Grok Ventures and its affiliates have acquired a more than 11 per cent interest in AGL Energy Limited making it the largest shareholder in the company.
Grok intends to vote against AGL’s planned demerger and in doing so believes there can be a better future for AGL which creates better value for the company and its shareholders. This includes accelerating the transition to net-zero while delivering reliable and affordable energy for customers.
Mike Cannon-Brookes, Principal of Grok, said keeping AGL together is the only way to put the company back at the forefront of energy generation in Australia.
“We are at a critical point in Australia’s energy transition, and in AGL’s future. This is about delivering cheap, reliable and clean energy to millions of families and businesses. We believe by keeping the company together, AGL can continue its long and proud history as a pioneer through energy market transitions.”
Grok says the AGL Board has made a series of mistakes and has been too slow to act on decarbonisation or adopt new technologies, which has resulted in the demerger plan.
“By not transitioning fast enough away from fossil fuels, the board has presided over AGL’s value plummeting to the tune of about 70 per cent in five years.
“Sweating old coal plants which are expensive to run, and increasingly breakdown like we’re seeing today with Loy Yang A is not economical or responsible. It makes no sense…or cents.”
Grok believes the demerger will create two weaker, interdependent companies with significant operating risk and dis-synergies. Grok suggests Accel Energy will not be able to fund its transition or meet its liabilities due to high leverage, thermal coal exposure, significant remediation costs and a reduced appetite for coal exposure from equity and debt investors.
“We intend to vote every AGL share we control at the relevant time against the demerger, and we call on fellow AGL shareholders to vote against the demerger to avoid further value destruction,” Cannon-Brookes said.
Grok has written to the AGL Board as the company’s largest shareholder, outlining why it has taken this action and saying it welcomes constructive discussion on more value-accretive alternatives, if AGL is kept together.
The AGL Board has stated that it has considered these developments and continues to believe that AGL’s proposed demerger is in the best interests of AGL shareholders.
In AGL’s opinion, the demerger:
- creates the potential to maximise growth in the value of shares by giving each company the freedom to pursue individual strategies and growth initiatives;
- supports shareholder returns through distinct dividend policies and capital structures; and
- leaves the future value of two ASX listed companies with shareholders.
“AGL remains committed to progressing the proposed demerger with a view to achieving implementation by 30 June 2022,” AGL said in a statement.
“The Board will continue to be guided by the best interests of AGL shareholders in its decisions.”
To find out more about Grok’s demerger position visit www.keepittogetheraustralia.com.au
