Forrest, Cannon-Brookes-backed Sun Cable collapses into administration
The rift between Andrew Forrest and Mike Cannon-Brookes was brewing late last year with one senior board resignation and fights over funding for the ambitious solar project.
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A fall out between two of the nation’s richest men has led to the abrupt implosion of the $30bn Sun Cable project, one of the world’s biggest solar and battery projects which had aimed to turbocharge Australia into a major international clean energy exporter.
Sun Cable was placed into administration on Wednesday after a dramatic scrap between its two high-profile backers – Mike Cannon-Brookes and Andrew Forrest.
It sets the scene for the businessmen to compete for control of the development, known as the Australia-Asia PowerLink.
The two billionaires clashed over different views on the optimal funding package and strategic vision for the project based in the Northern Territory, which would have sent power from Darwin to Singapore with a 4200km cable.
FTI Consulting were formally appointed as voluntary administrators on Wednesday.
“The appointment followed the absence of alignment with the objectives of all shareholders. Whilst funding proposals were provided, consensus on the future direction and funding structure of the company could not be achieved,” a statement from Sun Cable said.
The fallout threatens to sink one of Australia’s biggest energy projects, pitched as a vision for how the nation could move away from fossil fuels and become a major renewable energy exporter.
Sun Cable in March 2022 raised $210m of new funding to push ahead with its signature clean energy scheme – the $30bn Australia-Asia PowerLink development – with fresh funds ploughed in by the Atlassian co-founder, also the chairman of Sun Cable, and the Fortescue Metals chairman.
However, Dr Forrest’s Squadron Energy recently raised concern that Sun Cable failed to meet its Series B funding milestones and was spending cash at unsustainable rates. The project is running up to 12 months behind schedule, partly due to delays with Indonesian environmental approvals.
Squadron also raised issues with Sun Cable’s management team and may have ultimately wanted to install its own executives in place to run the huge renewable project, sources said.
Documents filed with the corporate regulator show that John Hartman, the chief executive of Dr Forrest’s private Tattarang investment group, quit the Sun Cable board in late November.
As part of ongoing funding needs for the development, Mr Cannon-Brookes’ Grok Ventures was planning to invest an extra $60m into Sun Cable, but that proposal was not agreed to by Squadron, sources said. Squadron, for its part, held concerns over a clause within Grok’s funding proposal that would have seen the company sold or put on the market if there were further failures to meet its funding milestones.
Squadron put forward a funding proposal for a similar amount prior to Christmas but it was not accepted by the rest of the board. Both Grok and Squadron held veto rights which effectively cancelled each other’s funding deals.
It had widespread backing from the federal government and received support from Scott Morrison with Indonesia approving the route of the power project through its territorial waters.
Grok said there was little other choice for the company than the move into administration, while underlining its ongoing interest in the scheme.
“In the circumstances, including where all but one shareholder agreed with the company’s funding strategy – the Board was left with no other option, but to enter into voluntary administration,” it said in a statement.
“Grok remains a strong supporter of Sun Cable delivering the world’s largest solar energy infrastructure network and the Australia-Asia Power Link. We are confident Sun Cable will be an attractive investment proposition and remain at the forefront of Australia’s energy transition.”
“Voluntary administration provides the best opportunity for the company to access appropriate funding sources.”
Documents filed with the Australian Securities and Investments Commission on Monday show that Sun Cable received a $28m cash injection on December 24. Both Squadron and Mr Cannon-Brookes’ private investment company CBC Co were involved, along with MYOB founder Craig Winkler, Craig Scroggie – the chief executive of NextDC – and Eytan Lenko, the chief executive of Beyond Zero Emissions.
The same group kicked in another $26m in mid-September, the documents show, with Squadron and CBC also paying $6.2m for new shares in late October.
All of the share issues are believed to be cash calls from the $210m capital raising announced by Sun Cable in March 2022.
The solar project in the NT, which is estimated to deliver carbon emissions abatement of 8.6 million tonnes per year, will help power Darwin and Singapore.
It includes the world’s largest battery and a 4200km high-voltage cable from Darwin to Singapore, the longest in the world.
Sun Cable still needs to raise more than $30bn in debt and equity by the end of 2023 to back its plans, with the company last year appointing Macquarie, Moelis & Company and MA Financial Group as its financial advisers for the massive task.
The Australia-Asia PowerLink project will create more than 1500 jobs during construction, 350 operational jobs and 12,000 indirect jobs. It will start supplying energy to Darwin in 2026. The venture aims to send 20 gigawatts of power from the world’s largest solar farm near Tennant Creek to Darwin and would also feature a giant battery as part of the project.
Sun Cable chief executive David Griffin said the project remains “well placed” for completion. “As we have progressed our work, the demand for delivering reliable, dispatchable 24/7 renewable energy in the Northern Territory and the region has risen materially,” Mr Griffin said in a statement issued on Wednesday.
“Sun Cable looks forward to developing and operating the projects to meet this demand.”
Originally published as Forrest, Cannon-Brookes-backed Sun Cable collapses into administration
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