AGL and Mosaic enter into Scheme Implementation Deed 

14 July 2010

AGL Energy Limited (“AGL”) and Mosaic Oil NL (“Mosaic”) today announced that they have entered into a Scheme Implementation Deed, under which AGL proposes to acquire all of the issued shares¹ in Mosaic by way of a scheme of arrangement (“the Mosaic Scheme”).

The Board of Mosaic unanimously recommends that Mosaic shareholders vote in favour of the Mosaic Scheme in the absence of a superior proposal and subject to the independent expert opining that the scheme is in the best interests of Mosaic shareholders. Each director of Mosaic intends to vote their respective shares in favour of the Mosaic Scheme, subject to the same qualifications. AGL has a relevant interest of 12.8% of the shares on issue in Mosaic as a result of agreements with some of Mosaic’s largest shareholders to support the Mosaic Scheme.

Transaction Highlights

• Mosaic shareholders will either receive cash of $0.15 per Mosaic share² or will receive 1.01 AGL shares per 100 Mosaic shares for all their Mosaic shares;
• The transaction price represents a 92% premium to Mosaic’s closing price of 7.8 cents on 30 June 2010 and 86% premium to the 30-day volume weighted average price of Mosaic shares of 8.08 cents prior to 30 June 2010;
• Mosaic shareholders may be eligible for scrip-for-scrip CGT rollover relief if they elect the all AGL scrip option; and
• Provides Mosaic shareholders with an immediate opportunity to realise the full value of Mosaic’s assets.

Commenting on this development AGL’s Managing Director Michael Fraser said “This transaction will allow both Mosaic and AGL shareholders to benefit from the strategic value of Mosaic’s assets and the value that AGL is able to add to these assets from our integrated position in the energy industry”.

Financial Impact on AGL

AGL has a strong balance sheet and will fund cash consideration involved in the Mosaic scheme from its existing cash reserves. The acquisition is not expected to have a material impact on AGL’s profitability for the year ending 30 June 2011.

Scheme Implementation Deed

A copy of the Scheme Implementation Deed is attached to this release.

Indicative Timing of the Mosaic Scheme

Key Events                                                               Target Date
Scheme announced, implementation deed signed    14 July 2010
Dispatch Scheme Booklet to Mosaic shareholders     7 September 2010
Mosaic Scheme Meeting                                             7 October 2010
Implementation Date of Scheme                                18 October 2010

1. Includes Mosaic fully paid ordinary shares and existing Mosaic partly paid ordinary shares and shares subject to the Taipan farmin arrangements (if issued prior to the Record Date).
2. Less any amount remaining unpaid on the share and adjusted for any dividends or return of capital declared or paid prior to close.

Further inquiries:

Media Investors
Nathan Vass, Head of Media
Direct: + 61 2 9921 2264
Mobile: + 61 (0) 405 040 133
e-mail: nvass@agl.com.au

About AGL
AGL is Australia's largest integrated renewable energy company and is taking action toward creating a sustainable energy future for our investors, communities and customers. Drawing on over 170 years of experience, AGL operates retail and merchant energy businesses, power generation assets and an upstream gas portfolio. AGL has Australia's largest retail energy and dual fuel customer base. AGL has a diverse power generation portfolio including base, peaking and intermediate generation plants, spread across traditional thermal generation as well as renewable sources including hydro, wind, landfill gas and biomass. AGL is Australia's largest private owner and operator of renewable energy assets and is looking to further expand this position by exploring a suite of low emission and renewable energy generation development opportunities.