Views Article – Sharenet Wealth

Australasia, News

AGL Energy CEO abruptly quits amid company plan to split, shares tank

* CEO Brett Redman’s exit stuns market

* Investors raised concern about Redman’s leadership – analyst

* AGL shares drop 4.5% to record low (Adds analyst comment, share price reaction)

By Sonali Paul

MELBOURNE, April 22 (Reuters) – The boss of AGL Energy resigned suddenly on Thursday, just two-and-a-half years into the role and less than a month after Australia’s top power producer and retailer announced plans to split into two.

Shares in AGL, already the second-worst performer in Australia’s top 200 over the past year, sank more than 4% to a record low of A$8.65 after the announcement that Brett Redman was stepping down immediately.

Chairman Graeme Hunt will take over as chief executive in the interim and lead the company through planning for the split into a bulk power generator and a retail business, which the company has promised to elaborate on by the end of June.

“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,” Redman said in a statement.

Investors and analysts were stunned by Redman’s departure after he enthusiastically promoted the split plan on March 30.

“Despite the share price performance – which makes for pretty grim reading – he was still quite a new CEO. He was trying as hard as he could to take the business in a new direction,” said an analyst who declined to be named ahead of publishing a research note.

Investors had started asking questions about Redman’s capability to lead the company after AGL disclosed last month it had spent A$100 million ($78 million) on a gas import project before even reaching a final investment decision (FID) on it, the analyst said.

The project was rejected by the state of Victoria on March 30.

“That’s a lot of money to have spent on a project that hasn’t made an FID. That attracts investors’ attention,” the analyst said.

There was also disappointment that AGL had flagged in February it would announce plans on its future capital structure by the end of March, but then in March only provided a broad vision of a plan to split, with no details on capital structure.

($1 = 1.2895 Australian dollars) (Reporting by Sonali Paul in Melbourne; Additional reporting by Shruti Sonal in Bengaluru; Editing by Ramakrishnan M., Devika Syamnath and Richard Pullin)

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