Australia's AGL withdraws demerger proposal
Australian energy retailer AGL Energy has withdrawn the proposal to separate the company into AGL Australia and Accel Energy via a demerger, caving into opposition from top shareholder Grok Ventures, it said on May 30 in a statement.
“AGL Energy believes that the demerger proposal would have been supported by a majority of shareholders, both retail and institutional, many of whom are long-term holders of AGL Energy shares,” it said. “However, having regard to anticipated voter turnout and stated opposition from a small number of investors including Grok Ventures, AGL Energy believes the demerger proposal will not receive sufficient support to meet the 75% approval threshold for a scheme of arrangement.”
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AGL said it had spent A$160mn ($114mn), out of the A$260mn it had estimated for demerger-related costs.
In the wake of the decision, chairman Peter Botten will resign from the board upon the appointment of a replacement independent chairperson. Graeme Hunt will also exit as CEO and managing director once a replacement has been appointed. Two other board members, Jacqueline Hey and Diane Smith-Gander, will depart, with Hey leaving on May 30 and Smith-Gander resigning in August.
The company is under pressure to close its coal-fired power plants. AGL said it has been in ongoing discussions with key stakeholders about decarbonisation and believes that the relevant dates for the closure of coal-fired power stations will continue to be accelerated.
“As Australia’s largest energy generator, owner of the largest portfolio of renewable generation and storage assets of any ASX listed company, and a leading retailer of energy solutions, AGL Energy and its people have a critical role to play in just transition,” it said.
“The board is committed to working actively with all stakeholders including government to decarbonise AGL Energy’s business at the fastest rate possible, while ensuring energy system stability, energy affordability for retail and industrial customers, and appropriate shareholder value outcomes,” the company added.