Grok Ventures’ offer of emergency funding for Sun Cable accepted by FTI Consulting
Mike Cannon-Brookes’ offer of $65m in emergency funding for Sun Cable has been accepted – but the company will be sold.
Mike Cannon-Brookes has sealed a deal to provide $65m of emergency funding for Sun Cable and the embattled renewable energy developer will be put on the market, amid an ongoing battle for control between its two wealthy backers.
Both the Atlassian boss and fellow shareholder Andrew Forrest offered financing deals in the first meeting of creditors held on Friday after the company sank into administration earlier in January.
Mr Cannon-Brookes’ Grok Ventures loan for $65m, including a six month interest-free period, was accepted by administrator FTI Consulting over a proposal from Mr Forrest’s camp.
Sun Cable’s fallout emerged after the two billionaires clashed over different opinions about the optimal funding package and strategic vision for the Australia-Asia PowerLink project, based in the Northern Territory, which would have sent power from Darwin to Singapore with a 4200km cable.
“The Grok interim funding proposal – which was submitted alongside others – has been accepted by FTI Consulting and will be finalised in the coming days. This proposal is indicative of Grok’s ongoing commitment to the success of Sun Cable and the AAPL project,” Grok said.
The administrator said it had sought funding in the short term to continue operations with the “objective of preserving optionality to maximise the overall value of the company through a sale of business process”.
FTI hopes a deal can be concluded within three months. The appointment of an adviser to sell the company is expected to occur soon and the sale process is expected to start before January 31.
“As administrators we have looked to preserve the value of Sun Cable and keep all options for the future of the project on the table,” FTI’s John Park said.
“We will seek to crystallise the interest expressed in the future of Sun Cable into a firm offer for the benefit of creditors and other stakeholders via the sale process.
“Ultimately, the successful bidder will have the opportunity to take the business forward in line with their vision.”
The administrators will apply to delay the second meeting of creditors in order to first undertake the sale process.
Sun Cable in March 2022 raised $210m of new funding to push ahead with its signature clean-energy scheme with fresh funds ploughed in by Mr Cannon-Brookes, who is also the chairman of Sun Cable, and Dr Forrest.
However, Dr Forrest’s Squadron Energy recently raised concern that Sun Cable failed to meet its funding milestones and spent 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.
As part of ongoing funding needs for the development, Grok was originally 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 resulted in the company being put on the market if there were further failures to meet its funding milestones.
One of Dr Forrest’s key executives, Squadron chair John Hartman – on Monday described Sun Cable’s marquee project, the proposed export cable, as “not commercially viable”.
The Sun Cable project aimed to transmit 20 gigawatts of power from the world’s largest solar farm near Tennant Creek to Darwin, with the electricity moving to Singapore where it would provide 15 per cent of the city-state’s power needs. The company was founded by David Griffin, and brothers Mac and Fraser Thompson.
Dr Forrest – who is backing the potential of hydrogen generated by renewable energy through Fortescue Future Industries – emerged as one of the country’s largest renewable energy investors after acquiring CWP Renewables in December.
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