Lopez majority hits reduced hydro stake anew

The Lopez majority has raised fresh concerns over First Gen Corp.’s decision to reduce its stake in Prime Hydropower Energy Inc. (PHEI) to 33 percent from 40 percent, arguing that the move was never presented to the board and therefore lacks legal basis.

In a statement on Wednesday, the Lopez majority led by Eugenio “Gabby” Lopez III said the reduction had “no board mandate” and questioned how the transaction could proceed without approval from the company’s directors.

The latest criticism adds to a growing dispute between the Lopez majority and First Gen management over transactions involving infrastructure tycoon Enrique Razon Jr.’s Prime Infra.

According to the group, the reduction was made just three weeks after First Gen’s board approved the original acquisition of a 40-percent stake in PHEI for P75 billion on Feb. 13.

The group noted that the deal included a P50-billion premium intended to reimburse Prime Infra for expenses incurred to date.

Under the revised arrangement, First Gen’s stake would fall to 33 percent while the transaction value would decrease to P62 billion, including a P42-billion premium.

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The group argued that the new structure leaves Prime Infra with a 67-percent interest while First Gen assumes the risks as a minority shareholder without veto rights.

“If the deal is so attractive, why reduce the stake at all and surrender seven percentage points of ownership and minority veto rights?”