First Gen asked to justify premium in Prime Infrastructure deal

MANILA, Philippines — The Lopez family majority is demanding an explanation from tycoon Federico “Piki” Lopez and the board of First Gen Corp. regarding the company’s hydropower deals with Prime Infrastructure, alleging that Piki “went all in with First Gen’s money” to keep his post.

In a statement yesterday, the family majority asked Piki and First Gen’s board to justify why the company agreed to pay for virtually 100 percent of the Prime Infra hydropower projects in exchange for only a 33 percent minority stake.

The majority, representing three branches of the clan, alleged that Prime, in effect, had been reimbursed for all its development expenses through a P42-billion premium for a 33 percent stake, down from an original P50-billion premium for a previously proposed 40 percent stake.

However, the 71 percent majority claimed that even at the reduced level, Prime needs to put up only a net amount of about P625 million for the P62-billion project, or one percent in return for 67 percent of profits, “with all risks borne by First Gen.”

“Piki went all in with First Gen’s money all for the pittance of keeping his job. He and the board must explain why they failed to protect First Gen and agreed to pay P42 billion, or a 200 percent premium,” the Lopez majority said. 

The majority further claimed that the deal was discussed for only an hour in an executive session and was concealed in the agenda under “other matters,” noting that no advance information was given to the board for its members to study.

It also raised doubt about First Gen’s independent directors Manuel Ayala, Alicia Rita Morales and Edgar Chua, who had earlier issued a joint statement in support of the deal. 

Ayala, Morales and Chua, however, said they properly discharged their duties in ensuring that the company’s hydropower deals with Prime Infra would benefit the company and its shareholders.

“How can a corporation, a listed one at that, be made to pay billions of pesos and be potentially in default for the job of one man and at the expense of hundreds of thousands of investors? No man’s job security is higher than the interest of a listed company anywhere in the world,” the Lopez majority statement added.

First Gen has repeatedly denied the allegations that Piki entered into disadvantageous deals. The company likewise earlier said that First Gen’s board of directors – which has its own governance and fiduciary obligations separate from Lopez Inc. and which includes Manuel “Beaver” Lopez Jr., the KKR representative and all independent directors – unanimously approved the questioned transactions.