A P62-BILLION hydropower investment by First Gen Corp. in Prime Infrastructure reportedly contains a “poison pill” provision that could result in a penalty of about P16 billion for the Lopez Group if top executive Federico “Piki” Lopez and his designated representatives are removed from the company.
In a statement on Monday, majority shareholders led by Piki’s cousin, Eugenio “Gabby” Lopez III, alleged that the provision effectively tied the terms of a potential buyout to the continued leadership of Lopez.
“This is self-dealing at the expense of all First Gen shareholders and for the exclusive benefit of Piki and his cohorts,” the group said, adding that the arrangement was only disclosed during a board meeting and taken up in an executive session lasting about an hour.
The Manila Times sought the side of Piki Lopez and First Gen through their representatives regarding the allegations, but no response had been received as of press time.
Piki, ousted as CEO of Lopez Inc. last month over allegedly questionable transactions that include the sale of First Gen natural gas assets to Prime Infrastructure Capital Inc. (Prime) and the acquisition of a stake in the latter. Piki, however, remains at the helm of the privately held family firm, having obtained a court restraining order.
The majority claimed that the details of the so-called poison pill — a mechanism typically used to deter hostile takeovers — had not been fully disclosed to shareholders or properly reported to the stock exchange, raising transparency concerns given First Gen’s status as a listed company.
Based on the group’s account, First Gen initially acquired a 40-percent stake in Prime Infra’s hydropower business for P75 billion before reducing it to 33 percent, valued at just over P62 billion. The majority bloc claimed these changes were not submitted for shareholder approval prior to board deliberations.
First Gen has said that it enters into transactions only with board approval and after “transparent and rigorous evaluations.” The deal with Prime Infra, it said, was unanimously greenlit by its board.
The Lopez majority, however, questioned the governance structure of the transaction, including why Lopez allegedly surrendered certain control rights and whether Prime Infra paid a premium in exchange for consolidated control of the hydropower assets.
They added that Lopez was previously removed by a 5–2 board vote from Lopez Inc. for loss of trust and confidence, but a court order subsequently blocked his ouster and prevented further removal actions within related companies.
First Gen shares on Monday dropped P0.56, or 3.04 percent, to close at P17.86 each amid a 0.72-percent fall for the benchmark Philippine Stock Exchange index.
