Australia’s biggest climate polluter, AGL Energy (ASX:AGL) has rejected a joint takeover bid by tech billionaire Mike Cannon-Brookes and Canada’s Brookfield Asset Management, saying the proposal “is not in the best interests of AGL Energy shareholders”.
The duo made the offer on Saturday in a move to rapidly accelerate the closure of AGL’s coal assets – the Bayswater Power Station in NSW’s Hunter Valley and Loy Yang A Power Station in Victoria – before an emergency board meeting was called on Sunday.
According to reports, the $8bn offer was at a 4.6% premium to AGL Energy shares, which closed on Friday at $7.16, and a 20% premium to the average traded price in the past month.
It meant a fast-track of AGL’s decarbonisation plans with a strategy to achieve net zero emissions by 2035, rather than its current 50% reduction in emissions plan by 2030 from the levels of fiscal 2019.
But in a market announcement this morning, AGL Energy said it rejected the “unsolicited, preliminary, non-binding” indication of interest because it “materially undervalues the company on a change of control basis” and is not “in the best interest of AGL Energy shareholders.”
“…The board believes AGL Energy shareholders would be forgoing the opportunity to realise potential future value via AGL Energy’s proposed demerger as both proposed organisations pursue decisive action on decarbonisation,” AGL Energy chairman Peter Botten said.
Earlier this month, AGL brought forward the planned closure date of the Bayswater black coal plant in New South Wales to no later than 2033, and Loy Yang A in the Latrobe Valley to 2045.
Under these plans, the company will be burning coal more than a decade longer than they should be which does not meet the target of achieving average global warming at 1.5°C.
And even worse, instead of taking any meaningful action, AGL has decided to split off its coal and gas generation assets and retail business into Accel Energy and AGL Australia.
A long, slow fight ahead
But Institute for Energy Economics & Financial Analysis Bruce Robertson says this is only round one of a title fight.
“Mike has $20 billion he wants to throw at renewable energy investment, AGL is worth about $8 billion – he hasn’t launched this bid expecting it to be the last and this just means the bell has gone for round one,” he said.
“This is just the beginning of the fight and it is going to be a long, slow one, so settle in. We are just cracking open the first packet of chips but there will be a full three course meal ahead; we are only in the pre dinner drinks stage.”
Last week the New South Wales Treasurer and Energy Minister Matt Kean said commercial interest in renewable generation and storage projects, representing almost 40 gigawatts and more than $100 billion of potential investment, had been received in the registration of interest for the Hunter-Central Coast Renewable Energy Zone (REZ).
The Hunter-Central Coast Renewable Energy Zone is where AGL’s Bayswater Power Station resides and includes NSW’s highest concentration of coal workers.
This proves the idea that NSW can accelerate its electricity sector decarbonisation, which is 100% aligned with investor appetite, energy finance analyst Tim Buckley says.
“We have eight years to prepare, we have a state government that wants to go forward and facilitate it and we have the biggest customer in New South Wales – Tomago Aluminium – with a clear mandate to 100% decarbonise in this decade by 2029 and AGL Energy is in a box seat to facilitate that as a supplier of the electricity,” he said.
“We need a company with the strategic direction and credibility to actually implement it. There’s a powerful alignment of investors, government, and corporate interests or there’s the alternative, which is to stick with the Luddite board.
“Now we wait to see how Mike Cannon-Brookes and Brookfield responds and how investors respond because ultimately, investors are the owners of AGL and they need to decide if they stick with the incumbent, laggard board and pay hundreds of millions of dollars to investment bankers to de-merge the company or decide to go for the impact capital and clear leadership of Mike Cannon-Brookes and strap on for the ride ahead.”
Credit approval for $35mn debt facility for Bouldercombe Project
The final credit approvals, including an agreed loan note subscription agreement have been received for Genex Power’s (ASX:GNX) 50MW/100MWH Bouldercombe Battery Project in central Queensland, set to be one of the first standalone large-scale Battery Energy Storage Systems in the state.
GNX has also entered into a cooperation agreement with Infradebt where both parties have agreed to work together on future merchant battery projects in Australia.
The company says the loan provides for a fixed interest rate over a tenor extending 12 years from the commencement of operations, scheduled for the second half of 2023.
“Importantly, the debt facility provides leverage against both the fixed and floating revenue streams under the off-take arrangements with Tesla Motors allowing Genex to maximise leverage and project economics,” it said.
Genex will now be working through the final conditions precedent with Infradebt, executing the loan documentation and taking the project to financial close.
UK grant for low-carbon cement development
First Graphene (ASX:FGR) is now part of a consortium which has been awarded a UK Government grant to develop high performance graphene-enhanced cement.
The £190,034 ($360,206) grant was awarded by the Government’s innovation agency, Innovate UK, and was secured by the consortium which is led by First Graphene.
Other groups in the consortium include construction materials group Breedon Cement, construction and regeneration group Morgan Sindall Construction & Infrastructure, and the University of Manchester’s Department of Mechanical, Civil and Aerospace Engineering.
The manufacture of clinker, which binds and strengthens cement, is a primary contributor to CO2 emissions and the UK cement industry is actively exploring methods to produce cements with lower clinker factor to increase the sustainability of cement products.
First Graphene’s PureGRAPH products have previously been shown in external testing to enhance the performance of cement composites, increasing compressive strength by 34% and tensile strength of cement mortar by 27%.
FGR managing director and CEO Michael Bell said this as an excellent opportunity to develop graphene enhanced concrete products at scale with exceptional visibility across the cement and construction sectors.
“It is also a major achievement to have secured this funding in a very competitive environment, which is testament to the consortium’s manufacturing and engineering capabilities,” he said.
“It is important to note that this is one of multiple collaborations with industry that the company is undertaking with a view to building our pipeline of commercial opportunities over the coming months.”