Reality bites for AGL Energy chair Peter Botten and CEO Graeme Hunt
Peter Botten was eyeing up a curry on Saturday night when the phone rang. Rumours had started to circulate over the weekend that AGL’s demerger may be dead in the water.
Peter Botten was eyeing up a curry on Saturday night when the phone rang. Rumours had started to circulate over the weekend that AGL’s demerger may be dead in the water. Botten was no stranger to a hostile situation after several decades juggling tribal tensions and volatile politics as the boss of Papua New Guinea-focused Oil Search.
But since taking over as AGL Energy’s chairman a year ago, the 66-year-old has been caught in the crossfire. First was two takeover bids by Mike Cannon-Brookes and Brookfield and, after both were rejected, the billionaire returned set on foiling the demerger which formed the centrepiece of AGL’s strategy.
Botten and his chief executive, Graeme Hunt, had spoken on Saturday morning. Initially there appeared little indication at the onset of the weekend that just 48 hours later both their jobs would be gone.
Several events on Friday appeared to have triggered the meltdown. Big institutional investors, including Martin Currie with a 3 per cent stake, had let AGL know they were against the demerger. Cannon-Brookes’ Grok Ventures had also done its own polling of retail investors which showed a majority were against the company restructure, and AGL had seen the writing on the wall.
While Grok’s campaign, known internally as Project Greenlight, had only ramped up in recent weeks, it was the culmination of an investment opportunity first spotted by Grok’s Jeremy Kwong-Law back in March 2021.
For Grok, based in Sydney’s Surry Hills with just eight staff on board, AGL appeared an odd fit. An 180-year-old electricity utility struggling to handle a rapid-fire reinvention of the industry to renewables looked a contrarian opportunity for the billionaire’s family fund.
But Cannon-Brookes and his team had become convinced that the best way of achieving real action on climate would come not through divestment, but by enacting change within the company itself.
Unfortunately for Botten and Hunt, AGL became their first public target.
By Sunday morning AGL’s board were realising their weekend had been turned upside down. Dozens of calls were made between the board, bankers, executives and PR advisers to check the damage and assess the fallout.
By any measure, wholesale changes were required – and they needed to start at the top. A board meeting was set for late Sunday and then deferred until early Monday morning.
Leaks to The Australian, which revealed the demerger bombshell on Sunday afternoon, set off a chain reaction and the decision for a formal release to the ASX pre-market on Monday morning.
Hunt spent Monday in town hall meetings with AGL’s top 50 executives, with a range of leadership forums held through the day to answer staff concerns.
He told one meeting that under normal circumstances AGL would have “romped” in with a successful vote on the demerger and sought to blame Cannon-Brookes for the disastrous sequence of events.
Still, many staff were angry and confused by the change of strategy on Monday. One worker asked why the company hadn’t thought to formulate a Plan B given the potential risk of not getting the split over the line.
Others looking to take redundancy packages were caught in the confusion over whether the changes would impact them, while a number of external staff expecting to join either AGL Australia or Accel made calls to check whether their jobs still existed.
With AGL having already spent $160m on the demerger, questions are also being asked how much it will take to unwind work already completed and how a company can soldier on after a year working on the demerger.
“It is slightly comical that the board will now do a strategic review, given the strategic review of 15 months ago is what landed at the decision to demerge,” MST Marquee analyst Mark Samter said.
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