* New AGL would be retail focused
* PrimeCo would be a bulk power generator
* Shares drop 3.5% after state rebuffs LNG import plan
MELBOURNE, March 30 (Reuters) - Australia's top power
producer and energy retailer AGL Energy on Tuesday
unveiled a plan to split into a bulk power generator and a
retail business, in a bid to revive its battered shares and lure
investors who shun coal.
The move comes after a 35% slump in its shares over the past
year made AGL the third worst performer among Australia's top
200 companies.
AGL, Australia's biggest polluter, has been weighing an
overhaul as wholesale power prices have nearly halved over the
past three years with an influx of wind and solar power. At the
same time the government has forced power retailers to cut
prices and investor appetite for coal-fired power has waned.
"What we are doing here is recognising that markets are
evolving and evolving rapidly," AGL Chief Executive Brett Redman
told analysts.
The aim is to create two businesses - New AGL and PrimeCo -
each with a different focus within the transition to cleaner
energy.
New AGL would be a carbon neutral retailer delivering
electricity, gas, internet and mobile services, while owning
flexible power assets such as gas-fired power plants and
batteries.
PrimeCo would hold the company's coal-fired power plants and
wind farms, supplying New AGL, other retailers, aluminium
smelters, and other industrial customers.
"It has strong cashflows, and you would expect it would have
a strong yield as well," Redman told Reuters.
Analysts were unable to assess what the two companies would
be worth as AGL, which has a market capitalisation of A$6.1
billion ($4.7 billion), has yet to decide on their capital
structure.
A fund manager said in the near term it's too hard to invest
in AGL, with the government threatening to build new power
plants, which could lead to an oversupply of power.
"In the short term, you've got a clear and present danger
with what the government's doing," said Jason Teh, chief
investment officer at Vertium Asset Management.
AGL's shares rose as much as 3.3% after unveiling the plan
but then slid 3.5% after the state of Victoria rejected AGL's
separate proposal to build a liquefied natural gas (LNG) import
terminal.
($1 = 1.3079 Australian dollars)
(Reporting by Sonali Paul; Additional reporting by Rashmi Ashok
in Bengaluru; Editing by Anil D'Silva and Richard Pullin)