AGL’s board is standing by its position that the demerger would unlock value for shareholders,including by transforming its coal sites into energy “hubs” that could include renewables and batteries.
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On Monday,AGL announced it had clinched a partnership with investment giant Global Infrastructure Partners to buy 49 per cent of Accel Energy’s pipeline of 2.7 gigawatts of future wind,battery and pumped hydro projects for $94 million so long as the demerger proceeds.
Hunt on Tuesday said the board was confident it would receive significant support for its plan once shareholders assessed the demerger scheme booklet. He said Cannon-Brookes’ attempt to scuttle the demerger was “not aligned” with the interests of thousands of shareholders who wanted to make an informed decision about the company’s future.
“Clearly the company’s future position,appropriately,should be in the hands of shareholders,but it should be in the hands of shareholders who are fully informed,” Hunt said.
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Tom Allen,an energy analyst at UBS,said there was considerable risk that shareholders may vote down the board’s proposal.
“If the vote fails and considering AGL has not articulated a ‘Plan B’,we estimate this could see material downward pressure on the stock if passive institutional holders sell,” Allen said.
AGL’s board knocked backtwo takeover bids earlier this year from Cannon-Brookes and Canadian asset manager Brookfield,which were seeking to buy AGL and invest another $10 billion to $20 billion on enough new renewables and batteries to accelerate its exit from coal this decade.
Cannon-Brookes on Tuesday told this masthead the board had adopted a “negative view” of the role AGL could play in leading the shift from planet-heating fossil fuels,and had let investors down by failing to embrace opportunities and prepare for the impact of the clean energy transition on its business.
AGL’s coal- and gas-fired power stations are the biggest sources of greenhouse gas emissions in Australia,accounting for 8 per cent of the nation’s carbon footprint. Accel Energy’s last coal plant,Loy Yang A in Victoria,would not close until 2045.
In a letter addressed to the board and circulated among shareholders,Cannon-Brookes’ Grok Ventures described the demerger as “irresponsible” because it would entrench a position inconsistent with limiting climate change” while more frequent breakdowns across its ageing coal fleet would drive up prices for customers.
It also cast doubt over whether Accel would be a viable,standalone public company because of huge liabilities and limited ability to access capital to fund the replacement of its assets and remediation costs.
Cannon-Brookes said his intention was to remain a long-term shareholder in AGL and he hoped that scuttling the demerger could “refresh” the company and brighten its outlook.
“Whether that’s the same board that’s going to do that refreshing and listen to shareholders after that vote,that’s a wholly different question,” he said.
AGL shares closed 3 per cent lower at $8.35.
Cannon-Brookes’ push to fast-track the closure of AGL’s coal-fired power stations has reignited a political debate about the pace of the clean energy transition. AGL and the Morrison government have argued the grid won’t handle the early closure,warning the shift from fossil fuel-based generation to more weather-dependent renewable energy would cause risks to power supply and household energy bills.
While coal still accounts for about two-thirds of Australia’s electricity,the uptake of renewables has been rising to record levels. Cannon-Brookes and other clean-energy advocates say large-scale wind and solar energy paired with big batteries will provide the cheapest electricity for consumers,rather than failure-prone and expensive-to-run fossil fuel-based generators.
Last week the Australian Energy Market Operator (AEMO) said outages across Australia’s ageing fleet of coal-fired power stations and rising costs of the fossil fuel have led to higher wholesale power prices that experts say are likely to be passed onto consumers’ bills as early as this year.