Top brass jump ship as AGL Energy coal demerger plan quashed

Atlassian co-founder Mike Cannon Brookes has responded after a huge win that will drastically alter Australia’s biggest polluting company.

Billionaire Mike Cannon-Brookes has seemingly cleaned up Australia’s biggest polluter, with AGL Energy abandoning plans that would have kept it burning coal for another 20 years.

AGL on Monday morning announced that its top brass would be resigning and that it would no longer attempt to split out its coal assets following a sustained period of pressure from Mr Cannon-Brookes and other investors.

As AGL’s biggest shareholder, Mr Cannon-Brookes said the announcement is a significant forward.

“Wow. A huge day for Australia,” he tweeted.

“We embrace the opportunities of decarbonisation with Aussie courage, tenacity and creativity.

“Lots of work but we CAN do this”.

Wow. A huge day for Australia 💚💛

Had to sit down & take it in. This live shot couldn’t be a better metaphor for a better, greener path ahead 🌱

We embrace the opportunities of decarbonisation with Aussie courage, tenacity & creativity.

Lots of work but we CAN do this 👊🏻 pic.twitter.com/mSCQl554C0

— Mike Cannon-Brookes 👨🏼‍💻🧢🇦🇺 (@mcannonbrookes) May 29, 2022

Environmental groups such as Greenpeace Australia cheered Monday’s news and said the failure of AGL’s demerger represented the failure of its old leadership team.

“AGL’s humiliating demerger backflip has to go down as one of the most bungled and misguided attempts at a corporate restructure in Australian history,” Greenpeace senior campaigner Glenn Walker said.

Atlassian co-founder Mr Cannon-Brookes has been the figurehead of the push to direct AGL away from producing coal-fired power, a practice the energy firm was keen to keep doing by splitting its heavy-polluting assets out into a new company.

Atlassian co-founder Mike Cannon-Brookes is AGL’s biggest shareholder with a 11.3 per cent stake.

“As AGL’s largest shareholder, we have requested a meeting with Vanessa Sullivan and Graham Cockroft who are co-chairing the “strategic review”,” Grok Ventures said in a release.

“Grok has strong views about the future direction of the company – including a Paris-aligned plan, taking advantage of the electrification transition and the renewable generation opportunity.”

AGL supplies about a third of Victoria’s power, and its gas and coal power stations are the biggest greenhouse gas emitters in the country, accounting for about 8 per cent of Australia’s carbon footprint.

Mr Cannon-Brookes had made a couple of attempts to buy AGL outright and derail the demerger with the help of other investment firms, before taking a majority 11.3 per cent stake earlier this month via his own company Grok Ventures.

It was this stake, and mounting opposition from others, that ultimately appears to have scuttled AGL’s vision.

The company on Monday insisted the demerger of is coal and gas assets was still a viable option but said the clear and growing resistance had nonetheless forced it – and its key management – to walk away.

“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 per cent approval threshold for a scheme of arrangement.”

AGL’s its gas and coal power stations are the biggest greenhouse gas emitters in the country

AGL chief executive Graeme Hunt and chairman Peter Botten announced they would now leave the company with the split no longer viable.

Board members Jacqueline Hey and Diane Smith-Gander will also leave.

“While the board believed the demerger proposal offered the best way forward for AGL Energy and its shareholders, we have made the decision to withdraw it,” AGL Energy board chair Peter Botten said.

“The board will now undertake a review of AGL’s strategic direction, change the composition of the board and management, and determine the best way to deliver long-term shareholder value creation in the context of Australia’s energy transition.”

Shares in AGL Energy took a hit at the open of markets on Monday and were last down 1.8 per cent at $8.71.

The company has lost three-quarters of its value in five years amid an intensifying push to decarbonise industry and prevent the most drastic impacts of climate change.