Mike Cannon-Brookes warns investors of AGL coal spin-off risks

“As AGL’s largest shareholder, Grok remains committed to voting the shares he owns against the split and will actively encourage other shareholders to do the same.”


According to Grok, among the financial risks that could negatively affect AGL’s production business are increased debt and interest costs as lenders exit coal, increased acquisition costs coal once supply contracts expire and the financial impact of outages at aging coal-fired generators, such as Loy Yang A in the Latrobe Valley, where a power outage knocked a unit out of service for the second time in just three years.

Since voting on the split requires the support of 75% of shareholders, Cannon-Brookes must convince an additional 14% of the register to vote against the proposal for it to fail.

AGL’s board insists the spin-off will unlock shareholder value, creating a carbon-neutral retail and clean energy company, known as AGL Australia, which will will be able to attract backers who are increasingly moving away from fossil fuel investments, while separate generating power, Accel Energy, would allow more focus on turning coal sites into hubs which could also house renewable energy and batteries.

AGL chairman Peter Botten said the independent expert report prepared by Grant Samuel provided “a very positive endorsement of the management recommended by the board”.

The split promotes a terrible outcome for shareholders, communities and the climate.

The private investment company of Cannon-Brookes Grok Ventures

“We have undertaken a very comprehensive review of all alternatives, and the program document highlights the alternatives we have considered, the pros and cons, and has very firmly set the split as the best way forward,” he said. Botten said. age and the Herald. “This will create the potential to maximize growth in share value by giving each company the freedom to pursue its own growth strategies and initiatives.”

AGL chief executive Graeme Hunt said the independent report highlighted both the risks and opportunities of the split. “There is no plan without risks, and we have made it clear to shareholders that it is,” he said, citing uncertainties surrounding future supply and demand dynamics, the speed of deployment of cheaper renewables, and the risks associated with the company’s aging coal-fired plant fleet.

Still, the report had reinforced the board’s conclusion that change was needed to respond to the transformation of the electricity sector, and the path of splitting was its “best option”, Hunt said.

“The way the industry is changing meant the company couldn’t just business as usual,” he said.

Greenpeace said it believed the program booklet highlighted the environmental and financial consequences of the split.

“We believe these documents make it clear that the environmental, social and governance commitments of institutional investors will be flouted, the climate impact will be nothing short of catastrophic, large corporate clients will increasingly abandon the business, the prices of electricity will increase, and retail shareholders will bear millions in costs,” said Greenpeace Australia campaigner Glenn Walker.

AGL’s board of directors has written to Grok Ventures, welcoming it as a shareholder and indicating that it will schedule a meeting this week.

Grok said he sees a positive future for the AGL company if it retains its power generation and retail integration structure.

“There’s a bright future for the company if the ‘gen-tailer’ model stays intact, allowing it to fund an accelerated transition to renewables, create jobs and ensure electricity prices are as low as possible,” he said.

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