Lopez ceasefire short-lived, majority throws another jab at Piki

MANILA, Philippines —  A ceasefire between two feuding Lopez camps appeared to be short-lived as the Lopez family majority, representing three branches of the clan, threw another jab at tycoon Federico “Piki” Lopez.

In a statement yesterday, the Lopez family majority accused Piki of committing “a horrible deal” after agreeing to pay Prime Infrastructure P50 billion as transaction premium and P25 billion as construction equity in First Gen Corp.’s P75-billion deal to buy 40 percent of Prime’s hydropower business.

The 71-percent majority said it learned about the premium, which it dubbed “scandalous,” only recently from board documents.

It said this is on top of the poison pills that would cost First Gen around P24 billion and putting its sister companies in default if Piki is removed from his job.

The majority claimed that First Gen did not disclose the premium to the Philippine Stock Exchange (PSE) but instead said: “P62.5 billion will be used to directly fund the construction and the equity requirements of the projects.”

It also said that just a few weeks after closing the deal early this year, Piki reduced First Gen’s stake to 33 percent from 40 percent, or to P61.875 billion from P75 billion.

The majority claimed that Prime Infrastructure needs to put up only P625 million to finish the project in 2030, for 67 percent of the profits at this reduced amount.

“In effect, Piki funded the whole project that is yet to be built, has no cash flow for years, and faces multiple completion risks. This is a horrible deal for First Gen. As we have been saying, we do not and cannot trust Piki,” it said.

The family majority urged the PSE and the Securities and Exchange Commission to require First Gen to “tell all to protect the investing public.”

According to the majority, the stake reduction in effect meant that First Gen gave up its strategic minority veto rights and surrendered to Prime absolute control.

Had First Gen added a few more shares to keep its veto power, it would have cost only P625 million, the majority said.

It also asked: “Did Prime pay a premium for getting full control of the hydropower company? If so, how much and who got it? So much is being hidden from the investing public that regulators must step in.”

The family majority said it has been asking Piki for documents regarding the original and reduced transactions to no avail.

Further, the majority also wants to know if the First Gen board, especially its independent members, was given enough information in advance to study them and properly perform their job of protecting the interest of the company and its shareholders.

Prior to the statement issued yesterday, hopes of a potential resolution of the Lopez family feud sparked after the Lopez majority issued a statement on May 14 indicating their openness to a ceasefire, with the board of holding company Lopez Inc. withdrawing its Feb. 27 resolution removing Piki as president and CEO.

The majority said the withdrawal presents an opportunity for the whole family to step back, reconsider their adversarial positions and look for options that are least injurious to the family, the Lopez group and the investing public.

In response, Piki welcomed what appeared to be an olive branch extended by the Lopez family majority, saying that he views the gesture as a possible first step for all parties to finally resolve the issues dividing the family.