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Origin taps insider to replace King as CEO

AAP logoAAP 8/09/2016 Prashant Mehra

Origin Energy has elevated the head of its gas and power retail business, Frank Calabria, to replace veteran chief executive Grant King.

Mr King announced on Friday he will retire as managing director and CEO at the company's annual general meeting on October 19.

He has led Origin since 2000, when the company was spun out from construction materials supplier Boral, where he was the head of the energy business.

Mr Calabria joined Origin as chief financial officer in 2001, and has been the chief executive of its energy markets business, overseeing power generation and the retail of gas and electricity, since 2009.

He takes the top job in a difficult phase for the company, as it struggles to ride out a collapse in crude oil prices.

Origin has suspended dividends after delivering a full year loss of $589 million in 2015/16, as weak oil prices and a heavy debt burden from its Australia Pacific LNG development weighed for a second year in a row.

Its balance sheet has been stretched as the slump in oil prices coincided with the final stages of construction of the $26 billion APLNG project in Queensland. The project shipped its first cargo in January.

Origin raised $2.5 billion through an equity raising in 2015/16, cut about 2,500 jobs, slash capital expenditure and pledged to sell non-core assets worth $800 million in an effort to repair its balance sheet.

Those efforts have helped it pay down $4 billion of debt.

Mr Calabria said his short term focus would be accelerating debt reduction and improving returns.

"We see lots of opportunities in the energy markets, but we can only look at them once we have been able to reduce our debt," he told AAP.

"At the same time, we are very close to the completion of APLNG and we need to take it from project to operational phase."

Chairman Gordon Cairns said Mr Calabria's appointment followed an extensive search that included several external candidates.

Origin is believed to be considering a demerger of its core energy markets business and its growing oil and gas development unit, but Mr Cairns said the board cannot consider a split with more than $9 billion of outstanding debt.

Origin Energy shares, which have recovered nearly 50 per cent from a January low of $3.44, jumped on news of the new change in leadership. The stock was up 30 cents, or 5.85 per cent, at $5.43 at 1335 AEST.

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