Sydney, Feb 13, 2006 (ABN Newswire) - The Australian Gas Light Company (ASX: AGL) today announced the structure, strategic direction and outlook for the two new companies, AGL Infrastructure and AGL Energy, that would result from its proposed demerger including forecasts of increased dividends and an outline of growth prospects.
The demerger Scheme Booklet was lodged with the Australian Stock Exchange and the Australian Securities and Investments Commission today and received Federal Court approval on Friday February 10, 2006.
AGL Chairman Mark Johnson said: "AGL's Board believes the demerger proposal is the best strategy for delivering longer-term value to AGL Shareholders. Separating the energy business from the infrastructure business will allow each company to focus on its own strategies and on the core tasks for success providing a clearer investment choice for Shareholders.
"AGL Energy will focus on growth in earnings per share and total shareholder returns. It will have the funding capacity to invest in both retail and power generation assets in its core markets of Victoria, Queensland, NSW and South Australia.
"AGL Infrastructure will derive most of its earnings from regulated tariffs that are paid by users of networks and pipelines and will focus on cash flow growth and the payment of franked dividends. AGL Infrastructure has growth opportunities such as the PNG Australian Pipeline Project and Agility, a provider of asset management services to the Australian infrastructure sector", Mr Johnson added.
Directors' Recommendation
AGL's Directors unanimously recommend that Shareholders vote in favour of the demerger. Directors have indicated in the Scheme Booklet that they will vote all shares held or controlled by them in favour of the demerger.
Independent expert Grant Samuel has also concluded the proposed demerger is in the best interests of AGL Shareholders.
AGL Shareholders will vote on the proposed demerger at General and Scheme Meetings in Sydney on 27 March 2006.
Dividend Outlook
The Scheme Booklet outlines increased dividends for AGL Shareholders as shown below. AGL Shareholders, who continue to hold shares in both AGL Infrastructure and AGL Energy following the implementation of the demerger, are expected to receive combined dividends of 66 cents per share for the 2006 financial year. This includes an anticipated 31 cents per share interim dividend from the current AGL for the six months to December 2005. The forecast total dividend will increase to 77.5 cents per share in 2007.
"These forecast dividends are consistent with the Board's view that the two companies should achieve better outcomes for their owners than can be achieved from a single company seeking to meet a wider range of objectives," Mr Johnson said.
AGL Energy and AGL Infrastructure post demerger
Following the demerger, AGL Energy will:
- be one of Australia's largest energy companies with the largest retail energy and dual fuel (electricity and gas) customer base in the key south-eastern Australian markets;
- own a substantial portfolio of wholesale energy contracts and assets to support is retail customer base;
- have identified development projects that will provide growth opportunities; and
- be expected to deliver high cash flow and future dividend growth for Shareholders.
Following the demerger, AGL Infrastructure will:
- be one of Australia's largest listed energy infrastructure companies specialising in the ownership, management and operation of energy infrastructure;
- consist of regulated energy distribution networks, investments in gas transmission pipelines, contracted electricity generation plans and an asset management and services business, Agility;
- have an identified business growth path through organic growth of the network businesses, future investment in the PNG Australian gas pipeline and Agility.
New Director for AGL Infrastructure
Chairman-elect of AGL Infrastructure Graham Reaney also announced today that Jeremy Maycock, currently Chairman of Cement Australia and Managing Director of the Hastie Group, would join the Board of AGL Infrastructure. Following his appointment, the Board will comprise Mr Reaney as Chairman, Sir Ron Brierley, Charles Allen, Jeremy Maycock and Greg Hayes, Managing Director.
Mr Maycock has almost 30 years experience as a director and executive with manufacturing and resources companies. He has most recently worked as Senior Vice President Australasia/Pacific for Holcim Limited, a world leading heavy construction material company headquartered in and listed on the Swiss Stock Exchange. He was the Managing Director of Milburn New Zealand Limited, one of two major cement manufacturers. He has also held sales and commercial manager positions with the Shell Group in the UK and New Zealand and Tait Electronics in both New Zealand and the USA. He holds formal qualifications in engineering. His appointment will commence after the effective date of the demerger in April 2006.
Additional new directors for AGL Energy and AGL Infrastructure continue to be sought as part of the Board renewal process.
Remuneration disclosures
The Scheme Booklet details the employment contracts and remuneration arrangements for Paul Anthony and Greg Hayes, the Managing Directors of AGL Energy and AGL Infrastructure respectively.
Also disclosed are the accrued statutory entitlements and termination payment for departing Managing Director, Greg Martin. Mr Martin who has spent 25 years with AGL, the last five as Managing Director, will receive a termination payment of $1.9 million plus accrued annual leave and long service leave of $1.56 million, as well as 149,381 share rights previously approved by Shareholders under the long term incentive scheme.
Demerger process
If the proposed demerger is approved by AGL Shareholders, AGL will:
- undertake an internal restructure to establish AGL Energy as the holding company for the retail and merchant energy business;
- undertake a capital reduction of $3.00 per share;
- apply the capital reduction amount on behalf of Shareholders to the purchase of shares in AGL Energy. Each AGL Shareholder will receive one AGL Energy share for every AGL share they hold (with the exception of ineligible overseas Shareholders who will receive the net cash proceeds of sale of their entitlement to AGL Energy shares);
- retain the infrastructure and services business in AGL which will be renamed AGL Infrastructure Limited; and
- apply to the Australian Stock Exchange for AGL Energy to be separately listed.
Demerger Timetable
General Meeting Monday 27 March, 2006
Scheme Meeting Monday 27 March, 2006
Court Hearing for
approval of demerger Thursday 30 March, 2006
Demerger becomes
legally effective Friday 31 March, 2006
Economic Separation
Date Friday 31 March 2006
AGL Infrastructure
Shares commence trading Monday 3 April, 2006
AGL Energy Shares
commence trading Monday 3 April, 2006
Demerger Date - Capital Reduction and transfer
of AGL Energy shares to
Participating
shareholders Thursday 13 April, 2006
