Sun Cable requires urgent change, says Hartman

Andrew Forrest’s top lieutenant has lambasted management of collapsed Sun Cable, saying “urgent change” is needed.

Andrew Forrest’s chief business lieutenant has lashed out at the management of collapsed Sun Cable, saying “urgent change” is needed to deliver on the company’s vast renewable energy vision.

Sun Cable was placed in voluntary administration on Wednesday, derailing the $30bn renewable energy project after a spat between the Atlassian founder Mike Cannon-Brookes and Dr Forrest, whose Squadron Energy was Sun Cable’s other anchoring shareholder.

The company foundered after two billionaires clashed over different views on the optimal funding package to take the company forward, and a conflict over whether Sun Cable was delivering on its promises to shareholders.

John Hartman, who runs Dr Forrest’s Tattarang private investment arm, said on Thursday Squadron still believed in Sun Cable’s vision – which would deliver renewable energy generated in Australia to Singapore and Indonesia through a 4200km undersea cable.

But he said Squadron had doubts about Sun Cable’s ability to deliver on that vision in its current form.

“A project with the scale and ambition of Sun Cable requires vision and precise execution. Squadron Energy believes in the vision but believes the manner in which the project is delivered needs urgent change,” he said.

Andrew Forrest’s Squadron Energy was one of Sun Cable’s two big investors. Picture: AAP

“Exceptional governance practices and world-class project delivery expertise, as well as pursuing bankable technologies, will be required to make the project a reality.”

Mr Hartman’s comments came as supporters of both billionaires circled the wagons around their respective renewable energy champions, with key Cannon-Brookes ally Eytan Lenko telling The Australian all shareholders were opposed to the Squadron proposal.

“Squadron’s proposal was basically going to take power away from management and ultimately dilute them out,” said Mr Lenko, a Sun Cable investor and also chief executive of Mr Cannon-Brookes’ green non-profit organisation Boundless.

Mr Cannon-Brookes floated the idea of assembling a new investment consortium to re-boot the project and hit back at criticism he was out of his depth being involved in a big infrastructure play.

Both billionaires are thought to have ruled out working together again on the project, prompting speculation Mr Cannon-Brookes could rekindle ties with a big player like Brookfield, which previously partnered with the mogul on its failed AGL Energy takeover bid.

Boundless chief executive officer Eytan Lenko.

Macquarie, one of the world‘s biggest investors in green energy, could be another target for Grok Ventures, Mr Cannon-Brookes private investment group.

“We believe Sun Cable is a highly valuable company that will attract a lot of interest. We have made it clear in our statements that we remain committed to the company. If there is an opportunity to remain invested alongside a consortium with constructive partners it is something we would certainly consider,” a Grok spokesman said.

Dr Forrest‘s Squadron harboured concern that Mr Cannon-Brookes was focused on the tech side of Sun Cable at the expense of getting the project built. However, Mr Cannon-Brookes said both aspects of the development were important to it proceeding.

“This is not just a construction project. There is a requirement for the most sophisticated technology and engineering capabilities to meet the opportunities ahead.”

Administrators FTI Consulting were first contacted by Sun Cable’s management on December 22, two days before the company received a $28m cash injection from its shareholders, ASIC records show.

But, unusually, FTI had no real engagement with Sun Cable until January 9, two days before its board sent the company into administration.

Documents released by FTI show its administrators were only then briefed on Sun Cable’s financial position, cash flow forecasts, and operations in a hurried set of talks with senior staff at Sun Cable – including general counsel Angela Aroozoo, chief executive David Griffin and finance boss Ryan Abbott across the day, as they were briefed on the company’s financial.

The Australian understands Sun Cable’s board and management had previously been seeking so-called “safe harbour” advice on its viability from insolvency firm Korda Mentha, with talks believed to date back as far as late November after Tattarang boss John Hartman quit the company’s board – a clear signal Dr Forrest was losing faith in the company.

Mike Cannon-Brookes. Picture: Kevin Dietsch

The Northern Territory government said it had been offered “big assurances” by Sun Cable the renewable project would proceed after its sudden collapse into voluntary administration following a spat between its two billionaire backers.

Acting NT Chief Minister Nicole Manison said it had been assured by Sun Cable chief executive David Griffin the development would still go ahead.

“We have been given big assurances from the chief executive that they’re confident that they will get through this voluntary administration process swiftly and that we can have confidence in this project going forward and they will have significant interest for investment,“ Ms Manison said.

“We need to take a deep breath here and realise that this is a $30bn project,” she said. “It is going to be globally significant and we make no apologies backing it and working alongside a project like this that looks to deliver renewable clean, green power.”

The collapse of the project backed by billionaires Andrew Forrest and Mike Cannon-Brookes showed the difficulty of executing one of the world‘s biggest renewable energy developments, energy adviser Michael Liebreich said.

“Sun Cable – top marks for vision, execution, not so much. Very hard to do this stuff in an era of tight money and high interest rates,” Mr Liebreich, the founder of Bloomberg New Energy Finance said on Twitter.