Thursday 22 April 2010

Integral, AEMO may face litigation over Jackgreen

Age
Monday 19/4/2010 Page: 3

Integral Energy and the Australian Energy Market Operator could face legal action over their role in the collapse of renewable energy company Jackgreen Energy. Jackgreen Energy, which was Australia's largest, specialist renewable retailer, toppled into voluntary administration in December after it failed to pay a $500,000 bill to the New South Wales government-owned Integral Energy. At the time the company said it was squeezed out of business by its bigger rival, which took most of its customers soon after the corporate paramedics were appointed.

Now its administrator, PKF, is mulling possible actions against state-owned power companies and AEMO, which suspended Jackgreen Energys power retail licence soon after administrators took charge. In a report to creditors of Jackgreen Energy International, a wholly owned subsidiary of the listed company, PKF recommended creditors put the company into liquidation at a meeting this week. This could pave the way for potential action against Integral, which is estimated to have gained 15,000 of Jackgreen Energys customers.

According to industry rules of thumb, acquiring Jackgreen Energy's customers would have been worth $10 million to $17 million to the government-owned retailer, which is for sale this year. The report estimated that trade creditors, which include Origin Energy and AGL Energy, will receive between 0.54¢ and 3.6¢ in the dollar. Most of its 100 staff have been sacked, and shares in the group are effectively worthless. In the concentrated industry of power retailing, Jackgreen Energy's collapse highlights the difficulties of small players trying to salvage value once they are in financial stress.

Administrators were required to move all Jackgreen Energy's customers to a rival because of restrictions to ensure power supply was unthreatened. This destroyed nearly all the value in the business. Administrator Atle Crowe-Maxwell said: "In my opinion there's a conflict between the Corporations Act and National Electricity Market Management Company rules, which don't allow for a company similar to Jackgreen Energy to appoint an administrator for the purpose of restructuring the company or maximising the chances of staying in existence." Separately, administrators said the listed parent company, Jackgreen Energy Limited, might have traded while insolvent from May last year until December.

0 comments: