Lopez group questions First Gen deal terms

THE LOPEZ FAMILY majority has raised concerns over the structure and disclosure of First Gen Corp.’s planned investment in the hydropower business of Prime Infrastructure Capital, Inc., reviving tensions within the family weeks after both sides signaled a pause in their dispute.

In a statement on Tuesday, the Lopez majority alleged that First Gen Chairman and Chief Executive Officer (CEO) Federico “Piki” Lopez had agreed to invest P75 billion for a 40% stake in Prime Infrastructure’s hydropower platform, consisting of a P50-billion transaction premium and P25 billion in construction equity.

“The Lopez majority found out about this ‘scandalous’ premium only recently from board documents,” the group said.

It added that the arrangement also included provisions it described as “poison pills” that could expose First Gen to about P24 billion in costs and trigger defaults among related companies if Mr. Lopez were removed from his post.

A member of First Gen’s public relations staff did not immediately reply to a Viber message seeking comment.

The group said First Gen’s public disclosure did not specify the transaction premium and instead stated that P62.5 billion would directly fund project construction and equity requirements.

It also questioned the subsequent reduction of First Gen’s stake in the hydropower platform to 33% from 40%, lowering the transaction value to P61.88 billion.

“At this reduced amount, Prime needs to put up only P625 million to finish the project in 2030 for 67% of the profits,” the Lopez majority said.

“In effect, Piki funded the whole project that is yet to be built, has no cash flow for years, and faces multiple completion risks. This is a horrible deal for First Gen,” it added.

The group called on the Philippine Stock Exchange and Securities and Exchange Commission to review the transaction and require more detailed disclosures on both the original and revised agreements.

It also argued that reducing the stake weakened First Gen’s governance position by removing strategic minority veto rights while giving Prime Infrastructure effective control of the venture.

The Lopez majority said it has requested more documents related to the transaction and questioned whether First Gen’s board, including independent directors, received sufficient information before approving the deal.

In May, the Lopez majority bloc of Lopez, Inc. withdrew a Feb. 27 board resolution seeking to remove Mr. Lopez as president and CEO, signaling a temporary easing of tensions within the family.

The bloc, which said it controls 71% of Lopez, Inc., said at the time that the withdrawal would allow family members to reassess their positions and explore options that would cause less harm to all parties. — Alexandria Grace C. Magno