AGL Energy’s board will meet on Monday morning and is expected to ditch the plan to split its operations, surrendering to a campaign by the billionaire climate activist Mike Cannon-Brookes to foil the move.
Neither AGL, Australia’s biggest electricity generator, nor Cannon-Brookes would comment on the meeting but bankers and consultants briefed some media outlets at the weekend that the demerger would be scrapped.
One insider told Guardian Australia that the board itself and management roles were “up in the air”, and it appeared Cannon-Brookes had succeeded, at least for now.
AGL had scheduled a meeting of shareholders for 15 June to vote on a scheme to separate its generation arm into a new company, Accel Energy, and a retailing arm, AGL Australia. It needs 75% of stockholders to agree to the plan, intended to take place by the end of June.
Cannon-Brookes shocked the company this month when he announced he had bought an 11.28% share, making him the biggest single shareholder. He vowed to block the demerger, saying it would destroy shareholder value as well as delay the closure of AGL’s remaining coal-fired power plants.
AGL itself has said the demerger would carry big costs, including $260m up front.
Last week Cannon-Brookes, through his family company Grok Ventures, said he wanted two seats on the board.
Media outlets including the Financial Review reported on Monday that the chief executive, Graeme Hunt, would leave AGL, as the demerger plan was now doomed. Other investors, including the superannuation fund Hesta, which owned about 0.36%, have also said they would oppose the demerger.
Earlier this year Cannon-Brookes joined the Canadian asset manager Brookfield in a bid to take AGL private at $8.25 a share but was rebuffed. The stock closed at $8.87 on Friday.
The contest over the future of the 180-year-old company comes as wholesale prices surge to record highs of more than $300 a megawatt-hour in parts of the national electricity market that serve Australia’s eastern states. Rising costs for gas and outages at coal-fired power stations are the main factors pushing prices higher.
Retail prices are also rising, with the default offer set by the Australian Energy Regulator last week lifting its standard market offer from 1 July by as much as 18%.
AGL operates three coal-fired power plants in New South Wales and Victoria. The Liddell power station in the Hunter has already closed one of its four units and will close the other three by next April.
In February AGL brought forward the closure date of the other two plants – Bayswater in the Hunter and Loy Yang A in Victoria – by several years. Cannon-Brookes argues that the termination needs to come much sooner and that an intact company would be better equipped to make the transition to a renewable energy and storage giant, helping to lower Australia’s greenhouse emissions significantly in the process.