First Gen deal ‘poison pill’ under scrutiny

The group that holds the majority control of Lopez Inc. is scrutinizing a “poison pill” in a P62-billion hydropower deal that could expose the group to over P16 billion in losses.

In a statement on Monday, the group said that the provision, embedded in the deal between First Gen Corp. and Prime Infrastructure Capital Inc., was tied to the position of Federico “Piki” Lopez.

This group, which includes the faction led by Eugenio “Gabby” Lopez III, said that the clause penalizes First Gen if Piki, the CEO, and his “designates” are removed from the company for any reason.

“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.

They added that the transaction was not fully disclosed, saying it was presented under “other matters” and discussed in an executive session lasting only an hour.

According to the statement, the clause allows Prime Infra to buy out First Gen’s 33-percent stake in the hydropower venture at a 25-percent discount.

“What we know is that if Piki and the present First Gen management are removed, Prime Infra will have the option to buy out First Gen’s 33-percent equity at a 25-percent discount,” it said.

This translates to a penalty of more than P16 billion out of the P62-billion deal value.

The group said that the details of such a poison pill have not been disclosed to the Philippine Stock Exchange despite First Gen being a listed firm.

The dispute comes after the Lopez Inc. board voted 5-2 to remove Piki for loss of trust and confidence.

However, Piki secured a court order shortly after, blocking his ouster and preventing his removal across other Lopez-affiliated companies.

The group also raised governance concerns over the investment structure, saying First Gen had initially acquired a 40-percent stake for P75 billion.

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This was later reduced to 33 percent worth over P62 billion, with the decisions allegedly not presented to the majority shareholders for approval.

They said these moves were only discussed during a brief board meeting, raising questions on transparency and oversight.

The group further questioned why Lopez had given up minority veto power by reducing the stake instead of retaining at least 33 percent plus one share.

“We do not know why he didn’t just go down to 33 percent plus one share to keep his veto power and whether Prime Infra paid a premium for being handed full control. We are blind to everything,” they said.

Against this backdrop, Lopez Holdings Corp. saw its 2025 net income jump 90 percent to P12.05 billion, driven by strong power and real estate operations.

The conglomerate also booked one-off gains from First Gen’s gas stake divestment and Rockwell Land’s acquisition of a controlling stake in Alabang Commercial Center.