STATE pension funds and international foreign investor KKR & Co. could face billions of pesos in potential losses due to so-called “poison pills” in deals between First Gen Corp. and Prime Infrastructure Inc. (Prime Infra), the majority group of Lopez Inc. said on Wednesday.
The group, led by Eugenio “Gabby” Lopez III, cousin of First Gen President and CEO Federico “Piki” Lopez, called for a government probe, claiming that both state-run Social Security System (SSS) and the Government Service Insurance System (GSIS) risk losing part of their investments if the provisions are triggered.
The provisions allow a related party to acquire First Gen’s gas and hydropower assets at a 25-percent discount if certain management changes take place at the energy firm.
SSS holds investments in First Gen valued at more than P1 billion, while GSIS’ exposure is close to P1 billion, based on the stock’s April 28 closing price of P16.86 per share.
KKR potentially faces a bigger loss given its roughly P12 billion worth of shares held through The Hongkong and Shanghai Banking Corp. Ltd.
The Lopez majority said such losses could affect the pension funds’ capacity to assist members and meet retirement obligations, including the payment of monthly pensions.
It added that the pension funds themselves should have opposed the provisions, which it described as benefiting only Piki and his designees at the expense of other shareholders.
“Why would one person’s job be worth billions of pesos of other people’s money? This is a scandal, and the government should investigate,” the group said.
It said that foreign investors holding shares through custodians such as Standard Chartered Bank and Deutsche Bank AG may also look into the matter based on transparency and shareholder protection standards.
The group asserted that a government probe was needed to clarify the issues surrounding the disputed provisions.
First Gen shares slipped P0.30, or 1.78 percent, to P16.56 apiece on Wednesday.
