Australia’s leading energy supplier and largest greenhouse gas emitter, AGL Energy Limited, has revealed its decision to undertake a demerger, making way for two new energy businesses with separate listings on the Australian Securities Exchange.
The announcement comes as Australia begins to move towards renewables, with the largely coal-reliant AGL suffering a $2.3 billion loss in the first half of 2021.
AGL Energy Chairman, Peter Botten, said, “The impact of recent challenging market conditions on our financial performance emphasises that AGL Energy is now at an inflection point, as the transition of the energy sector accelerates, driven by the rapid evolution in renewables and decentralised energy technology, customer needs and community expectations.”
Under the demerger proposal, AGL Energy Limited will become Accel Energy Limited (Accel Energy, previously referred to as “PrimeCo”) and AGL Australia Limited – with the latter retaining the AGL brand.
Mr Botten said, “For Accel Energy, this means focusing on the transition of its existing electricity generation assets and investment in the long-term rejuvenation of its valuable operating sites as low-carbon industrial energy hubs, as well as new clean energy projects.
“For AGL Australia, it means focusing on being Australia’s leading multi-product energy retailing business while investing in flexible energy trading, storage, supply and decentralised energy services.”
Graeme Hunt, the current Interim Managing Director and CEO of AGL Energy, will be the Managing Director and CEO of Accel Energy.
Mr Hunt was Chairman of AGL Energy from September 2017 to April 2021, and will be in charge of the company’s coal and gas power plant fleet, under Accel Energy.
AGL Australia will be led by Christine Corbett, who will be the Managing Director and CEO.
Ms Corbett has been Chief Customer Officer of AGL Energy since July 2019, before this she was a Special Advisor at PwC and boasts a 30-year career in Australia Post in senior positions.
AGL Energy shareholders would hold one share in each of Accel Energy and AGL Australia for every share they own in AGL Energy on the applicable record date.
Mr Hunt said, “We are excited to be taking this next step towards the creation of these two new businesses, each of which will play a leading role in Australia’s energy transition.”
Mr Hunt said that AGL Energy has received strong financing commitments from its banking group and new lenders, establishing independent borrowing facilities for both Accel Energy and AGL Australia.
“We remain committed to, and confident of achieving, investment grade credit ratings for both new businesses. We are now ready to begin the process of executing on establishing new commercial and operational structures and proceeding with the demerger process.”
AGL Energy intends to hold a scheme and general meeting to enable shareholders to vote on the proposal and to complete the demerger in the fourth quarter of FY22, subject to final AGL Energy Board, ATO and relevant regulatory, court and shareholder approvals.
AGL shares have dropped 10 per cent since the demerger was announced.