The ambitious Sun Cable renewable energy project has collapsed into administration after billionaires Mike Cannon-Brookes and Andrew Forrest were unable to agree on a path forward for the $25 billion business.
Administrators from US financial services firm FTI Consulting were appointed to the business on Wednesday. In a statement, the company said the appointment was due to an “absence of alignment with the objectives of all shareholders”.
“Whilst funding proposals were provided, consensus on the future direction and funding structure of the company could not be achieved,” a statement from Sun Cable said.
Sources close to the business who were not authorised to speak publicly on the issue said the impasse was between Cannon-Brookes and Forrest, who both had clashing ideas on ways to prop up Sun Cable after the project missed a key milestone in September and was bleeding cash.
Forrest’s Squadron Energy and Cannon-Brookes’ Grok Ventures were willing to invest additional capital in the business, sources said, but the two could not agree on terms, leaving them at loggerheads. The majority of shareholders reportedly supported Grok’s plan, however as both major shareholders have veto rights, the board was unable to get the deal over the line.
Both Squadron and Grok led Sun Cable’s most recent funding round in March, which raised $210 million which was supposed to keep the business funded until late 2023.
Sun Cable was founded in 2018 and planned to send solar-powered renewable energy via an undersea cable from the Northern Territory to Singapore. The operation was valued at about $25 billion and had attracted widespread support from investors and the federal government, with Prime Minister Anthony Albanese last year labelling it an exciting project.
Vying to be the world’s first intercontinental electricity grid, Sun Cable had planned to develop a 4200-kilometre underwater transmission line that would transmit solar power generated in the Northern Territory to Singapore, which could have met up to 15 per cent of Singapore’s demand.
The company is looking to use the administration process to find ways for Sun Cable to access additional capital, which could involve a recapitalisation or sale of the business.
In a statement, Cannon-Brookes signalled his continued support for the project.
“Sun Cable has achieved so much since it was founded in 2018. I’m confident it will play a huge role in delivering green energy for the world, right here from Australia. I fully back this ambition and the team, and look forward to supporting the company’s next chapter,” he said.
A spokesperson for Cannon-Brookes’ personal investment vehicle, Grok Ventures, said the investor remained a strong supporter of Sun Cable, and had been prepared to make additional investments in the business.
“In the circumstances, including where all but one shareholder agreed with the company’s funding strategy – the board was left with no other option, but to enter into voluntary administration,” the spokesperson said.
“We are confident Sun Cable will be an attractive investment proposition and remain at the forefront of Australia’s energy transition.”
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Source: Thanks smh.com