AGL Energy CEO Brett Redman has announced he is stepping down immediately, just weeks after announcing new plans to split the assets of Australia’s biggest coal generator, and the country’s biggest emitter, in two.
In a statement to the ASX on Thursday, AGL said that Redman made the unexpected decision to step down from the CEO and managing director roles after informing the board that he believed he could not make a long term commitment to the company after announcing the proposed split.
Redman will remain available to AGL through to the end of his notice period, through to October 21, but will hand over responsibility for running the company immediately.
AGL’s current chairperson, Graeme Hunt, has been appointed interim managing director and CEO, and will stand aside from the chairperson role.
Hunt will take on responsibility for leading AGL through the structural separation process and identifying appropriate long-term leadership needs for the company. AGL non-executive director Peter Botten – a former boss of Oil Search – will step into the chairperson role.
In March, AGL revealed plans to separate the business into two, with the company’s fossil fuelled power stations being carved out into a separate “PrimeCo” business – while AGL’s core brand will retain its energy retail business and its renewable energy generation portfolio.
The split would allow AGL’s brand to transition to become a “carbon neutral” supplier of energy services, while its “PrimeCo” will operate the company’s fleet of coal and gas power stations, including the Liddell, Bayswater and Loy Yang A coal-fired power stations, which are expected to close in coming decades.
The generation portfolio, which includes some of Australia’s largest coal generators, sees AGL rank as Australia’s single largest greenhouse gas emitter and responsible for around 8.2 per cent of Australia’s total emissions.
Redman’s departure also comes as the company is leading a takeover of ASX-Listed renewable energy developer Tilt Renewables, with a consortium led by AGL’s Powering Australian Renewables Fund making a $2 billion play for Tilt’s Australian assets.
Redman is stepping down from AGL after almost 15 years with the company and said he was pleased to see AGL endorse his plan to separate the business into two entities.
“After almost 15 years with AGL, I am proud of the contribution I have made to growing Australia’s largest multi-product energy retailer, assembling Australia’s largest electricity generator and founding Australia’s largest renewable investment fund,” Redman said in a statement to the ASX.
“I am also pleased to have established the case for the structural separation of the business. The timing of my departure will enable the leadership team to be established to execute upon the separation strategy and lead the business into its next chapter.”
Botten added that he believed his appointment and that of Hunt to AGL leadership positions would provide continuity of leadership within the company.
“I am honoured to be appointed Chairman of AGL. I want to add my thanks to Brett for his service to the company and to recognise Graeme for agreeing to take up the role of Interim CEO while we work through this important period,” Botten said.
“This will provide important continuity of leadership for the business and certainty for our people and shareholders while we work through the considerations of structural separation and establish a platform for future success.”
AGL has battled through a period of low energy prices, and recorded a $2.7 billion write down as a result of ‘onerous contracts’ relating to electricity offtake agreements.
The company was also forced to back out of a plan to construct a new gas import terminal at Point Crib in Victoria, after the project was met with strong opposition from environmental groups who argued the project was unnecessary and posed an unacceptable risk to the local coastal areas.
AGL shares traded below $9 in early morning trading, dropping around 2.5 per cent to $8.85 per share on the news. AGL’s shares have fallen considerably in recent years, down from a high mark recorded in early 2017 of above $27 per share, and are currently trading at an all time low since the re-listing of AGL Energy following a merger with Alinta in 2006.
Redman will leave AGL as a “good leaver”, leaving the company with the agreement of the board, ensuring the outgoing CEO will be entitled to a change of remuneration benefits and incentives.