FIRST Gen Corp. on Friday said BDO Unibank Inc. had issued a total of P24.75 billion in standby letters of credit in support of its acquisition of a 33-percent stake in Prime Hydropower Energy Inc. (PHEI).
In a disclosure, First Gen said the letters of credit, amounting to P9.9 billion and P14.85 billion, respectively, were issued in favor of wholly owned unit FGEN Aqua Power Holdings Inc., which now holds the stake in PHEI, a member of the Razon group.
PHEI is currently developing two major pumped storage hydro projects: the 600-megawatt Wawa facility and the 1,400-megawatt Pakil project, both seen as critical in stabilizing the grid and supporting the country’s transition to renewable energy.
BDO’s credit backing, however, comes with stringent covenants centered on maintaining leadership continuity within the First Philippine Holdings (FPH) Corp. group, majority owner of the renewable energy firm.
“The leadership continuity covenants provide, among others, that the occurrence of a change of management control is an event of default in outstanding loans of the FPH group,” the disclosure read.
These conditions are closely tied to the continued leadership of Federico “Piki” Lopez, chairman and chief executive of First Gen and a key figure in the Lopez-led FPH group, according to the statement.
Under the agreement, a change of control may be triggered if Lopez, or his designated representatives, ceases to hold critical roles, including his position as chief executive of First Gen, his influence over the company’s executive committee, or his role in voting First Gen’s shares in PHEI.
It also includes scenarios where Lopez steps down from the FPH board or if his family’s ownership in Lopez Inc. falls below a specified threshold.
BDO said the structure underscores the importance of Lopez’s continued involvement in the hydro projects, effectively linking the group’s financing arrangements to his leadership.
The bank’s terms highlighted that maintaining Lopez at the helm was “necessary, vital and indispensable,” and that replacing him “will trigger defaults in the loan agreements of the FPH group.”
Market observers said the arrangement reflects lenders’ preference for stability in large-scale, capital-intensive energy projects, particularly in ventures such as pumped storage hydropower that require long development timelines and consistent strategic direction.
The transaction further strengthens First Gen’s position in the renewable energy space, as it deepens its exposure to hydro assets that complement its existing portfolio of geothermal, wind and solar projects.
Piki 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 transaction with the Razon group.
A court has issued a restraining order against Piki’s removal.
The Lopez Inc. majority has criticized what it called a “poison pill” that would be triggered if Piki were removed. First Gen said that the Razon group had pushed for the inclusion of the “key man” provision.
BDO shares on Friday rose P0.90, or 0.76 percent, to close at P119.50 each, while those of First Gen added P0.10, or 0.57 percent, to P17.78 apiece, both outperforming the benchmark Philippine Stock Exchange index which ended down 1.07 percent.
