- Board of AGL Energy believes proceeding with proposed demerger will be in the best interests of
shareholders, protecting value and providing greater strategic focus
- AGL Energy Limited to become Accel Energy Limited, a baseload power producer focused on
redevelopment of its sites as low-carbon industrial energy hubs
- Accel Energy to demerge AGL Australia Limited, a leading multi-product energy retailer backed by
flexible energy trading, storage and supply
- Accel Energy leadership: Peter Botten to be Chair, Graeme Hunt identified as Managing Director & CEO
- AGL Australia leadership: Patricia McKenzie to be Chair, Christine Corbett identified as Managing
Director & CEO
- Strong support from lenders for new borrowing facilities for both entities
- Accel Energy to retain 15-20 percent shareholding in AGL Australia
- Anticipated completion of demerger in fourth quarter of FY22, subject to relevant approvals
- AGL Energy to terminate Special Dividend Program for remainder of FY21 and FY22 and underwrite the
Dividend Reinvestment Plan on ordinary dividends until demerger
- AGL Energy FY21 earnings guidance confirmed within previously provided range
AGL Energy Limited (AGL Energy) has today confirmed its intention to undertake a demerger to create two
leading energy businesses with separate listings on the Australian Securities Exchange. Under the demerger
proposal, AGL Energy will become Accel Energy Limited (Accel Energy, previously referred to as “PrimeCo”),
an electricity generation business focused on the accelerating energy transition. Accel Energy will demerge
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 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 30 June 2022 (FY22) 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.
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
“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
2 multi-product energy retailing business while investing in flexible energy trading, storage and supply and
decentralised energy services.”
AGL Energy Interim Managing Director & 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
“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.”
Leadership of Accel Energy and AGL Australia
AGL Energy has today confirmed the following leadership appointments.
For Accel Energy:
- Peter Botten AC, CBE, currently Chair of AGL Energy, will continue as Chair when the company
becomes Accel Energy. Mr Botten was appointed Chair in April 2021, having joined the Board as a
Non-Executive Director in October 2016. Previously, Mr Botten was Managing Director & CEO of Oil
Search Limited for more than 25 years, overseeing its development into a major Australian
Securities Exchange-listed company. He is also a Council Member of the Australia PNG Business
Council, Chairman of the Oil Search Foundation, Hela Provincial Health Authority and the National
Football Stadium Trust in Papua New Guinea, and a Director of Karoon Energy Limited.
- Graeme Hunt, currently Interim Managing Director & CEO of AGL Energy, has been identified as
Managing Director & CEO of Accel Energy. Mr Hunt’s role is expected to be for a fixed term of three
years commencing on the effective date of the demerger. Mr Hunt was Chairman of AGL Energy
from September 2017 to April 2021 having joined the Board as a Non-Executive Director in
September 2012. Previously he held senior executive position with a focus in capital intensive
industries. He was Managing Director of each of Broadspectrum Limited and Lihir Gold Limited,
having held several senior executive positions including CEO of each of the Iron Ore, Aluminium
and Uranium businesses over a 30-year career with BHP Group.
For AGL Australia:
- Patricia McKenzie will be Chair. Ms McKenzie has been a Non-Executive Director of AGL Energy
since May 2019. She has 40 years’ experience in the Australian energy sector with particular focus
on matters of market design, industry governance and regulatory reform. She was previously a
Director of APA Group, Chair of Essential Energy, a Director of Macquarie Generation and
Transgrid, CEO of the Gas Market Company and a member of the Gas Market Leaders Group, and a
Director of the Australian Energy Market Operator. She is Chair of NSW Ports and the Sydney
Desalination Plant group companies.
- Christine Corbett has been identified as Managing Director & CEO. Ms Corbett has been Chief
Customer Officer of AGL Energy since July 2019. From 2018, she was a Special Advisor at PwC
following a career at Australia Post of almost 30 years in which she held senior executive roles
including Chief Customer Officer and Interim CEO. Ms Corbett is a former Non-Executive Director
of the Royal Children’s Hospital, Melbourne.
- Further biographical details are available on AGL Energy’s website.
The Managing Director & CEO appointments were made following an extensive search process considering
both internal and external candidates using external search firms. Executive and Chair appointments were
overseen by the independent directors without the participation of those appointed.
While these appointments will take effect upon the demerger becoming effective, AGL Energy will progress
towards implementing new internal operational structures during FY22 consistent with the intended
demerged structure, with a view to accelerating the benefits of more focused organisations following the
The key terms and service agreements for the CEO appointments are in the process of being finalised and
an update will be provided to the market at the appropriate time. Further Board and management
appointments for Accel Energy and AGL Australia will also be confirmed in due course.
Mr Botten said: “We are delighted that we have been able to identify Graeme and Christine from within AGL
Energy as the new executive leaders of Accel Energy and AGL Australia. Graeme, in the Managing Director &
CEO role on a fixed-term basis, will provide vital continuity of leadership amid this time of great change for
our company and in the energy sector, as well as deep experience and know-how in running capital
intensive industrial businesses in a complex multi-stakeholder environment.
”Patricia’s oversight of the Board of AGL Australia will provide the new business an unrivalled level of
knowledge and experience in energy market design, governance and regulation. Christine’s elevation to the
role of Managing Director & CEO reflects her outstanding performance in stabilising and growing our
customer business since joining us two years ago. She will bring a passionate customer focus to the
leadership of the business while also providing important continuity.”
Minority ownership and contractual arrangements between Accel Energy and AGL Australia
It is proposed that Accel Energy will retain a minority ownership interest of between 15 to 20 percent in AGL
Australia following the demerger, which will enable Accel Energy to share in the anticipated value creation
in AGL Australia following demerger and provide balance sheet flexibility. Accel Energy will not seek
representation on the Board of AGL Australia and will account for its investment in AGL Australia as a
At demerger, contracts will be in place between Accel Energy and AGL Australia to assist both companies in
managing energy market price and supply risks over the short to medium term. The arrangements will
comprise multiple derivative contracts between the two entities in Victoria and New South Wales, including
fixed contracted volumes and volumes under options contracts, at market prices reflecting standard
commercial energy market terms. Separate bespoke arrangements will be in place in South Australia,
including agreements covering the provision of gas by AGL Australia to supply Accel Energy at Torrens
Island Power Station, and the sale of electricity derivative products by Accel Energy to AGL Australia.
After FY23, the contracted volumes will reduce to account for the closure of the Liddell Power Station in
New South Wales and to provide additional contracting flexibility. This arrangement will provide Accel
Energy with the opportunity to contract directly with major industrial customers and other retailers, while
enabling AGL Australia to increase supply from other sources. These volumes will be priced with reference
to market prices for the relevant products at that time. It is anticipated that firm contracted volume
arrangements will end no earlier than FY27.
A heads of agreement will be in place to support potential contracting activity between the two companies
as they pursue their transition strategies beyond FY27.
Further details of the offtake arrangements between the two entities will be provided in the demerger
scheme documents. It is anticipated that a transitional services agreement will be in place between the two
companies for a period for the provision of certain services.
Demerger process and timing
The proposed demerger is subject to final AGL Energy Board, ATO and relevant regulatory, court and shareholder approvals. The demerger is proposed to occur as follows:
- AGL Energy will be renamed Accel Energy.
- Accel Energy will undertake a capital reduction, which will be wholly applied to the acquisition of shares in AGL Australia.
- Following these steps, shareholders will hold one share in Accel Energy (previously their AGL Energy share) and one share in AGL Australia for every share they owned in AGL Energy (on the applicable record date).
A scheme booklet containing detailed information about the demerger is expected to be sent to
shareholders to enable shareholder meetings to consider and vote on the demerger and implementation of
the demerger in the fourth quarter of FY22.
In the months prior to demerger, the ASX stock code for AGL Energy will change from “AGL” to “AXL”, which
will remain post demerger, to reflect the change in AGL Energy’s name to Accel Energy. AGL Australia, the
newly created entity, will then obtain the ASX stock code “AGL” post demerger.
AGL Energy anticipates that, on demerger, a share top-up facility will be put in place to enable small
shareholders to subscribe to increase or decrease their investment in Accel Energy or AGL Australia.
Accel Energy post demerger
Accel Energy will retain AGL Energy’s position as Australia’s largest baseload electricity supplier via the Loy
Yang A, Macquarie Generation and Torrens Island sites and will prioritise the responsible operation of these
sites and facilitate their accelerated transition to low-carbon industrial energy hubs. Accel Energy will also
be Australia’s largest operator and offtaker of wind energy via the Macarthur, Hallett, Wattle Point and
Oaklands Hill wind farms, with the potential to develop 1,600 MW of new wind projects.
AGL Energy has today published a carbon transition statement for Accel Energy highlighting its role in an
accelerating energy transition and commitment to publishing progressive decarbonisation targets. Full
details of this statement are included in the accompanying slide presentation to this release.
Accel Energy will work with government and other key stakeholders and policy decision-makers to advocate
for the establishment of effective frameworks to enable an accelerated energy transition that protects
affordability and system security, as well as the fair economic interests of its workforce and capital
providers. This will require market design that recognises the value of existing infrastructure, the support
required for new generation and system security services, and the benefits that can be derived from
incentives to accelerate industrial decarbonisation.
Capital structure and capital allocation
Accel Energy is expected to establish syndicated bank debt facilities comprising an amortising term loan of
up to $800 million, as well as revolving cash advance and swingline facilities to fund short-term working
capital and liquidity requirements.
Accel Energy will adopt financial policies consistent with the maintenance of an investment grade credit
rating, supported by its leading low-cost position in the electricity generation sector and a prudent debt
structure. Accel Energy will also benefit from additional balance sheet flexibility provided by the
shareholding in AGL Australia.
This structure aligns with the cash flow profile of Accel Energy, enabling sufficient free cash flow to support
the payment of an appropriate level of dividends. More details on dividend policy, including the share of
free cash flow initially available, will be communicated in the demerger scheme documents. Thereafter,
subject to Accel Energy Board discretion, it is anticipated Accel Energy will communicate expected dividends
as a proportion of available free cash flow on a periodic basis. It is noted that the level of free cash flow
available for dividends is likely to remain leveraged to movements in wholesale electricity prices.
Accel Energy’s debt structure, combined with the maturation of onerous contracts on legacy wind farm
offtake arrangements, will result in the company having materially lower financial obligations post FY30.
This will balance risk as environmental restoration cash flows begin to increase in future years with the
closure of the Bayswater, Torrens Island and Loy Yang A power stations.
It is anticipated that Accel Energy will seek to leverage significant demand from capital providers to fund
attractive energy transition projects in line with its strategy to redevelop these sites as low-carbon industrial
Subject to the successful execution of these strategies, it is anticipated the timing of rehabilitation cash
flows may be able to be reshaped, or that the cost of rehabilitation may decrease, as the economic life of
operating sites is extended beyond that of thermal generation.
AGL Australia post demerger
The newly created AGL Australia will be Australia’s largest energy-led multi-product retailer of essential
services to households and businesses, providing more than 4.5 million1 electricity, gas, broadband and
other services. AGL Australia will own and operate Australia’s largest private hydro fleet as well as fast-start
gas-fired power stations, a growing battery development portfolio and other wholesale and decentralised
electricity and gas trading, storage and supply capabilities. AGL Australia will also own AGL Energy’s 20
percent equity investment in PowAR and 50 percent investment in ActewAGL’s retail operations.
AGL Australia will be carbon neutral for scope 1 and 2 emissions, with a clear pathway to carbon neutrality
for all electricity supply following the cessation in the late 2020s of the initial electricity offtake
arrangements it will establish with Accel Energy.
AGL Australia will work with stakeholders to advocate for reforms that drive the continued uptake and
integration of decentralised energy services, electric vehicles, broader demand-side participation, and the
development of new flexible generation. Such reforms must aim to maximise shared value between energy
businesses and customers, leverage private sector investment and minimise energy costs on households
Capital structure and allocation
AGL Australia is expected to establish bilateral multi-option bank facilities in aggregate totalling
approximately $2,000 million, complemented by new US Private Placement notes replacing AGL Energy’s
existing $910 million2 in US Private Placement notes.
AGL Australia will adopt financial policies consistent with maintaining an investment grade credit rating,
supported by the essential nature of the services it provides, strong brand and competitive position.
Subject to AGL Australia Board discretion, given the relatively predictable and stable nature of its business, it is anticipated AGL Australia will target a dividend payout ratio range referable to underlying earnings after tax. Further detail of this dividend policy range will be communicated in the demerger scheme documents.
It is anticipated that AGL Australia’s short to medium-term investment focus will be on continued development of its multi-product capabilities, customer systems and flexible energy trading, storage and supply. It is anticipated that AGL Australia will continue to source the majority of its electricity supply in a “capital light” manner via offtake arrangements, including those with Accel Energy and PowAR.
1 Includes approximately 300,000 services of ActewAGL, in which AGL Australia will own a 50 percent shareholding in the retail operations.
2 Comprises US$695 million of notes and $50 million of Australian dollar denominated notes, prior to fair value adjustments.
AGL Energy prior to demerger
AGL Energy has commitments to support the proposed value-adding growth investments such as the
company’s 20 percent equity share in PowAR’s acquisition of Tilt Renewables (which is expected to close in
August 2021) and the development of the Torrens Island battery (taking place in FY22 and FY23).
As a result, AGL Energy is today announcing the following dividend actions:
- Termination of the Special Dividend Program, meaning AGL Energy no longer intends to pay out an
additional 25 percent of Underlying Profit after tax for the FY21 final dividend or in FY22; and
- Intention to underwrite the Dividend Reinvestment Plan (DRP) for the FY21 final and FY22 interim
ordinary dividends during the demerger planning period.
The DRP underwrite program will enable shareholders to elect either to receive a cash dividend or
participate in the DRP by subscribing to receive AGL Energy shares in lieu of cash payment. AGL Energy will
appoint an investment bank to underwrite an amount equal to the total dividend payment. Any shortfall in
subscriptions from AGL Energy shareholders for new shares under the DRP will then be issued to the
underwriter. The underwriter will arrange for the sale of any shortfall volume on market. The DRP
underwrite will enable AGL Energy to retain cash within the business equal to the total value of each
dividend during the period it operates. Further details will be provided when each dividend is declared.
The termination of the Special Dividend Program combined with the DRP underwrite have the capacity to
preserve approximately $400 million to $500 million in cash within AGL Energy prior to execution of the
demerger, thereby supporting Accel Energy and AGL Australia in retaining strong and flexible balance
sheets after the demerger.
These actions are in addition to the efficiency initiatives announced at AGL Energy’s 30 March 2021 market
update including a targeted reduction, from FY20 levels, of $150 million in operating expenditure in FY22
and $100 million in sustaining capital expenditure by FY23. AGL Energy is making solid progress with these
initiatives and will provide a detailed update at its FY21 full-year results announcement in August 2021.
Update on earnings outlook
AGL Energy has today announced it expects underlying earnings for the current financial year (FY21) to be
within the company’s previous guidance as follows:
- Underlying EBITDA is expected to be within the lower half of the previous range of $1,585 million
to $1,845 million; and
- Underlying NPAT is expected to be around the middle of the previous range of $500 million to
$580 million. This includes approximately $90 million of insurance proceeds relating to the FY19
Unit 2 outage at the Loy Yang A power station, consistent with previous guidance. In addition, it
includes a net benefit of approximately $25 million from a change in accounting policy that
reduces historically capitalised costs relating to software as a service.
For FY22, AGL Energy continues to anticipate a material step-down in earnings as a result of the lower wholesale electricity prices of the past two years now being realised through forward sold positions, as well as the non-recurrence of the insurance proceeds noted above and increases to wholesale gas supply costs.
AGL Energy will host a conference call to discuss today’s announcement at 11:15am Australian Eastern Standard Time. Access to the conference call is via pre-registration through the following website link: www.agl.com.au/marketupdate. Upon registration, participants will be provided with a dial-in code to access the conference call facilities. A transcript and archive of the conference call will be made available on AGL Energy’s website, shortly after the event.
Authorised for release by AGL’s Board of Directors.
The full release can be found here.