SSS, GSIS seen at risk in First Gen turmoil
The majority group in Lopez Inc. has warned that key institutional investors, including state pension funds, could suffer heavy losses if controversial provisions tied to First Gen Corp. are triggered.
In a statement on Wednesday, the group led by Eugenio “Gabby” Lopez III said the Social Security System (SSS) and Government Service Insurance System (GSIS) risk losing billions of pesos from their First Gen holdings.
The potential losses stem from “poison pill” clauses linked to transactions with Prime Infrastructure Capital Inc. These could allow a buyout at a 25-percent discount.
Under these provisions, Prime Infra could acquire First Gen’s gas and hydropower assets for about P125 billion at below-market value if management changes occur.
The Lopez majority said these clauses effectively protect Federico “Piki” Lopez at the expense of shareholders. They warned that the company had “zero protection and benefit.”
“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, especially now that First Gen has been found to have disclosed the two pills two and six months late, and only because the majority exposed them,” the group added.
The majority said that global investor KKR may face the largest exposure, with about P12 billion in shares held through The Hongkong and Shanghai Banking Corp. Ltd.
SSS holds over P1 billion in investments. GSIS has nearly P1 billion based on the April 28 closing price of P16.86 per share.
Such losses, the group said, could weaken the pension funds’ capacity to support members and meet retirement obligations, including monthly payouts.
They noted that First Gen disclosed the clauses only after delays of two and six months, allegedly following the majority’s exposure of the terms.
The group also questioned the absence of transparency, saying First Gen has yet to release full investment agreements to verify whether the clauses existed at the time of disclosure.
Beyond disclosure concerns, the provisions were said to undermine the rights of the board and shareholders to replace management, a key principle in listed firms.
