Loan to own? Grok confident of 11.3pc control of AGL


“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 per cent at the relevant time against the demerger,” it said.

Mr Cannon-Brookes has been an ardent critic of AGL and has been actively campaigning against the company’s planned demerger.

He initially teamed up with Canadian conglomerate Brookfield in a bid to buy AGL, but returned earlier this month to reveal an 11.28 per cent stake in AGL amassed through a swap transaction and a collar loan.

Loan to own?

But the complexity of the transaction and the reliance on borrowed shares prompted proxy advisers to inform their large institutional shareholder clients to review their securities lending agreements if they intended to vote on the demerger. That was because their shares may have been loaned to Grok.

AGL also stepped up the pressure, as CEO Graeme Hunt said Mr Cannon-Brookes’ “end-game” was being questioned by investors.

Mr Cannon-Brookes had been defiant that he would be able to vote the full relevant interest he claimed.

Wednesday’s announcement confirmed that the equity swap component that accounted for 2.84 per cent of the shares was unwound, which had the effect of converting a derivative position into a cash position.

Of the remaining 59.1 million shares in a collar structure, that was “partially unwound”, leaving just 8,2 million shares subject to the existing arrangement.

On Tuesday, Mr Cannon-Brookes wrote to retail investors that account for about half of AGL’s share register – but who often don’t vote on company resolutions – to support his objection to the demerger.

“Grok’s interests are aligned with AGL shareholders,” Wednesday’s statement said.

“Grok would again like to highlight the AGL board’s lack of skin in the game, with directors holding less than 0.02 per cent of shares in the company.”

The announcement may dispel doubts about the true ownership of the shares. But some market participants are reserving judgment until JPMorgan files its disclosures to update changes to its relevant interest in AGL, and are keen to determine where the shares were sourced from.

At least 75 per cent of AGL’s voting shares need to be cast in favour of the demerger plan for it to go ahead.

Show some Love^^