FIRST Gen Corp. on Thursday said a contentious “key man” provision in its hydropower agreements with Prime Infrastructure Capital Inc. (Prime Infra) was introduced at the request of its partner, pushing back against claims that the clause was designed to entrench current management.
The firm said the provision, formally known as a change of management control (CMC) clause, is commonly used in large-scale energy projects to protect investors by ensuring continuity in leadership.
The clause designates First Gen Chairman and CEO Federico “Piki” Lopez and his team as key personnel whose continued involvement was considered critical to the execution of two pumped storage hydro projects being developed with Prime Infra.
These projects include the 600-megawatt Wawa facility in Rizal and the 1,400-megawatt Pakil project in Laguna.
Under the agreements, certain changes in leadership, such as Lopez stepping down as chief executive or losing board control, could trigger the CMC provision.
In such cases, Prime Infra will have the option to require First Gen to sell its stake in the joint venture at a steep discount of 25 percent during the construction phase and up to one year after commercial operations begin.
First Gen said the inclusion of the clause reflected its partner’s reliance on its management team, noting that such provisions were typical in capital-intensive infrastructure ventures where execution risks were closely tied to leadership continuity.
The company issued the clarification following scrutiny over the provision, which the majority of a Lopez family holding firm’s board has likened to a “poison pill.” Piki Lopez is currently embroiled in a dispute with his cousins at Lopez Inc., where he was removed as president and CEO in February over allegedly questionable deals that include the Prime Infra transaction.
A court has issued a restraining order against Piki’s removal.
First Gen shares on Thursday rose P0.18, or 1.03 percent, to close at P17.68 each.
