As expected AGL Energy has called off its proposed splitting of the company into ‘good’ and ‘bad’ halves after facing growing shareholder opposition to the idea, led by Sydney billionaire Mike Cannon-Brookes.
The splitting of the company into AGL Australia (the good bit) and Accel Energy (the bad, carbon-dominated bad bit) was to have been voted on at a shareholder meeting on June 15.
That is all now off and instead there’s another ‘review’ of the company with an update to come with the company’s 2021-22 results announcement in August and a final report by September.
And while the review is happening the company’s board and senior management will be cleaned out with chair Peter Botton and CEO Graham Hunt deciding to exit the company, along with several other directors.
“The Board of AGL Energy continues to believe that the Demerger Proposal offers the best way forward for AGL Energy and its shareholders, and this was also the view of the Independent Expert. However, the Board believes this path is no longer available,” the company told the ASX on Monday.
“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.
“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.”
“In these circumstances, the AGL Energy Board considers that it is in the best interests of AGL Energy shareholders to withdraw the Demerger Proposal. AGL Energy will approach the Court for orders to cancel the Court ordered scheme meeting and will not proceed with the associated general meeting that was to have considered various related resolutions,” AGL said.
The AGL Energy Board said it will now conduct a review of the company’s strategic direction.
This review will include:
- giving consideration to how the company moves forward in a way that will create long-term shareholder value in an environment where pressure on decarbonisation and energy affordability is accelerating;
- utilising the extensive analytical work conducted in preparation for the Demerger Proposal and a thorough assessment of the strategic plans that were developed for AGL Australia and Accel Energy, and their respective roles in the energy transition;
- any new approaches from third parties regarding alternative transactions; and
- further consultation with a broad range of stakeholders including Grok Ventures and other shareholders, regulators, governments and communities.
The review of the company’s strategic direction will be overseen by a Board sub-committee co-chaired by Vanessa Sullivan and Graham Cockroft utilising internal and external resources.
