Australian tech billionaire Mike Cannon-Brookes has sharpened his pitch to AGL shareholders in his bid to derail its proposed demerger, sparking a fiery retort from the company’s chief executive over the costs of shutting down its coal-fired power plants.
Speaking at an event at the Powerhouse Museum in Sydney on Friday, the Atlassian co-founder said he was confident the upcoming vote on the proposed separation of Australia’s largest polluter would be voted down by shareholders, and act as a “clear repudiation by some set of stakeholders … [who] want to go in a different direction.”
In a detailed investor memorandum, Cannon-Brookes’ investment arm Grok further argued that the proposed demerger would “destroy shareholder value” and failed to capitalise on “the huge opportunity for AGL” to lead an early energy transition.
The memo revealed Grok’s view that AGL should provide loans for customers to convert their homes to 100 per cent renewable energy.
“We expect AGL can deliver finance products to help customers fund approximately $100,000 of capital expenditures to electrify their homes,” the memo said. “We assume the average loan life to be 4-7 years.”
But AGL’s chief executive, Graeme Hunt, returned fire on Friday afternoon, slamming Cannon-Brookes’ commentary as “out-of-touch, undeliverable, and irresponsible nonsense.”
“Mike Cannon-Brookes’ lack of expertise and understanding when it comes to the Australian energy market, the reality facing energy customers, and the pressures of the real world, is betrayed by this out-of-touch proposal today,” he told the Herald and the Age.
“What about renters? What about marginalised Australians? What about people who simply don’t want to change their appliances and cars? Will they be forced to participate under this scheme?”
However, amid the escalating war of words, a Grok spokeswoman said AGL’s interpretation of the loan provision was incorrect. The reference to $100,000 of capital expenditures, it said, was based on a CSIRO and Rewiring Australia estimate of “all assets to electrify the average residential home.”
It said the expenditure would not happen all at once, and included “assets such as solar PV systems, stationary battery, home appliances and 1.8 electric vehicles.”
“These assets will be added and funded to the home over a period of time, as consumers themselves drive the demand for green and affordable energy,” Grok said.
The memo also revealed, for the first time, that Grok has pushed out the deadline for the closure of its coal-fired power plants Bayswater and Loy Yang A, from 2030 to 2035.
Cannon-Brookes acknowledged he’d softened his stance on the closure dates due to the slower pace of change in publicly listed companies, but insisted that keeping the plants running for a little longer would still align AGL’s operations with the goals set out in the Paris Climate Accords.
“2035 is probably about the date to get a real, Paris-aligned, productive plan,” he said. “That’s pretty much the deadline you have to get to go to the market and say, ‘we have a Paris plan’.”
“They [the board] would have to start listening as a company, and you may need to make some changes with that.”Mike Cannon-Brookes
Cannon-Brookes, one of Australia’s richest people, earlier this month spent $654 million to acquire, via derivative transactions, an 11.28 per cent economic and voting interest in AGL. The company board had earlier this year knocked back two takeover bids from Cannon-Brookes and Canadian asset manager Brookfield.
The suitors were seeking to buy the 180-year-old utilities giant and invest another $10 billion to $20 billion to accelerate the closure of its coal-burning power stations across Australia and replace them with large-scale renewable energy and batteries.
He continued his attack on AGL’s current board, led by chairman Peter Botten and Hunt, on Friday, saying that shareholders were “really f—ing frustrated” by the current board’s inaction on Paris-aligned targets.
“They [the board] would have to start listening as a company, and you may need to make some changes with that,” he said.
“Our intention would be to … go away and come up with a Paris-aligned plan. Let’s go up and come back with something we can get an ESG rating in the business by saying we’re actually going to plan for managing this transition.”
“And that probably requires more changes, as you mentioned, in the board and management to be forward-thinking, to lean into those opportunities, and to change how we view the future,” he said.
“That’s not up to us to do. That’s up to all the shareholders.”
The demerger, proposed by AGL’s management, would split the company into two separate public companies: energy retailer AGL Australia, and energy generator Accel Energy, which would be responsible for the ongoing maintenance of its three power stations.
AGL’s board says its plan should be supported by shareholders because it gives “each company the freedom to pursue individual strategies.”
But Cannon-Brookes, who insists the onus is on the board, rather than himself, to come up with a detailed plan for the decarbonisation of the company, says the plan is “globally irresponsible” and will fail to deliver better outcomes for both shareholders and the environment.
AGL shareholders will vote on the demerger on June 15.
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Source: Thanks smh.com