002 or 2003, or a Form 10-Q report for the
            periods ended June 30, 2002, Sept. 30, 2002, Dec. 31, 2002 or June
            30, 2003.

      -     On August 5, 2003, as required by Peregrine's consent and
            undertaking with the SEC, Peregrine filed with the SEC a Form 8-K
            containing an assessment of ongoing deficiencies in its internal
            control structure and procedures for financial reporting.

      -     Although Peregrine has entered into a consent decree with the SEC,
            the Department of Justice's investigation of Peregrine relating to
            events preceding Peregrine's bankruptcy remains open. The SEC's and
            DOJ's investigations of individuals are continuing and may include
            current and former employees of Peregrine. The company is providing
            its full cooperation to the SEC and DOJ in their investigations and
            continues to provide them with documents that may be relevant to
            their investigations. Although the company is cooperating with these
            investigations, it does not have access to all the information
            available to the SEC and the DOJ. It is possible that new
            information could come to light as a result of the ongoing
            investigations. The ultimate impact of these investigations on
            Peregrine's financial condition, results of operations, customer
            relations and management is uncertain, though Peregrine may face
            financial penalties and adverse reputational effects depending on
            the outcome of the investigations.

      -     The most recently filed discussion describing Peregrine's business
            is contained in the Disclosure Statement, dated May 29, 2003, which
            was amended or superceded in certain respects by the Fourth Amended
            Plan of Reorganization and the Confirmation Order, each entered on
            July 18, 2003. Section VII of the Disclosure Statement outlines
            several risk factors relating to Peregrine, its business and the
            bankruptcy proceeding. The Disclosure Statement is attached as
            Exhibit T3E-1 to the Application for Qualification on Form T-3
            Peregrine filed with the SEC on July 7, 2003. The Fourth Amended
            Plan of Reorganization and the Confirmation Order are attached as
            Exhibits 2.1 and 2.2, respectively, to the Form 8-K Peregrine filed
            with the SEC on July 18, 2003. Because certain information in the
            Disclosure Statement has been amended or superceded by information
            contained in Fourth Amended Plan of Reorganization and the
            Confirmation Order, the Disclosure Statement must be read in
            conjunction with such documents.

      -     The Form 8-K Peregrine filed on July 18, 2003 regarding approval of
            its Plan of Reorganization includes statements regarding (a) the
            timing of the initial or any interim or final distribution of New
            PSI Common Stock, (b) the amount of cash, the number of shares of
            New PSI Common Stock, and the principal amount of Reorganization
            Notes to which Peregrine's creditors are entitled and (c) the amount
            of New PSI Common Stock that holders of claims against or interests
            in Peregrine are eligible to receive. Factors that could cause
            actual results to differ materially from these statements include,
            but are not limited to, the following (capitalized terms that are
            not otherwise defined in this release are as defined in the Fourth
            Amended Plan of Reorganization and/or the Confirmation Order, each
            entered on July 18, 2003 and attached as Exhibits 2.1 and 2.2,
            respectively, to the Form 8-K Peregrine filed on July 18, 2003):

      -     the ability to determine the number of shares of New PSI Common
            Stock to be distributed by the Stock Disbursing Agent on the
            schedule set forth in the Plan;

      -     the amount of Class 8 Obligations in Peregrine's Chapter 11
            proceeding;

                                    - more -

                                                        (PEREGRINE SYSTEMS LOGO)

      -     any election by Peregrine to extend the deadline by which the final
            distribution of Reserved New PSI Common Stock must be made;

      -     the effect of any dispute with the Post-Emergence Equity Committee
            or others regarding the allocation of the Initial Class 9 Securities
            and the Reserved New PSI Common Stock between classes of claimants
            and interest holders under the Plan or the number of shares of the
            Initial Class 9 Securities and the Reserved New PSI Common Stock
            distributable under the Plan;

      -     the effect of rounding on a holder's Pro Rata share of
            distributions;

      -     the inability of Peregrine to satisfy any applicable requirements
            for trading of New PSI Common Stock on the over the counter and
            other national markets or exchanges;

      -     decisions made by securities market regulators that can effect the
            timing and methods of trading in the New PSI Common Stock; and

      -     the possibility of future proceedings in and adjudications by the
            Bankruptcy Court.

- -     Peregrine expects its securities initially to trade over-the-counter.
      Peregrine presently is unable to predict when or if its securities will be
      listed on a national securities exchange or quoted on the Nasdaq National
      Market System. Nasdaq Market Operations will determine the timing and the
      methods pursuant to which trading in New PSI Common Stock will commence.
      Peregrine advises you to check with your stockbroker to determine when and
      how trading will take place in the New PSI Common Stock. To the extent
      that active trading markets in Peregrine's securities develop and persist,
      the prices at which such securities might trade depend upon a number of
      factors, including industry conditions, the performance of, and investor
      expectations for, Peregrine post-reorganization and market factors, such
      as the number of holders who may wish to dispose of their securities to
      raise funds or recognize losses for tax purposes or otherwise.
      Furthermore, prices will be set based on incomplete financial information,
      as described above, until such time as Peregrine is able to bring its
      public disclosures current.


                                    # # #

                                                        (PEREGRINE SYSTEMS LOGO)

EX-99.2

                                                                    Exhibit 99.2

FAQ: PLAN OF REORGANIZATION - EQUITY HOLDERS
- --------------------------------------------------------------------------------
AUGUST 7, 2003

Forward Looking Statements. This communication contains forward-looking
statements about Peregrine and its plan of reorganization. Such statements are
based on management's beliefs and certain assumptions, estimates and
projections. As a result, such statements are subject to numerous risks and
significant uncertainties that could cause actual results to differ materially
from those contemplated by the forward-looking statements. Consequently, such
statements should not be regarded as a representation or warranty by Peregrine
that such results will be realized. Peregrine disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.

Factors that could cause actual results to differ materially from such
forward-looking statements are discussed in the following sections:

      -     Where can I find information about Peregrine's financial performance
            and its current business operations?;

      -     Where can I find further information about Peregrine's plan of
            reorganization?;

      -     What risk factors should I be aware of?; and

      -     the Forward Looking Statements section, at the close of this FAQ
            notice.

WHEN DOES PEREGRINE EMERGE FROM ITS CHAPTER 11 REORGANIZATION?
The effective date for Peregrines Plan of Reorganization is August 7, 2003 (the
"Effective Date"). The company's Fourth Amended Plan of Reorganization, as
Modified, Dated July 14, 2003 (the "Plan") was confirmed by the Bankruptcy Court
for the District of Delaware in an order dated July 18, 2003.

DID CREDITORS AND STOCKHOLDERS AGREE TO PEREGRINE'S MODIFIED PLAN?
The Plan was modified to reflect a consensus among all major constituencies in
the company's reorganization, including the Official Committee of Unsecured
Creditors and the Official Committee of Equity Holders (the "Equity Committee").

HOW MANY SHARES OF NEW COMMON STOCK ARE BEING ISSUED IN THE REORGANIZED COMPANY?
Under the provisions of the Plan, shares of Old Common Stock in Peregrine
(ticker symbol: PRGNQ) are canceled at the close of business on the Effective
Date. Also on the Effective Date, Peregrine is issuing 15 million shares of New
PSI Common Stock in the reorganized company (CUSIP No. 71366Q 20 0). In
addition, 2.65 million shares of New PSI Common Stock are being set aside for
future issuance under the 2003 Equity Incentive Plan. The New PSI Common Stock
will trade over-the-counter under a new ticker symbol to be assigned by Nasdaq
Market Operations and Participants Services ("Nasdaq Market Operations"). Nasdaq
Market Operations will also determine when and how trading in the New PSI Common
Stock will take place.


                                                                               1

WHAT DO I NEED TO DO TO RECEIVE ANY NEW PSI COMMON STOCK TO WHICH I MAY BE
ENTITLED?
If you hold shares of the Old PSI Common Stock at the close of business on the
Effective Date your shares of Old PSI Common Stock are canceled and in exchange
you have a right to certain distributions that may include shares of New PSI
Common Stock as well as other interests discussed below. Other than being a
holder of Old PSI Common Stock on the Effective Date, you do not have to take
any action to maintain your right to such distributions. Peregrine's transfer
agent, Mellon Investor Services, will retain a list of such holders at the close
of business on the Effective Date and all distributions, if any, made to holders
of Old PSI Common Stock will be made to the persons on that list. Mellon will
send a transaction notice to you following the date on which shares have been
entered in your name on the Company's books and records that are maintained by
Mellon.

DO I NEED TO TAKE ANY ACTION NOW TO RECEIVE ANY DISTRIBUTIONS OF NEW PSI COMMON
STOCK THAT I MAY BE OWED?
You need not surrender any stock certificates evidencing the Old PSI Common
Stock, and there is no other action you need take at this time to receive the
distributions to which you are entitled under the Plan.

HOW MANY SHARES OF NEW PSI COMMON STOCK WILL I RECEIVE?
Pursuant to the Plan, in accordance with applicable bankruptcy law, holders of
the Old PSI Common Stock and certain securities litigation claimants have been
placed into the same "class" - Class 9. Under the Plan, the members of Class 9
are entitled to receive, among other things, their pro rata share of the "Class
9 Reserve" and, if applicable, the "Class 7/9 Reserve". (For an explanation of
the "Class 9 Reserve" and the "Class 7/9 Reserve", see the section "How will the
New PSI Common Stock in the reorganized company be divided?") However, as a
practical matter, the division of such stock between the holders of Old PSI
Common Stock on the one hand and securities litigation claimants on the other
hand cannot be made at this point for several reasons. Peregrine believes that
this division of stock in the Class 9 Reserve and, if applicable, the Class 7/9
Reserve will depend on whatever settlement or agreement can be worked out by the
two main constituencies in Class 9, as represented by the Equity Committee prior
to the Effective Date (and the Post-Emergence Equity Committee after the
Effective Date) and plaintiffs in the pending class action securities
litigation. These parties have been in settlement negotiations. In the event
that a settlement or other agreement cannot be worked out by these parties, this
matter will be resolved by the Bankruptcy Court. Based on the foregoing, at this
time, we are unable to advise you as to how many shares of New PSI Common Stock
you will receive, if any, or when you will receive those shares. Any estimate of
the number of shares you may receive would be highly uncertain at this point.

You should be aware, however, that if you do receive shares of New PSI Common
Stock, the number of shares that you receive would likely be a small fraction of
the number of shares of Old PSI Common Stock you held on the Effective Date due
to the following factors:


                                                                               2

      -     The fewer number of shares of New PSI Common Stock that will be
            outstanding following the Effective Date (15 million) compared to
            the number of shares of Old PSI Common Stock that will be canceled
            (approximately 197.4 million);

      -     The allocation of most of the shares of New PSI Common Stock
            (between 63% and 67%) to holders of Peregrine bonds (Class 7 under
            the Plan); and

      -     The potential division of the remaining 33% to 37% of the shares of
            New PSI Common Stock between the two main constituencies in Class 9
            -- the holders of Old PSI Common Stock on the one hand and certain
            securities litigation claimants on the other hand.

In addition, fractional shares will not be issued and the number of shares you
receive will be rounded down to the nearest whole number.

You should also be aware that, depending upon the outcome of the settlement
discussions between the two main constituencies in Class 9, it is possible,
although unlikely, that you will not receive any shares of New PSI Common Stock.
You and other shareholders would receive notice of any potential settlement that
may be reached between the two main constituencies in Class 9, and any such
settlement would be subject to Bankruptcy Court approval.

WHAT WILL HAPPEN TO MY PEREGRINE STOCK IN THE REORGANIZED COMPANY?
The Old PSI Common Stock is canceled as of the close of business on the
Effective Date. In exchange, persons in Class 9 will receive up to 4,950,000
shares of the reorganized company's New PSI Common Stock (33% of the reorganized
company). Class 9 includes those persons who held shares of Old PSI Common Stock
at the close of trading on the Effective Date, together with persons described
in the Plan who have claims pending against the company based on prior purchases
of Old PSI Common Stock, as well as certain other subordinated claims. As
discussed above, the allocation of the shares between the securities litigation
claimants on the one hand and the holders of Old PSI Common Stock on the other
hand will likely depend on the outcome of settlement negotiations between the
Equity Committee (representing the holders of Old PSI Common Stock) and
representatives of the securities litigation claimants. (The Equity Committee
will be dissolved shortly after the Effective Date, and the Post-Emergence
Equity Committee after the Effective Date would carry on any such settlement
negotiations.) If these parties are unable to reach a negotiated settlement, the
allocation will be decided by the Bankruptcy Court.

In addition, Class 9 may receive up to an additional 600,000 shares of the
reorganized company's New PSI Common Stock (4% of the reorganized company),
depending on the final amount of Allowed Class 8 Claims (general unsecured
claims). As set forth in the Plan, in some circumstances, some, most or all of
these additional shares may be distributed to bondholders in Class 7, rather
than the shareholders and securities litigation claimants in Class 9. The
allocation of any additional shares from the Class 7/9 Reserve will also likely
be subject to the negotiations between the Equity Committee and representatives
of the securities litigation claimants.


                                                                               3

In addition to shares of New PSI Common Stock, Class 9 will have the right to
receive cash proceeds, if any, that may be generated from certain potential
litigation claims of Peregrine that will be transferred to an independent
Litigation Trust provided for in the Plan (see below). The allocation of these
trust proceeds, if any, may also be subject to negotiation between the Equity
Committee and representatives of the securities litigation claimants.

HOW WILL THE NEW PSI COMMON STOCK IN THE REORGANIZED COMPANY BE DIVIDED?
The Plan provides for the New PSI Common Stock to be divided between holders of
Class 7 Claims (Peregrine bondholders) and holders of Class 9 Claims
(stockholders, securities litigation claimants and certain other subordinated
claimants) in the following way:

- -     Bondholders in Class 7 receive in the aggregate 63% of the stock
      (9,450,000 shares) (the "Class 7 Reserve").

- -     Stockholders and securities litigation claimants in Class 9 will receive
      an aggregate 33% of the stock (4,950,000 shares) (the "Class 9 Reserve");
      provided, however, that the actual division of stock between the
      stockholders on the one hand and the securities litigation claimants on
      the other hand will likely be decided in a settlement between the Equity
      Committee and representatives of securities litigation claimants. (The
      Equity Committee will be dissolved shortly after the Effective Date, and
      the Post-Emergence Equity Committee after the Effective Date will carry
      on any such settlement negotiations.) In the event that this division
      cannot be consensually resolved, this matter will be determined by the
      Bankruptcy Court.

- -     4% of the stock (600,000 shares) (the "Class 7/9 Reserve") is reserved for
      later distributions to either Class 7 Claims or Class 9 Claims or both.

Under the Plan, the shares in the Class 9 Reserve and the Class 7/9 Reserve will
be held by the Stock Disbursing Agent for final distribution and will be
considered issued and outstanding as of the Effective Date. Until they are
distributed in accordance with the Plan, shares in the Class 9 Reserve and the
Class 7/9 Reserve will be voted by the Stock Disbursing Agent in accordance with
instructions given by the Post-Emergence Equity Committee which shall be formed
as of the Effective Date. Peregrine has agreed to serve as the Stock Disbursing
Agent under the Plan.

In addition to the shares to be issued to the bondholders in Class 7 and the
stockholders and securities claimants in Class 9, 2.65 million shares of New PSI
Common Stock have been reserved for issuance under Peregrine's 2003 Equity
Incentive Plan. The percentages set forth above do not account for the potential
dilution from the issuance of shares of New PSI Common Stock under the 2003
Equity Incentive Plan.

The New PSI Common Stock will be trading over-the-counter under a new ticker
symbol to be assigned by Nasdaq Market Operations.


                                                                               4

HOW WILL THE NEW PSI COMMON STOCK BE DIVIDED BETWEEN STOCKHOLDERS AND SECURITIES
LITIGATION CLAIMANTS IN CLASS 9?
As noted above, settlement discussions are underway between the Equity Committee
and representatives of the securities litigation claimants. The Bankruptcy Court
must approve any settlement that may be reached by these two main constituencies
in Class 9. If these parties are unable to reach a negotiated settlement, the
Bankruptcy Court will decide the allocation.

HOW WILL STOCKHOLDERS IN CLASS 9 SHARE IN THE CLASS 7/9 RESERVE NOTED ABOVE?
Class 9 will be eligible to receive up to an additional 600,000 shares of New
PSI Common Stock (equivalent to 4% of the reorganized company), depending on the
amount of General Expense claims (Class 8) and other factors. Distributions of
these shares will be on a quarterly basis, commencing with a first distribution
on or before October 31, 2003, if practicable. However, distributions from the
Class 7/9 Reserve to Class 9 Claims, including holders of Old PSI Common Stock,
will not take place until a settlement between the Post-Emergence Equity
Committee and representatives of securities litigation claimants is reached or
some other resolution is adjudicated by the Bankruptcy Court.

WHO ARE THE SECURITIES LITIGATION CLAIMANTS THAT MAY BE SHARING IN THE DIVISION
OF NEW STOCK AND PROCEEDS, IF ANY, FROM THE LITIGATION TRUST?
Certain securities litigation claimants may share in the Class 9 Reserve and the
Class 9 share, if any, of the Class 7/9 Reserve, as a result of class action
lawsuits brought on behalf of purchasers of Old PSI Common Stock at various
times between July 22, 1999 and May 3, 2002. The lawsuits alleged violations of
securities laws. Settlement discussions are underway between the Equity
Committee and representatives of the securities litigation claimants to agree on
division of stock and proceeds, if any, from the Litigation Trust. Any agreement
would require Bankruptcy Court approval. If the parties to the settlement
discussions cannot reach an agreement, the division of the Class 9 Reserve and
the Class 9 share, if any, of the Class 7/9 Reserve would be adjudicated by the
Bankruptcy Court.

WHEN WILL THAT SETTLEMENT BE REACHED?
Peregrine cannot say precisely if and when a settlement between the Equity
Committee and securities litigation claimants will be completed. Negotiations
are currently underway between the Equity Committee and representatives for the
securities litigation claimants. The Plan does not set a deadline for when
settlement must be reached. If the parties to the settlement discussions cannot
reach an agreement, the division of the Class 9 Reserve and the Class 9 share,
if any, of the Class 7/9 Reserve would be adjudicated by the Bankruptcy Court.

SINCE SHARES OF NEW PSI COMMON STOCK THAT ARE IN THE CLASS 9 RESERVE AND THE
CLASS 7/9 RESERVE WILL NOT BE DISTRIBUTED ON THE EFFECTIVE DATE, WHAT WILL
HAPPEN TO THEM?
Under the Plan, until the apportionment of the shares in the Class 9 Reserve and
the Class 7/9 Reserve is resolved, the shares are considered issued and
outstanding as of the Plan's


                                                                               5

Effective Date and will be held in book entry form by the Stock Disbursing
Agent. In addition, a Voting and Distribution Agreement will be executed between
the Stock Disbursing Agent, Peregrine, and the Post-Emergence Equity Committee
as called for by the Plan that obligates the Stock Disbursing Agent to vote the
shares it holds pursuant to instructions given by said Committee. Peregrine has
agreed to serve as the Stock Disbursing Agent under the Plan. Once the
Bankruptcy Court has approved a settlement or other resolution, the stock in the
Class 9 Reserve will be distributed by Peregrine in its role as Stock Disbursing
Agent in accordance with the terms of any such settlement or resolution. There
is no deadline as to when any such settlement or resolution must be reached and
the Class 9 Reserve distributed.

Under the Plan, until shares from the Class 7/9 Reserve are distributed, the
Post-Emergence Equity Committee will likewise provide instructions to the Stock
Disbursing Agent on how undistributed shares in the Class 7/9 Reserve are to be
voted should any vote of Peregrine stockholders occur prior to such
distribution. Therefore, Peregrine, in its role as Stock Disbursing Agent under
the Plan, will cast votes for the shares in both the Class 9 Reserve and the
Class 7/9 Reserve as instructed by the Post-Emergence Equity Committee until the
shares in those reserves are distributed in accordance with the Plan.

ONCE THAT SETTLEMENT IS REACHED OR ADJUDICATED, WILL I RECEIVE ALL OF THE SHARES
OF NEW PSI COMMON STOCK TO WHICH I AM ENTITLED?
Because holders of Old PSI Common Stock may be entitled to receive shares of New
PSI Common Stock from two separate reserves, the Class 9 Reserve and the Class
7/9 Reserve, that are each subject to separate sets of conditions, it is
possible that you may not receive all of the shares of New PSI Common Stock to
which you are entitled when a settlement or other resolution is reached. It is
possible that you will receive shares from the Class 9 Reserve and/or the Class
7/9 Reserve at a time agreed to in such settlement or at a later date in
accordance with the Court's resolution. However, in all likelihood, you will not
receive any shares from either the Class 9 Reserve or the Class 7/9 Reserve
until a settlement between the Equity Committee and representatives of the
securities litigation claimants is reached or other resolution is ordered by the
Bankruptcy Court.

OTHER THAN MY PRO RATA SHARES, IF ANY, OF NEW PSI COMMON STOCK ISSUED FROM THE
CLASS 9 RESERVE AND THE CLASS 7/9 RESERVE DISCUSSED ABOVE, WILL I RECEIVE
ANYTHING ELSE IN EXCHANGE FOR THE CANCELLATION OF MY SHARES OF OLD PSI COMMON
STOCK?
Subject to any settlement that may be reached between the Equity Committee and
the securities litigation claimants, holders of Old PSI Common Stock may also
receive a pro rata interest in cash proceeds, if any, from certain potential
litigation claims of Peregrine. With limited exceptions, Peregrine's potential
rights, claims and causes of action against third parties (including any
potential claims against former directors, officers or professional firms
formerly engaged by Peregrine) will be transferred to an independent Litigation
Trust, which is provided for in the Plan. This trust will be charged with
evaluating the merits of such claims and supervising their prosecution, if
prosecution is appropriate. After payment of litigation trust expenses and other
costs, proceeds generated by any such litigation would be shared by Class 9 in a
manner to be determined


                                                                               6

by any settlement between the Equity Committee and the securities litigation
claimants. Because the apportionment of interests in the Litigation Trust would
be subject to the terms of any settlement and due to the inherently uncertain
nature of litigation, there can be no assurance regarding when or if holders of
Old PSI Common Stock will ultimately receive any cash proceeds from the
Litigation Trust.

WILL SHARES OF NEW PSI COMMON STOCK BE LISTED ON A STOCK EXCHANGE?
New PSI Common Stock is expected to initially trade over-the-counter. Under the
Plan, Peregrine shall also use commercially reasonable efforts to list the New
PSI Common Stock on a national securities exchange or cause the New PSI Common
Stock to be quoted on the Nasdaq National Market System. We are presently unable
to predict when or if such listing will occur.

WHEN WILL TRADING IN NEW PSI COMMON STOCK COMMENCE?
Nasdaq Market Operations will determine the timing and the methods pursuant to
which trading in New PSI Common Stock will commence. We advise you to check with
your stockbroker to determine when and how trading will take place in the New
PSI Common Stock. You should be aware, however, that shares of New PSI Common
Stock that may be issued to you from the Class 9 Reserve and the Class 7/9
Reserve will not be issued directly to your brokerage account, but will instead
be issued through Peregrine's transfer agent, Mellon Investor Services, Direct
Registration System. (See information below).

In determining whether to trade in New PSI Common Stock, you should also be
aware that there is limited information available regarding Peregrine's current
and historical financial and operating results. We strongly advise you to
consider carefully the answers to the following questions discussed below:

      -     Where can I find information about Peregrine's financial performance
            and its current business operations?;

      -     Where can I find further information about Peregrine's plan of
            reorganization?;

      -     What additional risk factors should I be aware of?; and

      -     the Forward Looking Statements section, at the close of this FAQ
            notice.

Due to the factors discussed in these sections, we believe that trading in New
PSI Common Stock would be highly speculative.

In addition, if you are considering trading in New PSI Common Stock on the basis
of your current holdings in Old PSI Common Stock before you receive your
distribution, if any, of New PSI Common Stock, we strongly advise you that such
trading would be highly speculative because we are unable to estimate the number
of shares of New PSI Common Stock you may receive and it is possible, although
unlikely, that you may not receive any shares of New PSI Common Stock. See the
answer above to the question - "How many shares of New PSI Common Stock will I
receive?"


                                                                               7

WILL SHARES OF NEW PSI COMMON STOCK TRADE BEFORE I RECEIVE ANY SHARES ISSUABLE
TO ME FROM THE CLASS 9 AND THE CLASS 7/9 RESERVES?
Shares of New PSI Common Stock are issuable as of the Effective Date to
bondholders from the Class 7 Reserve pursuant to the Plan whereas the shares
issuable to you from the Class 9 Reserve and the Class 7/9 Reserve will not be
issued until it becomes practicable to do so. That is, the precise allocation of
the Class 9 Reserve and the Class 9 share, if any, of the Class 7/9 Reserve
between the holders of Old PSI Common Stock on the one hand and securities
litigation claimants on the other hand will likely depend on the Equity
Committee prior to the Effective Date (and the Post-Emergence Equity Committee
after the Effective Date) and representatives of the securities litigation
claimants reaching a settlement. If such a settlement is not reached, the
allocation of this stock will be resolved by the Bankruptcy Court (see above).
Therefore, subject to the determination by Nasdaq Market Operations regarding
when and how trading in the New PSI Common Stock will occur, trading in the
shares of New PSI Common Stock issued from the Class 7 Reserve may commence
prior to any distributions to you. However, any such trading will not affect
your rights to receive shares of New PSI Common Stock from the Class 9 Reserve
and the Class 7/9 Reserve or the amount of any such shares, if any, issuable to
you.

If you are considering trading in New PSI Common Stock on the basis of your
current holdings in Old PSI Common Stock before you receive your distribution,
if any, of New PSI Common Stock, we strongly advise you that such trading would
be highly speculative because we are unable to estimate the number of shares of
New PSI Common Stock you may receive and it is possible, although unlikely, that
you may not receive any shares of New PSI Common Stock. See the answer above to
the question "How many shares of New PSI Common Stock will I receive?"

IF I SELL MY SHARES OF NEW PSI COMMON STOCK IF AND WHEN THEY ARE DISTRIBUTED
FROM THE CLASS 9 RESERVE, WILL I STILL RETAIN MY RIGHT TO RECEIVE LATER
DISTRIBUTIONS FROM THE CLASS 7/9 RESERVE, IF ANY, AND CASH PROCEEDS FROM THE
INDEPENDENT LITIGATION TRUST, IF ANY?
Peregrine's transfer agent, Mellon Investor Services, will retain a list of the
holders of Old PSI Common Stock at the close of trading on the Effective Date
and that list will not be modified to reflect later transactions in New PSI
Common Stock. All distributions, if any, made to holders of Old PSI Common Stock
will be made to the persons on that list. In addition, that list will be made
available to the Litigation Trust for use in determining persons eligible to
receive an interest in the Litigation Trust.

Therefore, even if you sell shares of New PSI Common Stock distributed to you,
if any, from the Class 9 Reserve, any rights or interests that you may have in
future distributions, if any, of New PSI Common Stock, or in the Litigation
Trust, will be distributed to you in accordance with the Plan and/or any
Court-approved settlement, and will not be affected by any sale of shares of New
PSI Common Stock that you may receive. As discussed above, however, there can be
no assurances whether there will be any initial or subsequent distributions to
the holders of Old PSI Common Stock.


                                                                               8

WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO ME OF THE DISTRIBUTIONS OF
THE SHARES OF NEW PSI COMMON STOCK AND POSSIBLE OTHER CONSIDERATION?
You should not be taxable on the receipt of your share, if any, of the New PSI
Common Stock distributed from the Class 9 Reserve. Some portion of any
distributions of any New PSI Common Stock you may receive from the Class 7/9
Reserve will be taxable to you as interest income, while the remainder of any
such distributions should be nontaxable to you. Although there is some
uncertainty as to how and when to account for this interest income, we believe
you should be taxable only when you receive that New PSI Common Stock and then
only to the extent the fair market value of the New PSI Common Stock received
(measured on the date of receipt) exceeds the discounted present value of that
New Common Stock. The discounted present value of any New Common Stock you might
receive from the Class 7/9 Reserve should be determined by discounting the fair
market value of that New PSI Common Stock (measured on the date of receipt) by
the appropriate "applicable federal rate", assuming compounding, from the date
the New PSI Common Stock is received to the Effective Date.

The tax treatment of the right to receive possible future payments from the
Litigation Trust is uncertain. The IRS may assert that you are taxable
immediately on the value of such right. In addition, if you are not required to
realize taxable income until you receive a distribution from the Litigation
Trust, a portion of such distribution may be characterized as interest for
federal income tax purposes.

The U.S. federal income tax consequences to holders of the Old PSI Common Stock
are complex and depend upon a number of factors. You are urged to consult with
your own tax advisors regarding the tax treatment of the distributions.

IF I RECEIVE SHARES OF NEW PSI COMMON STOCK, WILL THEY BE IN CERTIFICATED OR
BOOK-ENTRY FORM?
The Company's transfer agent, Mellon Investor Services, will maintain the New
PSI Common Stock in book-entry form under its Direct Registration System. This
book-entry form of ownership permits stockholders to own, record and transfer
shares electronically, without having a physical stock certificate issued.
Shares of New PSI Common Stock that may be issued to you, if any, will be held
in your name and recorded electronically on the company's books and records,
which are maintained by Mellon Investor Services. Under this system, you will
have all the traditional rights and privileges afforded stockholders with your
stock directly registered to your name. If you wish to have a physical stock
certificate, you may request one. After shares of New PSI Common Stock, if any,
have been issued to you through the Direct Registration System, you may also
request to have the shares transferred to your brokerage account. If and when
New PSI Common Stock is issued under the Direct Registration System, further
information on that system will be made available to you.

WHERE CAN I FIND INFORMATION ABOUT PEREGRINE'S FINANCIAL PERFORMANCE AND ITS
CURRENT BUSINESS OPERATIONS?
There is limited information available regarding Peregrine's current and
historical financial and operating results. Trading in our securities is highly
speculative and risky.


                                                                               9

Information that may be relevant to persons trading in our securities includes
the following:

- -     On April 4, 2003, we filed with the SEC on Form 8-K audited financial
      results for fiscal years 2002, 2001 and 2000. These results restated
      previously reported results for the first three quarters of fiscal 2002
      and all of fiscal years 2001 and 2000. We have not published restated
      quarterly results for quarters within the restatement period or issued
      quarterly results for quarters subsequent to the restatement period (i.e.,
      for the quarters ended June 30, 2002, Sept. 30, 2002, and Dec. 31, 2002).
      We have not filed with the SEC amended Form 10-Q reports or Form 10-K
      reports for periods covered by the restatement, and we have not filed a
      Form 10-K for the periods ended March 31, 2002 or 2003, or a Form 10-Q
      report for the periods ended June 30, 2002, Sept. 30, 2002, Dec. 31, 2002
      and June 30, 2003.

- -     The most recently filed discussion describing our business is contained in
      the Disclosure Statement, dated May 29, 2003, which was amended or
      superceded in certain respects by the Fourth Amended Plan of
      Reorganization which was filed on July 14, 2003, and the Confirmation
      Order which was entered by the Bankruptcy Court on July 18, 2003. Section
      VII of the Disclosure Statement outlines several risk factors relating to
      us, our business and the bankruptcy proceeding. The Disclosure Statement
      is attached as Exhibit T3E-1 to the Application for Qualification on Form
      T-3 we filed with the SEC on July 7, 2003. The Fourth Amended Plan of
      Reorganization and the Confirmation Order are attached as Exhibits 2.1 and
      2.2, respectively, to the Form 8-K we filed with the SEC on July 18, 2003.
      Because certain information in the Disclosure Statement has been amended
      or superceded by information contained in Fourth Amended Plan of
      Reorganization and the Confirmation Order, the Disclosure Statement must
      be read in conjunction with such documents.

WHERE CAN I FIND FURTHER INFORMATION ABOUT PEREGRINE'S PLAN OF REORGANIZATION?
The Disclosure Statement, dated May 29, 2003, which was amended or superceded in
certain respects by the Fourth Amended Plan of Reorganization which was filed on
July 14, 2003, and the Confirmation Order which was entered by the Bankruptcy
Court on July 18, 2003. Section VII of the Disclosure Statement outlines several
risk factors relating to us, our business and the bankruptcy proceeding. The
Disclosure Statement is attached as Exhibit T3E-1 to the Application for
Qualification on Form T-3 we filed with the SEC on July 7, 2003. The Fourth
Amended Plan of Reorganization and the Confirmation Order are attached as
Exhibits 2.1 and 2.2, respectively, to the Form 8-K we filed with the SEC on
July 18, 2003. Because certain information in the Disclosure Statement has been
amended or superceded by information contained in Fourth Amended Plan of
Reorganization and the Confirmation Order, the Disclosure Statement must be read
in conjunction with such documents.

In addition, the Form 8-K we filed on July 18, 2003 regarding approval of our
Plan of Reorganization includes statements regarding (a) the timing of the
initial or any interim or final distribution of New PSI Common Stock, (b) the
amount of cash, the number of shares of New PSI Common Stock, and the principal
amount of Reorganization Notes to


                                                                              10

which our creditors are entitled and (c) the amount of New PSI Common Stock that
holders of claims against or interests in Peregrine are eligible to receive.

WHAT RISK FACTORS SHOULD I BE AWARE OF?
You should be aware of the factors discussed in Disclosure Statement and in the
SEC filings referenced above. In addition, factors that could cause actual
results to differ materially from the statements contained herein include, but
are not limited to, the following (capitalized terms that are not otherwise
defined in this release are as defined in the Fourth Amended Plan of
Reorganization and/or the Confirmation Order attached as Exhibits 2.1 and 2.2,
respectively, to the Form 8-K we filed on July 18, 2003):

- -     the ability to determine the number of shares of New PSI Common Stock to
      be distributed by Peregrine in its role as the Stock Disbursing Agent on
      the schedule set forth in the Plan;

- -     the amount of Class 8 Obligations in our Chapter 11 proceeding;

- -     any election by the Company to extend the deadline by which the final
      distribution of New PSI Common Stock from the Class 7/9 Reserve must be
      made;

- -     the effect of any dispute with the Post-Emergence Equity Committee or
      others regarding the allocation of the Initial Class 9 Securities and the
      Reserved New PSI Common Stock between classes of claimants and interest
      holders under the Plan or the number of shares of the Initial Class 9
      Securities and the Reserved New PSI Common Stock distributable under the
      Plan;

- -     the effect of rounding on a holder's Pro Rata share of distributions;

- -     the inability of Peregrine to satisfy any applicable requirements for
      trading of New PSI Common Stock on the over-the-counter and other national
      markets or exchanges;

- -     decisions made by securities market regulators that can effect the timing
      and methods of trading in the New PSI Common Stock;

- -     the possibility of future proceedings in and adjudications by the
      Bankruptcy Court;

- -     although Peregrine has entered into a consent decree with the SEC, the
      Department of Justice's investigation of Peregrine relating to events
      preceding Peregrine's bankruptcy remains open. The SEC's and DOJ's
      investigations of individuals are continuing and may include current and
      former employees of Peregrine. Peregrine is providing its full cooperation
      to the SEC and DOJ in their investigations and continues to provide them
      with documents that may be relevant to their investigations. Although
      Peregrine is cooperating with these investigations, it does not have
      access to all the information available to the SEC and the DOJ. It is
      possible that new information could come to light as a result of the
      ongoing investigations. The ultimate impact of these investigations on
      Peregrine's financial condition, results of operations, customer relations
      and management is uncertain, though Peregrine may face financial
      penalties and adverse reputational effects depending on the outcome of the
      investigations; and

- -     we expect the New PSI Common Stock initially to trade over-the-counter. We
      are presently unable to predict when or if our securities will be listed
      on a national securities exchange or quoted on the Nasdaq National Market
      System. Nasdaq Market Operations will determine the timing and the methods
      pursuant to which trading in New PSI Common Stock will commence. We advise
      you to check with your stockbroker to determine when and how trading will
      take place in the New PSI Common Stock. To the extent that an active
      trading market develops and persists in Peregrine securities, the prices
      at which such securities might trade depend upon a number of factors,
      including industry conditions, the performance of, and investor
      expectations for, Peregrine post-reorganization and market factors, such
      as the number of holders who may wish to dispose of their securities to
      raise funds or recognize losses for tax purposes or otherwise.

In addition, you should also review the discussion of "Forward-Looking
Statements" immediately following and be aware of the factors discussed therein
and other factors that are described from time to time in reports we file with
the SEC.

FORWARD LOOKING STATEMENTS
This communication contains forward-looking statements about Peregrine,
including statements regarding (a) the timing of the initial or any interim or
final distribution, (b) the number of shares of New PSI Common Stock to which
you are entitled, (c) the amount of New PSI Common Stock that you are eligible
to receive, (d) the eligibility of New PSI Common Stock for trading on any
organized market and the timing and methods by which such any such trading may
occur; and (e) the amount of any interest you may have in the Litigation Trust.
These statements are based on management's beliefs and certain assumptions,
estimates and projections. As a result, such statements are subject to numerous
risks and significant uncertainties that could cause actual results to differ
materially from those contemplated by the forward-looking statements..
Consequently, such statements should not be regarded as a representation or
warranty by Peregrine that such results will be realized. Peregrine disclaims
any intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

Factors that could cause actual results to differ materially from these
forward-looking statements include, but are not limited to, (a) the ability of
Peregrine and others to determine the number of shares of New PSI Common Stock
to be distributed by Peregrine


                                                                              12

in its role as the Stock Disbursing Agent on the schedule set forth in the Plan,
(b) the amount of Class 8 Obligations in Peregrine's Chapter 11 proceeding, (c)
any election by Peregrine to extend the deadline by which the final distribution
of New PSI Common Stock must be made, (d) the effect of any dispute with the
Post-Emergence Equity Committee or others regarding the allocation of the Class
9 Reserve, the Class 7/9 Reserve and the Litigation Trust between classes of
claimants and interest holders under the Plan on the time when the distribution
of New PSI Common Stock by Peregrine in its role as the Stock Disbursing Agent
shall occur, (e) the effect of rounding on a holder's Pro Rata share of
distributions, (f) the inability of Peregrine to satisfy any applicable
requirements for trading of New PSI Common Stock on the over the counter and
other national markets or exchanges, (g) decisions made by securities market
regulators that can effect the timing and methods of trading in the New PSI
Common Stock, (h) the possibility of future proceedings in and adjudications by
the Bankruptcy Court, and (i) other factors that are described from time to time
in reports we file with the SEC, including, but not limited to risk factors, set
forth in the Disclosure Statement in Support of the Fourth Amended Plan of
Reorganization, dated May 29, 2003 and attached as Exhibit T3E-1 to the
Application for Qualification on Form T-3 Peregrine filed with the SEC on July
7, 2003, the risk factors contained in Form 8-K that Peregrine filed on July 18,
2003 regarding approval of its Plan of Reorganization, and Peregrine's filings
with the United States Securities and Exchange Commission.


                                                                              13

EX-99.3

                                                                    EXHIBIT 99.3


FAQ: PLAN OF REORGANIZATION - BONDHOLDERS
- --------------------------------------------------------------------------------
AUGUST 7, 2003

Forward Looking Statements. This communication contains forward-looking
statements about Peregrine and its plan of reorganization. Such statements are
based on management's beliefs and certain assumptions, estimates and
projections. As a result, such statements are subject to numerous risks and
significant uncertainties that could cause actual results to differ materially
from those contemplated by the forward-looking statements. Consequently, such
statements should not be regarded as a representation or warranty by Peregrine
that such results will be realized. Peregrine disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.

Factors that could cause actual results to differ materially from such
forward-looking statements are discussed in the following sections:

- -     Where can I find information about Peregrine's financial performance and
      its current business operations?;

- -     Where can I find further information about Peregrine's plan of
      reorganization?;

- -     What risk factors should I be aware of?; and

- -     the Forward Looking Statements section, at the close of this FAQ notice.

WHEN DOES PEREGRINE EMERGE FROM ITS CHAPTER 11 REORGANIZATION?

The effective date for Peregrine's Plan of Reorganization is August 7, 2003 (the
"Effective Date"). The company's Fourth Amended Plan of Reorganization, as
Modified, Dated July 14, 2003 (the "Plan") was confirmed by the Bankruptcy Court
for the District of Delaware in an order dated July 18, 2003.

DID CREDITORS AND STOCKHOLDERS AGREE TO PEREGRINE'S MODIFIED PLAN?

The Plan was modified to reflect a consensus among all major constituencies in
the company's reorganization, including the Official Committee of Unsecured
Creditors and the Official Committee of Equity Holders (the "Equity Committee").

HOW WILL THE COMPANY REPAY CREDITORS?

The company will repay creditors with cash (on or shortly after the Effective
Date or in installments over time), new common stock in the reorganized company
(the "New PSI Common Stock") or notes, release of liabilities, return of
collateral, and retention of liens, depending on provisions for each class of
creditors in the Plan.

HOW MANY SHARES OF NEW COMMON STOCK ARE BEING ISSUED IN THE REORGANIZED COMPANY?

Under the provisions of the Plan, shares of Old Common Stock in Peregrine
(ticker symbol: PRGNQ) are canceled at the close of business on the Effective
Date. Also on the Effective Date, Peregrine is issuing 15 million shares of New
PSI Common Stock in the reorganized company (CUSIP No. 71366Q 20 0). In
addition, 2.65 million


                                       1

shares of New PSI Common Stock are being set aside for future issuance under the
2003 Equity Incentive Plan. The New PSI Common Stock will trade over-the-counter
under a new ticker symbol to be assigned by Nasdaq Market Operations and
Participants Services ("Nasdaq Market Operations"). Nasdaq Market Operations
will also determine when and how trading in the New PSI Common Stock will take
place.

WHAT DO I NEED TO DO TO RECEIVE ANY DISTRIBUTIONS OF SECURITIES AND CASH TO
WHICH I MAY BE ENTITLED AS A HOLDER OF PEREGRINE'S 5-1/2% CONVERTIBLE
SUBORDINATED NOTES DUE 2007?

If you hold Peregrine's 5-1/2% Convertible Subordinated Notes due 2007 (the "Old
PSI Notes") at the close of business on the Effective Date, you will have a
right to certain distributions of the reorganized company that will include
Peregrine's new 6-1/2% Senior Notes due 2007 (CUSIP No. 71366Q AD 3) (the "New
PSI Notes"), shares of New PSI Common Stock and a cash payment. Other than being
a holder of Old PSI Notes on the Effective Date, you do not have to take any
action to maintain your right to such distributions.

With the exception of shares of New PSI Common Stock from the "Class 7/9
Reserve" (see below) that may be distributed to you on a quarterly basis
beginning October 31, 2003, we expect that the distributions of cash and
securities to which you are entitled will take place reasonably promptly
following the Effective Date in exchange for the cancellation of the Old PSI
Notes that you hold. Your holdings of the Old PSI Notes will be canceled and the
cash and securities will be credited to your account through the book entry
system maintained by The Depositary Trust Company (DTC) promptly following the
Effective Date without any action required on your part. A list of the holders
of the Old PSI Notes as of the Effective Date will be retained and will also be
used for future distributions from the Class 7/9 Reserve to which you may be
entitled (see discussion below).

DO I NEED TO TAKE ANY ACTION NOW TO RECEIVE ANY DISTRIBUTIONS OF CASH, NEW PSI
NOTES OR NEW PSI COMMON STOCK THAT I MAY BE OWED?

You need not surrender any certificates evidencing the Old PSI Notes or the Old
PSI Common Stock, and there is no other action you need take at this time to
receive the distributions to which you are entitled under the Plan.

HOW WILL THE NEW PSI COMMON STOCK IN THE REORGANIZED COMPANY BE DIVIDED?

The Plan provides for the New PSI Common Stock to be divided between holders of
Class 7 Claims (Peregrine bondholders) and holders of Class 9 Claims
(stockholders, securities litigation claimants and certain other subordinated
claimants) in the following way:

- -  Bondholders in Class 7 receive in the aggregate 63% of the stock (9,450,000
   shares) (the "Class 7 Reserve").

- -  Stockholders and securities litigation claimants in Class 9 will receive an
   aggregate 33% of the stock (4,950,000 shares) (the "Class 9 Reserve");
   provided, however, that the actual division of stock between the stockholders
   on the one hand and the


                                       2

   securities litigation claimants on the other hand will likely be decided in a
   settlement between the Equity Committee which represents the holders of Old
   PSI Common Stock and representatives of securities litigation claimants. (The
   Equity Committee will be dissolved shortly after the Effective Date, and the
   Post-Emergence Equity Committee after the Effective Date will carry on any
   such settlement negotiations.) In the event that this division cannot be
   consensually resolved, this matter will be determined by the Bankruptcy
   Court.

- -  4% of the stock (600,000 shares) (the "Class 7/9 Reserve") is reserved for
   later distributions to either Class 7 Claims or Class 9 Claims or both.

Under the Plan, the shares in the Class 9 Reserve and the Class 7/9 Reserve will
be held by the Stock Disbursing Agent for final distribution and will be
considered issued and outstanding as of the Effective Date. Until they are
distributed in accordance with the Plan, shares in the Class 9 Reserve and the
Class 7/9 Reserve will be voted by the Stock Disbursing Agent in accordance with
instructions given by the Post-Emergence Equity Committee which shall be formed
as of the Effective Date. Peregrine has agreed to serve as the Stock Disbursing
Agent under the Plan.

In addition to the shares to be issued to the bondholders in Class 7 and the
stockholders and securities litigation claimants in Class 9, 2.65 million shares
of New PSI Common Stock have been reserved for issuance under Peregrine's 2003
Equity Incentive Plan. The percentages set forth above do not account for the
potential dilution from the issuance of shares of New PSI Common Stock under the
2003 Equity Incentive Plan.

The New PSI Common Stock will be trading over-the-counter under a new ticker
symbol to be assigned by Nasdaq Market Operations.

HOW ARE HOLDERS OF THE OLD PSI NOTES (CLASS 7) TREATED UNDER THE PLAN?

The Old PSI Notes are canceled as of the close of business on the Effective
Date. In exchange, each bondholder will receive (1) a cash distribution equal to
30% of principal and accrued interest on his bonds, (2) his pro rata share of
$58.8 million in original principal amount of the New PSI Notes, and (3) his pro
rata share of 9,450,000 shares of the New PSI Common Stock (63% percent of the
reorganized company). In addition, bondholders may receive up to an additional
600,000 shares of the New PSI Common Stock (4% of the reorganized company),
depending on the final amount of Allowed Class 8 Claims (general unsecured
claims), as well as other factors. (These percentages do not account for
potential dilution due to shares of New PSI Common Stock set aside for future
issuance under Peregrine's 2003 Equity Incentive Plan. See above).

HOW WILL BONDHOLDERS IN CLASS 7 SHARE IN THE CLASS 7/9 RESERVE NOTED ABOVE?

Bondholders are eligible to receive up to an additional 600,000 shares of New
PSI Common Stock (equivalent to 4% of the reorganized company). These shares may
be distributed to the bondholders or the Class 9 Claims or both depending on the
amount of General Expense claims (Class 8) and other factors. Distributions of
these shares will be on a quarterly basis, commencing with a first distribution
of those shares, if any, that bondholders are entitled to receive, on or before
October 31, 2003.


                                       3

WHAT ADJUSTMENTS WILL BE MADE IN DISTRIBUTING PRO RATA SHARES OF CASH, NEW PSI
NOTES AND NEW PSI COMMON STOCK TO BONDHOLDERS?

Subject to Plan requirements regarding the number of pro rata shares to be
issued, your pro rata share is subject to certain adjustments, which are
described below:

- -  In the case of the cash distribution, if your pro rata share includes a
   fraction of a cent, the actual payment to you will be rounded down to the
   nearest whole cent.

- -  In the case of any distribution of New PSI Common Stock, no fractional shares
   of the stock will be distributed. If your pro rata share calls for the
   distribution of a fractional share of New PSI Common Stock, the number of
   shares that you will be entitled to receive will be rounded down to the
   nearest whole number of shares or, if less than a single share, no shares
   will be distributed. No cash or other consideration will be paid in
   compensation for fractional shares.

- -  In the case of any distribution of New PSI Notes, the New PSI Notes will be
   distributed in denominations of $1,000 and integral multiples thereof. If
   your pro rata share calls for the distribution of a principal amount of New
   Notes in a denomination of less than $1,000 or an integral multiple thereof,
   the principal amount of New Notes that you will be entitled to receive will
   be rounded down to the nearest integral multiple of $1,000 or, if less than
   $1,000, no New Notes will be distributed.

AS A BONDHOLDER, WHEN WILL I RECEIVE MY SHARE OF THE CASH, NEW PSI NOTES AND NEW
PSI COMMON STOCK?

Bondholders will receive their initial distribution of cash, New PSI Notes and
New PSI Common Stock reasonably promptly following the Effective Date.
Distribution of the portion of New PSI Common Stock held in the Class 7/9
Reserve that is allocated to bondholders, if any, will take place on at least a
quarterly basis, commencing with a first distribution on or before the end of
October 2003. All of the New Common Stock held in the Class 7/9 Reserve is
required under the Plan to be distributed within 90 days of the second
anniversary of the Plan's effective date, unless extended by Peregrine for no
more than a single additional year.

WILL THE NEW PSI NOTES BE IN CERTIFICATED OR BOOK-ENTRY FORM?

The indenture trustee, registrar and paying agent for the New PSI Notes will be
U.S. Bank. The New Notes will be evidenced by a single Global Note in the name
of CEDE & Co., the nominee of The Depositary Trust Company (DTC). The Global
Note will be held by U.S. Bank, as custodian for DTC. The New PSI Notes will be
maintained by DTC in book-entry form. Banks, brokers and other DTC participants
will enter the New Notes for the account of their customers, and the New PSI
Notes may be transferred in the same manner as other securities.

WILL THE NEW PSI NOTES BE LISTED ON A STOCK EXCHANGE?

The Company has no current intention to list the New PSI Notes on a national
exchange or Nasdaq. There can be no assurance that a market for the New PSI
Notes will develop or, if developed, that it will be maintained.


                                       4

WILL THE NEW PSI COMMON STOCK BE IN CERTIFICATED OR BOOK-ENTRY FORM?

The New PSI Common Stock issued to the bondholders will likewise be evidenced by
a single global stock certificate in the name of CEDE & Co., the nominee of The
Depositary Trust Company (DTC). The New PSI Common Stock issued to the
bondholders will be maintained by DTC in book-entry form. Banks, brokers and
other DTC participants will enter the New PSI Common Stock for the account of
their customers, and the New PSI Common Stock may be transferred in the same
manner as other securities.

WILL SHARES OF NEW PSI COMMON STOCK BE LISTED ON A STOCK EXCHANGE?

New PSI Common Stock is expected to initially trade over-the-counter. Under the
Plan, Peregrine shall also use commercially reasonable efforts to list the New
PSI Common Stock on a national securities exchange or cause the New PSI Common
Stock to be quoted on the Nasdaq National Market System. We are presently unable
to predict when or if such listing will occur.

WHEN WILL TRADING IN NEW PSI COMMON STOCK COMMENCE?

Nasdaq Market Operations will determine the timing and the methods pursuant to
which trading in New PSI Common Stock will commence. We advise you to check with
your stockbroker to determine when and how trading will take place in the New
PSI Common Stock.

In determining whether to trade in New PSI Common Stock, you should also be
aware that there is limited information available regarding Peregrine's current
and historical financial and operating results. We strongly advise you to
consider carefully the answers to the following questions discussed below:

- -     Where can I find information about Peregrine's financial performance and
      its current business operations?;

- -     Where can I find further information about Peregrine's plan of
      reorganization?;

- -     What risk factors should I be aware of?; and

- -     the Forward Looking Statements section, at the close of this FAQ notice.

Due to the factors discussed in these sections, we believe that trading in New
PSI Common Stock would be highly speculative.

WILL SIGNIFICANT NUMBERS OF ADDITIONAL SHARES OF NEW PSI COMMON STOCK BE
DISTRIBUTED UNDER THE PLAN AFTER SHARES ARE ISSUED TO BONDHOLDERS FROM THE CLASS
7 RESERVE AND THE CLASS 7/9 RESERVE?

Pursuant to the Plan, the 4,950,000 shares in the Class 9 Reserve (representing
33% of the shares of New PSI Common Stock on an undiluted basis) may not be
distributed until the Equity Committee representing the holders of Old PSI
Common Stock that was canceled on the Effective Date reaches a settlement with
the representatives of certain securities litigation plaintiffs as to
apportionment of the Class 9 Reserve or other resolution is adjudicated and
ordered by the Bankruptcy Court. (The Equity Committee will be dissolved shortly
after the Effective Date, and the Post-Emergence Equity


                                       5

Committee after the Effective Date will carry on any such settlement
negotiations.) Under the Plan, until the apportionment of the shares in the
Class 9 Reserve is resolved the shares are considered issued and outstanding as
of the Plan's Effective Date and will be held in book entry form by the Stock
Disbursing Agent. In addition, a Voting and Distribution Agreement will be
executed among the Stock Disbursing Agent, Peregrine, and the Post-Emergence
Equity Committee as called for by the Plan that obligates the Stock Disbursing
Agent to vote the shares it holds pursuant to instructions given by the
Post-Emergence Equity Committee. Peregrine has agreed to serve as the Stock
Disbursing Agent under the Plan. Once the court has approved a settlement or
resolution, the stock will be distributed by Peregrine in its role as Stock
Disbursing Agent in accordance with the terms of any such settlement or
resolution. There is no deadline as to when any such settlement or resolution
must be reached and the Class 9 Reserve distributed.

Under the Plan, until shares from the Class 7/9 Reserve are distributed, the
Post-Emergence Equity Committee will likewise provide instructions to the Stock
Disbursing Agent on how undistributed shares in the Class 7/9 Reserve are to be
voted should any vote of Peregrine stockholders occur prior to such
distribution. Therefore, Peregrine, in its role as Stock Disbursing Agent under
the Plan, will cast votes for the shares in both the Class 9 Reserve and the
Class 7/9 Reserve as instructed by the Post-Emergence Equity Committee until the
shares in those reserves are distributed in accordance with the Plan.

The rights and interests of bondholders under the Plan will not be affected by
any such settlement or resolution between the holders of Old PSI Common Stock
and the securities litigation plaintiffs, but trading volume and liquidity in
New PSI Common Stock may be affected when the Class 9 Reserve is distributed to
holders of Class 9 Claims following the settlement or resolution. The timing of
the distribution of shares of New PSI Common Stock, if any, that may be
apportioned to Class 9 Claims from the Class 7/9 Reserve, may also not occur
until such settlement or resolution is reached. In any event, no more than the
total of 15 million shares allocated among the Chapter 11 claimants (see above)
will be distributed under the Plan. In addition, 2.65 million shares have been
set aside for future issuance under the 2003 Equity Incentive Plan.

IF I SELL ANY OF MY NEW PSI NOTES OR ANY OF THE SHARES OF NEW PSI COMMON STOCK
DISTRIBUTED TO ME BEFORE I RECEIVE ALL OF THE NEW PSI COMMON STOCK ISSUABLE TO
BONDHOLDERS UNDER FROM THE CLASS 7/9 RESERVE, IF ANY, WILL I STILL RETAIN MY
RIGHT TO RECEIVE LATER DISTRIBUTIONS FROM THE CLASS 7/9 RESERVE TO WHICH I MAY
BE ENTITLED?

A list of the holders of all Old PSI Notes on the Effective Date will be
retained, and that list will not be modified to reflect later transactions in
New PSI Notes or New PSI Common Stock. All distributions, if any, made to
holders of Old PSI Notes will be made to the persons on the list.

Therefore, even if you sell any New PSI Notes or any shares of New PSI Common
Stock distributed to you, any rights or interests that you may have in future
distributions, if any, of additional securities pursuant to the Plan, will be
distributed to you in accordance with the Plan and will not be affected by any
sale of shares of New PSI Common Stock that


                                       6

you may receive. As discussed above, however, there can be no assurances whether
there will be any initial or subsequent distributions to the bondholders of New
PSI Common Stock from the Class 7/9 Reserve.

WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO ME OF EXCHANGING THE OLD
PSI NOTES FOR NEW PSI NOTES AND OTHER CONSIDERATION?

You should be taxable on the initial distribution only to the extent of the
lesser of (x) the total gain you realize (the excess of the value of the total
package of consideration you receive over your basis in your Old PSI Notes) or
(y) the amount of the consideration you receive other than consideration
consisting either of New PSI Common Stock or, if the New PSI Notes are
"securities" for federal income tax purposes, New PSI Notes. In calculating the
gain you realize in the initial distribution, you may be required to allocate a
portion of your basis in your Old PSI Notes to New PSI Common Stock that you may
receive in interim distributions.

Some portion of any interim distributions you receive will be taxable to you as
interest income, while the remainder of any such distribution should be
nontaxable to you. Although there is some uncertainty as to how and when to
account for this interest income, we believe you should be taxable only when you
receive an interim distribution, and then only to the extent the fair market
value of the New PSI Common Stock received (measured on the date of receipt)
exceeds the discounted present value of the New PSI Common Stock received. The
discounted present value of any New PSI Common Stock you receive should be
determined by discounting the fair market value of that New PSI Common Stock
(measured on the date of receipt) by the appropriate "applicable federal rate",
assuming compounding, from the date the New PSI Common Stock is received to the
Effective Date.

The U.S. federal income tax consequences to holders of the Old PSI Notes are
complex and depend upon a number of factors. You are urged to consult with your
own tax advisors regarding the tax treatment of the distributions.

WHERE CAN I FIND INFORMATION ABOUT PEREGRINE'S FINANCIAL PERFORMANCE AND ITS
CURRENT BUSINESS OPERATIONS?

There is limited information available regarding Peregrine's current and
historical financial and operating results. Trading in our securities is highly
speculative and risky. Information that may be relevant to persons trading in
our securities includes the following:

- -  On April 4, 2003, we filed with the SEC on Form 8-K audited financial results
   for fiscal years 2002, 2001 and 2000. These results restated previously
   reported results for the first three quarters of fiscal 2002 and all of
   fiscal years 2001 and 2000. We have not published restated quarterly results
   for quarters within the restatement period or issued quarterly results for
   quarters subsequent to the restatement period (i.e., for the quarters ended
   June 30, 2002, Sept. 30, 2002, and Dec. 31, 2002). We have not filed with the
   SEC amended Form 10-Q reports or Form 10-K reports for periods covered by the
   restatement, and we have not filed a Form 10-K for the periods ended


                                       7

   March 31, 2002 or 2003, or a Form 10-Q report for the periods ended June 30,
   2002, Sept. 30, 2002, Dec. 31, 2002 and June 30, 2003.

- -  The most recently filed discussion describing our business is contained in
   the Disclosure Statement, dated May 29, 2003, which was amended or superceded
   in certain respects by the Fourth Amended Plan of Reorganization which was
   filed on July 14, 2003, and the Confirmation Order which was entered by the
   Bankruptcy Court on July 18, 2003. Section VII of the Disclosure Statement
   outlines several risk factors relating to us, our business and the bankruptcy
   proceeding. The Disclosure Statement is attached as Exhibit T3E-1 to the
   Application for Qualification on Form T-3 we filed with the SEC on July 7,
   2003. The Fourth Amended Plan of Reorganization and the Confirmation Order
   are attached as Exhibits 2.1 and 2.2, respectively, to the Form 8-K we filed
   with the SEC on July 18, 2003. Because certain information in the Disclosure
   Statement has been amended or superceded by information contained in Fourth
   Amended Plan of Reorganization and the Confirmation Order, the Disclosure
   Statement must be read in conjunction with such documents.

WHERE CAN I FIND FURTHER INFORMATION ABOUT PEREGRINE'S PLAN OF REORGANIZATION?

The Disclosure Statement, dated May 29, 2003, which was amended or superceded in
certain respects by the Fourth Amended Plan of Reorganization which was filed on
July 14, 2003, and the Confirmation Order which was entered by the Bankruptcy
Court on July 18, 2003. Section VII of the Disclosure Statement outlines several
risk factors relating to us, our business and the bankruptcy proceeding. The
Disclosure Statement is attached as Exhibit T3E-1 to the Application for
Qualification on Form T-3 we filed with the SEC on July 7, 2003. The Fourth
Amended Plan of Reorganization and the Confirmation Order are attached as
Exhibits 2.1 and 2.2, respectively, to the Form 8-K we filed with the SEC on
July 18, 2003. Because certain information in the Disclosure Statement has been
amended or superceded by information contained in Fourth Amended Plan of
Reorganization and the Confirmation Order, the Disclosure Statement must be read
in conjunction with such documents.

In addition, the Form 8-K we filed on July 18, 2003 regarding approval of our
Plan of Reorganization includes statements regarding (a) the timing of the
initial or any interim or final distribution of New PSI Common Stock, (b) the
amount of cash, the number of shares of New PSI Common Stock, and the principal
amount of Reorganization Notes to which our creditors are entitled and (c) the
amount of New PSI Common Stock that holders of claims against or interests in
Peregrine are eligible to receive.

WHAT RISK FACTORS SHOULD I BE AWARE OF?

You should be aware of the factors discussed in Disclosure Statement and in the
SEC filings referenced above. In addition, factors that could cause actual
results to differ materially from the statements contained herein include, but
are not limited to, the following (capitalized terms that are not otherwise
defined in this release are as defined in the Fourth Amended Plan of
Reorganization and/or the Confirmation Order attached as Exhibits 2.1 and 2.2,
respectively, to the Form 8-K we filed on July 18, 2003):


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- -  the ability to determine the number of shares of New PSI Common Stock to be
   distributed by Peregrine in its role as the Stock Disbursing Agent on the
   schedule set forth in the Plan;

- -  the amount of Class 8 Obligations in our Chapter 11 proceeding;

- -  any election by the Company to extend the deadline by which the final
   distribution of New PSI Common Stock from the Class 7/9 Reserve must be made;

- -  the effect of any dispute with the Post-Emergence Equity Committee or
   others regarding the allocation of the Initial Class 9 Securities and the
   Reserved New PSI Common Stock between classes of claimants and interest
   holders under the Plan or the number of shares of the Initial Class 9
   Securities and the Reserved New PSI Common Stock distributable under the
   Plan;

- -  the effect of rounding on a holder's Pro Rata share of distributions;

- -  the inability of Peregrine to satisfy any applicable requirements for
   trading of New PSI Common Stock on the over-the-counter and other
   national markets or exchanges;

- -  decisions made by securities market regulators that can effect the
   timing and methods of trading in the New PSI Common Stock;

- -  the possibility of future proceedings in and adjudications by the
   Bankruptcy Court;


- -  although Peregrine has entered into a consent decree with the SEC, the
   Department of Justice's investigation of Peregrine relating to events
   preceding Peregrine's bankruptcy remains open. The SEC's and DOJ's
   investigations of individuals are continuing and may include current and
   former employees of Peregrine. Peregrine is providing its full cooperation
   to the SEC and DOJ in their investigations and continues to provide them with
   documents that may be relevant to their investigations. Although Peregrine is
   cooperating with these investigations, it does not have access to all the
   information available to the SEC and DOJ. It is possible that new
   information could come to light as a result of the ongoing investigations.
   The ultimate impact of these investigations on Peregrine's financial
   condition, results of operations, customer relations and management is
   uncertain, though Peregrine may face financial penalties and adverse
   reputational effects depending on the outcome of the investigations; and

- -  we expect the New PSI Common Stock initially to trade over-the-counter. We
   are presently unable to predict when or if our securities will be listed on a


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   national securities exchange or quoted on the Nasdaq National Market System.
   Nasdaq Market Operations will determine the timing and the methods pursuant
   to which trading in New PSI Common Stock will commence. We advise you to
   check with your stockbroker to determine when and how trading will take place
   in the New PSI Common Stock. To the extent that an active trading market
   develops and persists in Peregrine securities, the prices at which such
   securities might trade depend upon a number of factors, including industry
   conditions, the performance of, and investor expectations for, Peregrine
   post-reorganization and market factors, such as the number of holders who may
   wish to dispose of their securities to raise funds or recognize losses for
   tax purposes or otherwise.

In addition, you should also review the discussion of "Forward-Looking
Statements" immediately following and be aware of the factors discussed therein
and other factors that are described from time to time in reports we file with
the SEC.

FORWARD LOOKING STATEMENTS

This communication contains forward-looking statements about Peregrine,
including but not limited to statements regarding (a) the timing of the initial
or any interim or final distribution; (b) the amount of cash, the number of
shares of New PSI Common Stock, and the principal amount of New PSI Notes that
you are entitled to receive; (c) the eligibility of the New PSI Common Stock for
trading on any organized market and the timing and methods by which such trading
may occur; and (d) the possible development of a trading market in the New PSI
Notes. These statements are based on management's beliefs and certain
assumptions, estimates and projections. As a result, such statements are subject
to numerous risks and significant uncertainties that could cause actual results
to differ materially from those contemplated by the forward-looking statements.
Consequently, such statements should not be regarded as a representation or
warranty by Peregrine that such results will be realized. Peregrine disclaims
any intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

Factors that could cause actual results to differ materially from these
forward-looking statements include, but are not limited to, (a) the ability of
Peregrine and others to determine the number of shares of New PSI Common Stock
to be distributed by Peregrine in its role as the Stock Disbursing Agent on the
schedule set forth in the Plan, (b) the amount of Class 8 Obligations in
Peregrine's Chapter 11 proceeding, (c) any election by Peregrine to extend the
deadline by which the final distribution of New PSI Common Stock must be made,
(d) the effect of any dispute with the Post-Emergence Equity Committee or others
regarding the allocation of New PSI Common Stock between classes of claimants
and interest holders under the Plan on the time when the distribution of New PSI
Common Stock by Peregrine in its role as Stock Disbursing Agent shall occur, (e)
the effect of rounding on a holder's pro rata share of distributions, (f) the
inability of Peregrine to satisfy any applicable requirements for trading of the
New PSI Common Stock over the counter or in other national markets or exchanges,
(g) decisions made by securities market regulators that can effect the timing
and methods of trading in the New PSI Notes and the New PSI


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Common Stock, (h) the possibility of future proceedings in and adjudications by
the Bankruptcy Court, and (i) other factors that are described from time to time
in reports we file with the SEC, including, but not limited to risk factors set
forth in the Disclosure Statement in Support of the Fourth Amended Plan of
Reorganization, dated May 29, 2003 and attached as Exhibit T3E-1 to the
Application for Qualification on Form T-3 Peregrine filed with the SEC on July
7, 2003, the risk factors contained in Form 8-K that Peregrine filed on July 18,
2003 regarding approval of its Plan of Reorganization, and Peregrine's filings
with the United States Securities and Exchange Commission.


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