Mike Cannon-Brookes hands over $600 million in cash in AGL fight

On May 18, 2022

Tech billionaire Mike Cannon-Brookes has spend $650 million via his family investment firm, Grok Ventures, for his stake in AGL, including $600 million in cash and $50 million in debt.

The Atlassian co-founder and co-CEO is waging a public campaign to stop a demerger plan for Australia’s biggest energy company.

While the initial stake was in a complex derivatives that meant the shareholders of the borrowed stock could “recall” it at short notice, Grok had JP Morgan execute $300 million in trades on Tuesday to take full control of the shares. Grok now owns the shares.

“Grok has now invested approximately $650 million to build its relevant interest of 11.28% in AGL shares, with close to $600 million funded with cash and the remainder with debt,” a Grok spokesperson said.

“Only 1.21% remains subject to JPM’s right to recall shares under stock borrow arrangements in certain circumstances. At this point in time, JPM has not recalled any shares.

“Given the success Grok has had in unwinding the collar position and reducing the residual borrow risk, Grok is confident that they will be able to vote the full 11.28% at the relevant time, against the demerger. They ask their fellow shareholders to look at the merits of the AGL Board’s proposed demerger and vote against it.”

Yesterday Cannon-Brookes wrote to AGL shareholders about the company’s “deeply flawed” demerger plan. Shareholders are due to vote on the proposal on June 15.

The tech billionaire said the details of the merger proposal release earlier this month “confirms the Board’s lack of leadership and a strategy that misses one of Australia’s biggest economic opportunities, decarbonisation”, with the plan costing around $400-500 million.

“This lack of vision from the Board is consistent with their track record, having spent $0 on direct development of renewable generation over the last five years,” he wrote.

Cannon-Brookes AGL to shutter its coal-fired power stations by 2035, and questions whether the proposed coal spin off Accel Energy will be financially viable.

AGL CEO Graeme Hunt responded that Cannon-Brookes is all block and no plan.

“We’ve been meeting with a number of investors and shareholders over recent days and they are very concerned that Grok has not articulated a plan beyond scuttling the demerger, and are also concerned that they might not be revealing their plan because of what it could mean for shareholder value,” he said.

The Grok spokesperson also took a swipe at AGL’s directors saying the Board members “lack skin in the game” with a combined holding of less than 0.02% of shares in the company.

“Grok implores the AGL Board to start preparing for AGL’s future and the potential outcome that the demerger does not proceed,” they said.