Prime Infra pushed ‘key man’ clause in hydro deal–First Gen

First Gen Corp. said the controversial “key man” provision in its hydropower deal with Prime Infrastructure Capital Inc. was requested by its partner, not by its own management.

In a statement on Thursday, the Lopez-led energy firm clarified that the change of management control (CMC) clause—which some tagged as a “poison pill”—is a standard safeguard in large-scale energy and infrastructure contracts.

The issue has drawn attention amid the ongoing leadership dispute within Lopez Inc.

Family factions are contesting control over key companies, including First Gen.

First Gen said the CMC provision, also known as a “key man clause,” reflects a partner’s need to ensure continuity in projects that rely heavily on specific executives.

In this case, Prime Infra identified First Gen chair and CEO Federico “Piki” Lopez and his team as the “key men” essential to delivering two major pumped storage hydro projects.

These projects include the 600-megawatt (MW) Wawa facility in Rizal and the 1,400-megawatt Pakil project in Laguna.

The clause outlines several scenarios that would trigger a change of management control. These include the removal of Piki or his designees from leadership roles, board positions or voting control.

If such a trigger occurred during construction and up to one year after operations begin, Prime Infra may require First Gen to sell its stake in the projects at a discount.

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First Gen emphasized that the inclusion of the clause signals Prime Infra’s confidence in Piki’s leadership and track record in executing complex energy projects.

The Razon-led partner earlier described First Gen as a “seasoned local energy player” with a strong track record, underscoring the importance of continuity in management for project success.

The clarification comes as the Lopez family feud intensified, with the group holding majority control of Lopez Inc. earlier questioning provisions in the P62-billion hydropower deal. They said these could expose the group to about P23 billion in losses.

First Gen, however, maintained that the provision is a customary risk-mitigation tool and not an extraordinary condition imposed by its leadership.