AGL confirms demerger, splits from coal assets

AGL Macquarie coal plant (HESTA)
AGL's Macquarie power station

AGL Energy will split into two separately listed entities in a demerger, with AGL Energy becoming Accel Energy Limited (Accel Energy, previously referred to as “PrimeCo”)—an electricity generation business focused on the accelerating energy transition.

Accel Energy will demerge into a new entity, AGL Australia Limited (AGL Australia, previously referred to as “New AGL”), a multi product energy-led retailing and flexible energy trading, storage and supply business. AGL Australia will retain the AGL brand.

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 the financial year ending June 30, 2022, subject to final AGL Energy Board, ATO and relevant regulatory, court and shareholder approvals. After the demerger, 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.

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AGL Energy Chairman, Peter Botten, said: “As one of Australia’s oldest businesses, AGL Energy has a proud heritage of leading change in the energy industry. This has created significant value for shareholders in prior years, including via the integration of our strong retail footprint with a baseload energy generation business. However, 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.

“After careful consideration, the Board has confirmed that AGL Energy should move forward as two independently-listed companies as the Board believes this will be in the best interests of shareholders. The clarity of purpose created by this change will protect shareholder value, enabling each business to focus on their respective strategic opportunities and challenges presented by the accelerating energy transition.

“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 and supply and decentralised energy services.”

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Of the planned demerger AGL Energy Interim Managing Director and CEO Graeme Hunt said: “Our proposal is the next evolution in AGL’s 180-year history and is an important step in positioning us to protect shareholder value and establishing platforms for growth while providing greater customer focus and creating opportunities for our people. Accel Energy and AGL Australia will continue to play an important role in the Australian economy as a major employer and provider of essential services. 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.

“AGL Energy has received strong financing commitments from its banking group and new lenders to establish 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.”

The demerger will see Accel Energy headed by existing interim CEO Graeme Hunt while AGL Australia will be led by existing chief customer office Christine Corbett as CEO.