AGL demerger plan in doubt amid mounting opposition

“It’s going to be very difficult [to secure enough votes for the demerger to pass],” said one source familiar with the AGL board’s deliberations.

Additionally, Cannon-Brookes’ investment firm Grok has increasing confidence that large shareholders will vote against the demerger rather than abstain as it was speculated they might do.

The company first announced plans to split in two in June last year, a move that investors questioned at the time. However, the company believes the demerger would unlock value for shareholders, creating carbon-neutral retail and clean power company to be known as AGL Australia, which will be able to attract financial backers that are increasingly distancing themselves from fossil fuel investments.

Meanwhile, the separate power generation company – Accel Energy – will focus on transforming coal sites into energy hubs that could also house renewables and batteries.

HESTA, which is believed to hold 0.4 per cent of AGL shares on behalf of its members, this week said it was “unconvinced” that the demerger proposal would accelerate decarbonisation to meet the goals of the Paris climate agreement to limit global temperature rises to 1.5 degrees.

It also said it was concerned about the risk of coal power stations becoming “stranded assets”, and believed the board had failed to adequately outline how it would support communities affected by the eventual closures of those plants.

AGL in March brought forward the closure of its Bayswater coal plant in NSW from 2035 to 2033, while Loy Yang A in Victoria’s Latrobe Valley would have its 2048 closure date brought forward to 2045.

However, the announcement disappointed climate campaigners including Cannon-Brookes, who have been urging the company to align its closure dates with the United Nations’ calls for developed countries to quit coal-fired electricity by 2030 to avert catastrophic levels of climate change.

Graeme Hunt, AGL’s chief executive, says such a timeline is “overly accelerated” and insists the demerger is the company’s best option, while also accusing Cannon-Brookes of peddling “false claims” and “rhetoric” without a proper plan.