FIRST Gen Corp. on Tuesday confirmed that its agreements with Prime Infrastructure Capital Inc. (Prime Infra) contained a so-called “poison pill” if chairman and CEO Federico “Piki” Lopez and his representatives were removed from their posts within a certain timeframe.
In a clarification to the stock exchange, First Gen said the deal included “change of management control” provisions that could be triggered if any internal leadership changes occur during construction of the Wawa and Pakil hydro power projects and up to the first anniversary of their commercial operations.
If such provisions were triggered, First Gen could be exposed to a potential loss of around P23 billion as it could be forced to sell its shares in Prime Hydropower Energy Inc. (PHEI) to Prime Infra at a discount of 25 percent of the purchase price, amounting to about P15.5 billion.
Additionally, First Gen could also be forced to sell its shares in the gas plants to Prime Infra at the same discount of 25 percent, or about P8 billion.
First Gen explained that a change in control may occur under several scenarios, including if Piki Lopez or his designated representatives cease to hold key leadership roles in the company and its affiliates.
“These contractual arrangements were requested by Prime Infra,” First Gen claimed.
The clarification came after a strongly worded press statement on Monday from Lopez Inc. majority shareholders led by Piki’s cousin Eugenio “Gabby” Lopez III.
The group called on Piki to accept his removal from the family holding firm and accused him of clinging to power despite a “perfectly legitimate dismissal” by a 5-2 board vote for cause and loss of confidence.
The group also raised concerns over the First Gen-Prime Infra deal, saying that the “change of control” provision could expose First Gen to billions of pesos in penalties if Piki and his group were removed.
The group denied Piki’s claim that his ouster was linked to his stance on funding ABS-CBN Corp.
Instead, it alleged that Piki had proposed shutting down and liquidating ABS-CBN last year, a move the majority said it opposed in favor of keeping the network operational and preserving jobs.
First Gen shares dropped P0.46, or 2.58 percent, to close at P17.40 per share on Tuesday.
