AGL Energy abandons plans to demerge coal generation business

 AGL Energy abandons plans to demerge coal generation business

AGL Energy abandoned its plans to downgrade the coal -focused generation business and announced chief executive Graeme Hunt and chairman Peter Botten to leave the company.

In a statement to ASX, the company said it has insufficient shareholder support and will now conduct a strategic review of its operations.

Atlassian founder Mike Cannon-Brookes, who is the company’s largest shareholder, has called for the demerger to be thrown out since he launched an unsuccessful takeover bid earlier this year.

AGL’s coal and gas -powered power stations are a major source of Australia’s greenhouse gas emissions, accounting for about 8 per cent of the country’s carbon footprint.

Mr Hunt and several AGL directors who have now also left the company argued for months that the split would open up value for shareholders.

But the board has lost confidence that its plan to split AGL’s retail and coal-focused power generation businesses will get the required 75 percent approval if it goes to a vote on June 15.

Its strategic review will now be overseen by a board sub-committee that will report back to shareholders in September.

“While the board believes the demerger proposal offers the best way forward for AGL Energy and its shareholders, we have made the decision to withdraw it,” Mr Botten said.

“The board will now take a strategic direction, change the composition of the board and management, and figure out the best way to provide long-term shareholder value.”

Four board members including Mr Botten, Mr Hunt, non-executive directors Jacqueline Hey and Diane-Smith Gander will resign.

Mr Cannon-Brookes, who is one of Australia’s richest people, urged shareholders to reject the demerger, arguing that if AGL offloads its assets there is nothing it can do to reduce those. emissions and respond to climate change.

Mr Cannon-Brookes has an 11.28 per cent stake in AGL.

HESTA, which owns 0.36 per cent of AGL shares for its members, last week said it was “not convinced” that the demerger proposal would accelerate decarbonization to achieve the goals of the climate agreement in Paris to limit global temperature rise to 1.5 degrees Celsius.

HESTA chief executive Debby Blakey said the superannuation fund would vote against AGL’s proposal to transfer its interests in coal-fired power to new company Accel.

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