Lopez feud: First Gen explains nitty-gritty of Razon hydro deal
Lopez-led First Gen Corp. confirmed that its hydropower deal with Prime Infrastructure Capital Inc. carries “change of management control” provisions that could trigger discounted share sales.
In a statement on Tuesday, First Gen said the clause allows Enrique Razon-led Prime Infra to require the sale of its shares in Prime Hydropower Energy Inc. (PHEI) at a 25-percent discount.
PHEI controls the 1,400-megawatt (MW) hydropower facility in Laguna and the 600-MW facility in Rizal. Razon controls 67 percent of the company.
The discount amounts to about P15.5 billion, based on Razon’s P62-billion investment in the Wawa and Pakil projects.
The provision applies during the construction phase of the projects and up to one year after the start of commercial operations.
First Gen added that the clause could extend further, covering its remaining stake in gas plants previously sold to Prime Infra.
If exercised, this would allow Prime Infra to acquire the Lopezes’ remaining gas assets at the same 25-percent discount, equivalent to around P8 billion.
Altogether, probable losses could reach roughly P23.5 billion, but the company emphasized it would only arise if the option is exercised. The clause will only take effect if Prime Infra opts to exercise its rights under the agreement.
A “change of management control” is defined by several conditions tied to Federico “Piki” Lopez and his designees.
These include scenarios wherein Piki is no longer chief executive, loses board representation, or no longer controls voting rights in the hydropower venture.
First Gen said these contractual terms had been requested by Prime Infra and reflected its “trust and confidence” in Piki and his management team.
The company also confirmed that documents for its 33-percent stake in PHEI and related project entities have already been executed.
Despite the ongoing dispute within the Lopez family, First Gen said its operations remain unaffected and business continues as usual.
The disclosure comes after a majority faction within Lopez Inc. led by Eugenio “Gabby” Lopez flagged a “poison pill” in the hydropower deal, warning of multibillion-peso losses.
The internal rift, involving attempts to remove Piki from leadership, has drawn attention to how management changes could trigger financial consequences.
